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(S) NATIONAL NATIONAL RECONNAISSANCE OFFICE

WASHINGTON. D.C.

OFFICE OF THE DIRECTOR 7 September 1976

MEMORANDUM FOR MR. ELLSWORTH

SUBJECT: Streamlined Management and the NRO

Since its inception, the NRO has functioned within a

framework of streamlined management. Streamlined management

was instituted at the outset principally to maximize program

Success by keeping the numbers of people involved in the .

review and decision apparatus as low as possible. The

following philosophy was employed for the NRO's first eleven

years.

Major program decisions were made directly by

senior managers, in the forum of the NRP Executive.Committee.

As originally conceived, the two principal members were the

Deputy.Sedretary of Defense (Chairman) and the Director, •

Central Intelligence. Program and budget issues were staffed

to the ExCom directly by the Director, NRO. Resource decisions

were clearly and unambiguously fed back to the NRO.

- Followiftg . the allocation of resources, the Director,

NRO exercised line management authority with direct control

over his managers. in the field.

Managers of the Program Offices were responsible

for the total satellite life cycle from system concept through

operation.

A small staff, free from any significant involvement with other elements of the DOD, provided support for the

Director, NRO.

Strict internal review was conducted by a select

audit organization within DCAA.

- The NRO was exempted from all other Executive

'Branch oversight or review except that provided by the ExCom.

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Congressional interface was a minimum. Normally

discussions were limited to the Chairman, ranking minority

member, and a staff member, for each of the four committees

of concern.

The incremental funding concept was applied to

NRO programs. •

Funding flexibility was permitted within the

overall approved program.

Interagency participation existed, with both DOD

and CIA elements.

Personnel were carefully selected, and retained

under a stabilized tour program.

Operation in a closed security environment further

protected the NRO from involvement in the bureaucratic DOD

study and decision process (and prohibited any other organization from conducting satellite reconnaissance studies, development, or operation).

In the last four years there have been significant changes,

which have diluted the streamlined management concept and

resulted in growing normalization:

The creation of the ASD(I) office and more recently

the Director, Defense Intelligence, which has influenced the

NRO and NRP both by directives affecting resources and by

requiring support to study activities.

The formation of the IC Staff, which also provides

direction and requires significant support for study efforts.

Significant increase in the interface with the

Congress, with much greater information requirements in response

to staff questioning.

Congress has made program decisions this year which

have normally been made by the ExCom.

. With the abolishment of the ExCom and assumption

of this function by the CPI, the IC Staff now provides certain

staff functions duplicative of those formerly performed for

the Director, NRO and the ExCom.

ONE involvement has increased.

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The impact of the normalization process is:

. Additional layers of review, which requires

significant NRO Staff support.

A proliferation of study activity which requires

continuing participation from the NRO Staff and Program

Offices, both of which are not manned for this requirement.

A consequent dilution of the effort which can be

devoted to satellite development and operational management.

- Uncertainties in the decision process, and the

introduction of organizations not in the direct line of

management.

- A potential for increased costs and longer schedules

for deployment of reconnaissance satellites and technical

compromise in their capabilities.

The streamlined management structure for the NRO has

contributed greatly to successful mission accomplishment,

while effecting considerable savings in people and costs

compared to more normalized DOD management methods. Recognizing

that complete reversal of recent changes and return to old ways

of doing business are not totally possible, it is believed that

some steps are required to establish a new management framework

and prevent further unproductive erosion. A plan for doing

this would include the following elements:

Obtain an Executive Branch decree that the NRO

will be operated as a special, fenced, and streamlined entity.

Establish a series of agreements with involved

Executive Branch organizations, which both define and limit

the extent of review and direction or participation. These

agreements would be directed and approved by the Secretary of

Defense. Specific organizations would include at least the

ASD(I)/DDI, IC Staff, ONE, DDR&E, DMA, ARPA, and DCAA.

Direct that outside staffs concentrate on the

validity of requirements, priorities, and broad budgetary ,

trade-offs, rather than hardware solutions for the NRP.

- Direct that outside staffs evaluate the NRP output against requirements and priorities, rather than the intraprogram issues pertaining to hardware trade-offs for the NRP.

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- Limit outside staff involvement to bottom-line

issues.

- Direct that the Director, NRO have the sole

responsibility for staffing NRP issues to the CFI.

• - Apiroich the involved committees of the Congress

seeking agreement to limit involvement in the NRP decision

process. Further, to attempt to limit the number of formal

submittals and responses required of the NRO to only the most

essential because of the workload involved.

(29.04•4 QA.41(

Charles W. Cook

Acting Director

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STREAMLINED MANAGEMENT - CONTROL WITHIN THE NRO

The concept of "streamlined management" provides the essential management and operation within the NRO to assume timely

and effective management, command and control of NRP resources.

"Streamlined management" consists of the following methods:

The DNRO presently has resource allocation authority

within a fenced budget. This provides him budgetary flexibility.

The DNRO has direct access to his line organization elements. This short vertical up and down chain makes his

programs highly responsive and makes him directly accessible to

his program managers.

The DNRO controls end-to-end system contracting and

procedures which, therefore, makes it responsive.

The NRP enjoys strict internal review by select

audit organizations and personnel. This limits indiscriminate

reviews by any number of agencies that might feel a necessity

to intervene in NRP matters.

The special security required for collection system

protection provides a management spinoff by allowing conduct of

NRP system acquisition, conduct and operations in, essentially,

a sanctuary environment. This environment prevents unwarranted

external intrusion into NRP activities.

As a national organization, the NRO is integrated

and interagency manned by highly qualified personnel motivated

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by the NRP mission to provide the necessary objectivity to

their decision makers. Historically, the program has been

marked by a high stability in personnel manning, which has

been beneficial to continuity and effectiveness. This stability

accrues from the high program priority.

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SECTTI

OFFICE OF THE SECRETARY OF DEFENSE

WASINDION. D. C. 20)01

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1 October 1976

logiounnort FOR MR. ELLSWORTH ,

Beneath is a revision, w the streamlined management paper. Belem,

are some of my thoughts ofhstreailined macagement concept in general

in aware or less abstract fashion.-

Streamlined management should embody the following principles:

Non-competitive and unambiguous mission - single responsibility

- Overall program effort fenced by means of strong security policy,

strong management protection - reports to the top management

directly

Program and budget issues staffed directly to the top management

for decisions without intermediate levels of review

1- Descartes, once decided upon, not competitive with other resources

management of resources within the program is permitted to be

flexible

Program managers report directly to the Director - decision authority

clearly defined and vested at the lowest possible level

Staffing (manning) held to a bare minimum of people with high

responsibility

- Deporting held to a minimum consistent with proper accountability

requirements - checks and balances for oversight clearly defined

and delimited

Outside support requirements held to minimum - required audit, studies

and furnishing of information held to the level commensurate with

minimum manning and top management approval.

Most ismortant„ the mission and modus-operandi must be psychologically

perceived as vital and important and worthy of special treatment,

both internally and externally to. the organisation - further, the

bureaucracy must be willing to keep its hands off - but with the

confidence thud: checks and balances and safeguards are present.

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SOSJECit Streamlined Management and the Orgadikatioit

. • •

•

Since its inception, the organization has functioned within a framework

of streamlined management. Streamlined management was instituted at the

outset principally to maximize program success by keeping the numbers of

people involved in the review and decision apparatus as low as possible.

The following philosophy was employed for the first eleven years.

— Major program decisions were maie directly by senior.

minagers, in the forum of an Executive Committee. As originally conceived,

the two principal members were the Deputy Secretary of Defense (Chairman)

and the Director, Central Intelligence. Program and budget issues were

staffed to the ExCom directly by the organization Director. Resource

decisions were clearly and unambiguously fed back to the organization.

— Following the allocation of resources, the Director exercised

line.management authority with direct control over his managers in the field.

Managers of the subordinate offices were responsible for the

total life cycle from system concept through operation.

— • small staff, free from any significant involvement with other

elements of the DOD, provided support for the organization.

— Strict internal. review was conducted by a select audit organize

• tine within DCAA.

— The organization was exempted from all other Executive Branch

oversight or review except that provided by the ExCom.

— Congressional interface was a minimum. Normally discussions were

limited to the Chairman, ranking minority member, and a staff member, for each

of the four committees of concern.

— The incremental funding concept was applied to the individual programs.

— Fund*: flexibility was permitted within the overall approved program.

— Interagency participation existed.

— Personnel were carefully selected, and retained under a stabilized

tour program.

— Operation in a closed security environment further protected the

organization from involvement in the bureaucratic DOD study and decision process

(and prohibited any other organization from conducting system studies, development,

or operation).

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- The creation of the ASD(I) office and more recently the Director,

'Defense Intelligence, which has rinfienced the organization and program both by

directives affecting resources and by requiring support to study activities.

•

- The formation of the IC Staff, which also provides,direction and

requires significant support for study snorts.

Significant increase in the interface with the Cearea, with much

IgreitOr information requirements in response to staff questioning.

Congress has nada program decisions this year which have normally

...Ibsen made by the Won.

With the abolishment of the ExCom and assumption of this function by

i

' the CFL'the IC Staff now provides certain staff functions duplicative of those

`-'41" formerly performed by the organisation directly to the ExCom.

ON3 involvement has increased. -

The impact of the normalisation process is:

Additional layers of review, which requires significant internal

Staff support.

••=.

- A proliferation of study activity which requires continuing

participation from the Staff and subordinate offices, both of which are not

Noma for this requirement.

- A consequent dilution of the effort which can be devoted to system

development and operational management.

- Uncertainties in the decision process, and the introduction of

orgenitations not in the direct line of management.

- A potential for increased costs and longer schedules for deployment

of systems and technical compromise in their capabilities.

The streamlined management structure for the organisation has contributed

greatly to successful mission accomplishment, while effecting considerable savings

in people and costs compared to more normalized DOD management methods. Recognizin

that gpopvertfassulss leterees han and return to old ways of doing business 

are not it is believed that soma steps are re u re to establish

a new ma t framework and revent further unpr uct ve erosion; A p an or

this would nc e e o ng e ements:
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Cl.I - Obtain an Executive Branch deCrie that the organization will be

opera eas a special, fenced, and streamlined - entity. r.:

3.

) - Establish a series of agreements with involved Executive Branch •

&tires, which both define and limit the extent of review and direction

or participation.. These agreements would be directed and approved by the

Secretary of Defense. Specific' organizations would include at least the

ASD(I)/DDI, IC Staff, ONE, DDR&E, DMA, ARPA, and DCAA.

pelt Direct that outside staffs concentrate on the validity of requirezammts,.priorities, and broad budgetarrtrade-offs, rather than hardware solutions.

•

10.04 - Direct that outside staffs evaluate the organizational output against

requirements and priorities, rather than the intra-program issues pertaining to

hardware trade-offs.

100.,0- Limit outside staff involvement to bottom-line issues.

- Direct that the organization director have the sole responsibility

for staffing issues to the CFI.

Approach the involved committees of the Congress seeking agreement

to define a limit of involvement in the decision process. Further, attempt to

define a limit to the number of formal submittals and responses required of

the organization to only the most essential..

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STREAMLINED PANAGEMNT

The concept of "streamlined management" would provide

the essential management and operation to assume timely and

effective management, command and control of resources.

"Streamlined management" would consist of the following

methods:

Resource allocation authority within a fenced

budget. This would provide budgetary flexibility.

Direct access to line organization elements.

This short vertical up and down chain would make a program

highly responsive and directly accessible to managers.

Control end-to-end system contracting and

procedures which would make it responsive.

Would enjoy strict internal review 'by select

audit organizations and personnel. This limits indiscriminate

reviews by any number of agencies that might feel•a necessity

to intervene.

e. Be integrated and interagency manned by highly

qualified personnel motivated by the program mission to provide

necessary objectivity to their decision makers. Marked by a

high stability in personnel manning, which would be beneficial

to continuity and effectiveness.
COMMENTS

The section on Historical Perspectives of Acquisition Managements -

You may want to expand this section if appropriate. The following

were highlights not mentioned in your discussion.

1930s - Dominance of the cost plus a fixed fee contracts. Management competition de-emphasized due to the urgency surrounding the

ballistic missile programs.

1960s - Contract definition concept to determine which contractor

woulgTrceive the development contract. Emergence of incentive

contracting. Packard "fly/try before buy" concepts. Prototyping

re-emerges. DOD Directive 3000.1

1970s - A good source for amplifying this area is the book Arming

Amelia-by 3. Ronald Fox.

(Tailored) Streamlined Acquisition Management Approaches

In this section you mention the U-2, SR-71 and Atlas D upper

stage propulsion vehicle. There are two other examples which might

be covered, the Polaris and the F-if. The first was highly successful.

Streamlining the latter was not very successful Gen Bellis attempted

to adapt streamlined management for the F-Irind an understanding

and review of his difficulties might be edifying.

I think stressing the classified programs such as the SR-71/U2 may prejudice your case. •

3. Characteristics of the (Tailored) Management Approach

You may want to consider changing this section to a discussion

of the criteria for successful (tailored) streamlined management.

The following is by no means an all inclusive lists

Unassailable Priority - A widely recognized priority of the requirement. Although it is realized that it is unlikely in this day and

age to receive unequivocal support throughout the Executive

and Legislative branches, nevertheless a program must have

an accepted priority and a constituency at the highest levels

of OSD, OMB and Congress.

Need Date - To counterbalance the ever-present threat of program

deferral or fund reprogramming, there should be an accepted

date by which this capability must be operational.

c. Scope - As a general precept, streamlined management is most

successful when employed on a program of limited scope. The
larger and more compex, in terms of technologies, contractional

base and legislative/constituency interests, the less likely streamlined management can be successfully employed.

d. Simplified Requirements Mechanism - There is an inexorable

tendency to change the system requirements and,thus the design,

during the early phases of the system acquisition process. The

more simplified the requirements mechanism (the number and

diversity of the potential players) the better the chance for

success.

4. Proposed Alternatives

The section appears to be redundant as you have already discussed

characteristics. You may want to consider combining this discussion

with that which appears on pg. S. Listed below are additional or revised

characteristics for your consideration. Obviously, some may not be

appropriate.

ORGANIZATIONAL CONSIDERATIONS

Small and cohesive organization - minimum number of people

with the maximun qualifications.

Rank structure - Proportionately more higher grade people than

lower.

Long tenure - Long duration assignments for both officers and

civilians.

Direct Chain of Command - Direct line from the engineer to

the SPO to the decision maker. A direct and vertical chain

of command.

e. Collocation of buying and engineering personnel - contributes

to good understanding of requirements by buying and engineering

personnel.

S. Procurement and Financial Authorities -

The SPO controls tfirect end-to-end system contracting. The

authority to apply funds on an incremental basis is an Important tenet

which allows sufficient funding latitude to permit ready use of the

most practical means of contracting. This funding flexibility also

allows programs to avoid the constraints of piecemeal procurement.

6. Increased Contractor Involvement

In general, streamlined management activities are characterized

by extensive contractor involvement in all areas of the cycle. For

example, the contractor has much deeper involvement in configuration

management and quality control. Accordingly, the need for the government to perform contract administration is significantly reduced.

Contractors may take responsibility for development, manufacturing

Page 2
and operational success with appropriate oversight by engineering/contracting officers.

USE OF CONTRACTOR INCENTIVES 

Contractors are granted large incentive fees for operational performance.

Thus, there is significant motivation on the part of the SPO/contractor

team to ensure mission success. This also tends to minimize, to the extent

possible, an adversary relationship between government and contractor

people.

OVERSIGHT

Oversight should be kept to a minimum, with special audit activities

performing the function. Efficiency suffers when programs are subjected

to the normal inspection/oversight process.

Such are my specific comments. In general I think it is essential that your

paper establish a framework of decision for the Air Force hierarchy. That is

why I emphasize the need to have a criteria baseline (what constitutes the factors

which must exist before tailored management techniques can be used). Once

those are developed, you can play your candidates against this criteria. It is

realized that the foregoing list of characteristics is the best of all worlds, the

AF/RD challenge is to selectively adapt whatever characteristics are appropriate.

Should your successor or Gen Lowe want additional information on the general

subject of streamlined management, may we suggest a review of the Congressional

review (Joint Armed Services Committee) or the Weapon Systems Acquisition

Process which occurred In December 1971. Files on these proceedings are available

In SAFLL. d Admiral Ridcover were featured witnesses.

Page 3
MIPLY TO

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i.e:PARTMENT OF THE AIR FORCE

14EACIOUANTERS UNITED STATES AIR FORCE

WASHINGTON. D.0

2 0 MAR 1S79

*mum Tailored Acquisition Strategies

VD. SAF/SS

The Deputy Chief of Staff/Research, Development and

Acquisition has directed Major General Dewey K. K. Lowe,

Director of Contractin and Acquisition Policy, and

Assistant for Special Projects,

to p r orm a rev ew o t a acquisition process and determine appropriate strategies for selected programs that will

allow the Air Force to acquire urgently needed capabilities

in compressed acquisition cycles.

As a part of the basic re arch in this project,

General Lowe and are reviewing the application

of specialized management techniques that have been successfully applied to various programs in acquiring

capabilities in much shorter times than the current twelve

year cycle.

3. Your cooperation and assistance in examining selected

programs to assess the utility of alternative management

ro C

ant

DCS/Research, Development and

Acquisition

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-(St NATIONAL RECONNAISSANCE OFFICE

WASHINGTON. D.C.

THE NRO STAFF 7 June 1979

MEMORANDUM FOR MR. HILL

SUBJECT: Tailored Acquisition Strategies

As you may recall, AF/RD has been studying the feasibility

of adapting certain streamlined management tenets to selected

Air Force programs. The ultimate aim is to compress the

12-year acquisition cycle to a more reasonable duration. To

assist General Lowe in understanding streamlined management in

practice, we briefed him and he visited SP and Buckley. Based

upon your suggestion, d the differences in management

style between DSP and

The attached draft which has been provided to us for review

fral Lowe's summary report to General Stafford.

and I will review and I have sent a copy to

The paper is fairly shallow in some areas. We plan to

suggest a reorientation of his discussion of the characteristics

of streamlined management. For example, I think the paper may

be more useful to the Air Force hierarchy if a criteria matrix

were established which would describe what factors/situations

permit successful employment of streamlined management techniques,

i.e. unassailable priority, a need date, a well defined

requirements mechanism. Additionally, there are several more

examples of streamlined management schemes than those mentioned

(i.e., Polaris, F-16).

Wiliffilleak General Lowe's action officer on the

project, is interested h feasibility of developing a BYEMAN

annex comparing DSP and Although it undoubtedly would

strengthen the document, t "General Lowe envisions us

writing the annex as Brandt is being transferred in the next two

weeks. As we are not the most objective office on this subject

and as we could be criticized for throwing stones at the "white"

Air Force, I recommend we resist an active involvement in the

annex if one were to be proposed.

Please let me know what you think.
T4.-LORED ACQUISITION STRATE ES 

INTRODUCTION 

The basic objective of acquisition management is to deliver modern, usable equipment to'the force at the time needed.

The total time to accomplish this objective is increasing. The

acquisition cycle for major programs is now taking 12 or more

years with noted . increaies in time from program initiation

through DSARC II.. As a result of the lengthening cycle, costs

are escalating and systems are becoming technologically obsolete before they are deployed.

In the race to catch technology and reduce the rate of

increasing costs, program funding is deferred and production

schedules are stretched. Thus requirements are shifted to

future years where the same funding problems will again be

faced with compounded effects. Hence, 'a funding or budget

boW wave is produced which effects the services' ability to

program and budget adequate resources to execute programs in

an efficient and effective way.

The single most important challenge in acquisition today

.

.

is to shorten the acquisition cycle through tailored management

strategies. The cycle must be compressed not only to afford

the systems needed but to prevent unreasonable technology decay.

Historical Perspective of Acquisition Management

The 1950s 

The systems management approach to Air Force acquisitions

was developed and institutionalized in the 1950s. This innova-
tive.technique facilitiated the urgent and successful development of the U.S. ballistic missile program and was spurred on

by the Russian Sputnik launchings late in that decade. Concurrent development and production used regularly in this era

significantly reduced the time required to field the new miset

sale systems. However, programs too often were marked with

high risk, poor definition and low visibility which resulted

in cost overruns of 200 to 300 percent. „zoo off A'r

pirr.r" •

04/ Doevoisaiii The 1960s 

A number of concerns about the process became evident

in the early 1960s. Final costs were still exceeding cost

estimates by factors of 1 to 2 and, in addition, more systems were

entering development than could reasonably be procured with.

available production funds. In some cases duplicative systems

were developed/ while unglemourous but needed equipment was not

produced at all. The general lack of a prioritized allocation

system was evident.

The resulting reaction to this environment was the implementation of changes to the process that focused on more detailed initial planning, elaborate cost estimates, and greater

centralization of responsibility for development and acquisition

decision-making. This was the birth of the sequential production decision process by the Office of the Secretary of Defense

(OSD). A summary critique of the 1960 changes found an emerging

realization that the acquisition cycle length was increasing.

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The 1970i

In the late 60s and early 70s an attempt was made to return

to a more decentralized management system. The services were allowed more freedom to improve on their program management with

OSD approval. Key acquisition management personnel were given

more responsibility and recognition (e.g., program directors).

However, this supposed decentralization was coupled with the

institutionalization of a sequential step-by-step acquisition

system. A three step delielopment cycle was implemented (i.e.,

conceptual development, full scale development and production).

.Other failsafe "fly before buy" assurances were also emphasized.

The Office of Management and Budget Circular A-109 on

major systems acquisitions also influenced the late 70s. This

policy formalized the "Front End" of the acquisition cycle by

adding a specific "Milestone Zero" deciiion for initiation of

a piogram based on a mission oriented statement of need.

The result of acquisition management changes in this decade

(e.g., formalization of DPC/DSARC system, prototypes, etc.) lead

to reduced cost growth (generally less than 100 percent) but

also to a marked increase in the length of the acquisition

cycle, especially in the time from program initiation through

DSARC II.

Characteristics of Today's Acquisition Management Environment 

Today's system acquisition management process has a high

degree of technical involvement by the OSD staff, principally

the Office of the Under Secretary of Defense Research and
Engineering (OUSDR&E), but also the Office of the Assistant

Secretary of Defense Program Analysis and Evaluation (PACE).

This involvement manifests itself throughout the life cycle of

programs with heavy influence on the scope and statement of

need as well as on the technologies and risk assessments of the

approaches being pursued. Although decentralization has been

a common recommendation in system acquisition studies the overall trend has been more, not less, concentration of authority

and control at the top. •

The decision processes, as a result of centralization,

are highly kinetic with almost frantic activity in the various

organizational hGWrarchies all the way from the program office

to OSD. Great quantities of paper, considerable travel by

significant numbers of people, and participation by large staff

contingents are the norm. The milestoni decision process requires a program manager to "fight his way to the top" to gain

approval to proceed at each new phase of his program. The

heavy involvement at the higher levels requires that the previous

phase be essentially complete before enough information is available for a decision on the following phase. The common result is

a go-stop-go profile of the funding and activity in the program

which creates serious gaps between program phases and disrupts

the continuity of the contractor's activities and work force.

A parallel, yet somewhat related problem is the seemingly

growing dominance of the resource allocation process over the

systems acquisition process. Milestone decisions to proceed

4
with a system acquisition have not been explicitly linked to

allocated resources. There is a growing problem in disconnects

manifested by the PPBS not providing .the necessary funds to implement even recent milestone decisions. This further aggravates

the instability in program objectives and tends to negate any

gains in continuity resulting from the sequential milestone

approach.

A summary view of current systems acquisition management procedures finds a highly structured and formalized process which

is significantly centralized at the higher organizational levels.

Its procedural focus tends to be on activity within the government

above the program manager level rather than on the contractual

relationships with industry. Complex in its own right, the acquisition process is complicated even more by the bureaucratic

resource allocation process.

(Tailored) Streamlined Acquisition Management Approaches 

There have been streamlined system acquisitions that were

conducted differently from the previous.characterization of

the formalized system. These programs have been few, mostly

classified and generally successful. Two such examples are

the U-2 and SR-71 reconnaissance airplanes built by Lockheed in

the Kelly Johnson "Skunk Works". Both shared high national

urgency with strict security limitations on access to the program.

Both programs were considered successful with high performance/

technology systems being fielded in a relatively short time at
•

close to initial cost estimates. These systems are still operating successfully in original or follow-on versions.

A third example, a space system also built by Lockheed,

is the Agana D upper stage propulsion vehicle: This program

was also quite successful with the first vehicle being delivered

approximately seven months after contract go-ahead. The vehicle

performance met or exceeded requirements with a 12-16 percent

cost growth. Significantly, access to • this streamlined managed

program was strictly limited but not because of security considerations. it

Characteristics of the (Tailored) Streamlined Management Approach 

There are several key characteristics common to streamlined

management programs. The focus of the entire management method

is on the relationship between government and industry and centers

on the working level activity of the contractor. Authority is

highly decentralized to the government program office and on

to the contractor's project organizatioh. Both groups operate

very independently with rapid, direct communications between

them and the appropriate decision makers. A close knit, hands-

.

on, management relationship exists between the two project organizations. Both government contractor organizations are small

in numbers of people but strong in talent and initiative. Most

of these programs enjoy high priority with only minimal funding

changes. Also, most have restricted access due to security considerations, but at least one example created the limited access

environment strictly for the benefits in responsiveness and

6 •
•

economy of operation. Significantly, most of these programs were

•

unusually low volume production systems with limited deployment

and contractor intensive support.

Although, a streamlined management approach has in the past

denoted highly sensitive/classified programs, this investigation

indicates that it could be tailored for other programs. Thus, the

primary purpose of this paper is to expand on an examination of

generic traits of the streamlined (tailored) approach and to

recommend candidate programs upon which to test this type of

acquisition strategy.

SYSTEMIC CONCERNS 

Recent work in analysis of the current acquisition process,

especially that underway at the. Rand Corporation, suggests that

the front end of the process may be the,key to reducing acquisition times. There is a growing belief that the lengthening requirement validation and concept formulation phases are the prime

factors contributing to the stretch out of the cycle. At the

same time, there is an equally strong belief, accompanied by

pertinent empirical data? that full scale development times have

remained relatively fixed over the past twenty years.

Much of the information obtained by the study team in

discussions with Air Force and industry people directly involved

in system acquisition work supports the idea that a better job

of stating capabilities is a cruical need. There is a common

and persistent belief among this group that OMB Circular A-109

has exacerbated the "long front end" process. However, a review

7
• of new starts since implementation of A-109 provides no conblusive

evidence that this is the case. In discussions with OMB representatives who authorized A-109, the opposite contention is made,

i.e., the A-109 policy can be a positive help in reducing acquisition cycles.

Within DOD, there is a continuing attempt to reverse the

unfavorable trends in the length of program acquisition cycles.

The most recent work is embodied in revised DODI's 5000.1 and

5000.2. Review of these directives, both of which are still in

draft, indicates a positive recognition of the importance of

tailoring acquisition strategies. Indeed, the prime feature

that the proposed policy and procedures evidence is the focus

on allowing a Systems Program Director initial unconstrained

choice in tailoring an effective and efficient strategy.

Although sound DOD policy is necessary, it appears that

operationalizing such direction is equally important. There is

no evidence that this transition from policy to performance has

been done effectively. Indeed, the overwhelming majority of

those individuals contacted, perceived a serious deficiency in

this very area. The slot:, uncertain MENS review and approval

cycle is cited frequently as an example of this failing.

Of even more concern to most of those contacted was the

lack of stability in allocation of resources. a review of the

final stages of the budget formulation process for the FY 1980

President's Budget highlights this concern. By late December

8
1978, the OSD control system had degraded to the point that the

military departments had little or no visibility as to the exact

state of their programs. This almost quixotic condition carried

on into January 1979 before the OSD Comptroller was able to restore the needed administrative discipline to the formulation review process and finally structured a balanced budget request.

An even more recent example of instability in resource

allocation is the Air Force FY 81-85 Program Objective Memorandum formulation. The failure to make a substantive linkage between the output of the Air Force Planning Guide and the output

of the Program Review Committee in the Air Staff Board corporate

review process is clear. So, too, is the subsequent loss of

discipline within the review process which culminated in last

•minute major perturbations to the total program. Functional

managers were severely constrained in their ability to effectively

balance planned program content within prescribed guidance. Once

more there was a noticeable lack of system discipline and corresponding evidence of program instability.

Beyond the concerns for ineffective implementation of policy

and lack of stability in resource allocation is the major concern

of growth in program oversight. This function too has seemingly

lost the degree of discipline needed to allow program directors

sufficient time to manage their programs. An almost universal observation from those involved in program management is that the

informational demands imposed by higher echelons have become excessive. Except for those programs where security considerations

9
limit access, there is a continued propensity for everyone

wanting to know.

Much of the information requirements is placed upon pro

grams by the Services. Added to this are the growing requirements for program data imposed by OSD, OMB, and the Congress.

The affect appears to be a dilution of program management capability with no evidence of real value added payoffs in the

quality of decisions made at higher levels. The cost of meeting

program informational demands is not explicitly known and there

is no indication that those generating such requests are in

any way accountable for their contribution to program overhead.

PROPOSED ALTERNATIVES 

The major effort of the study is directed toward selectively identifying programs that would benefit from application

of*a tailored acquisition strategy that incorporates basic traits

of streamlined management, and, in particular, that explicitly

values time. The goal of such a strategy would be to deliver

needed capability in a reasonable time, an acquisition cycle

of perhaps five to seven years vis-a-vis the twelve or more

years that have become the norm.

•Selective examination of the characteristics of systems

acquisitions which have successfully met • compressed IOC's was

made. From this analysis a set of generic program strategy traits

is derived. Each of these is discussed in subsequent paragraphs.

10
Quality of Managers 

There is no substitute for excellence in management. Repeatedly, the finding that the success of a program depends

most on the performance of the Systems Program Director, his

staff and the contractor was confirmed. It is clear that competent managers are the key ingredient in overcoming the effects

of the systemic problems already mentioned. Selecting the best

managers to do the most important work is the first and most

crucial step in insuring that high priority programs are successful.

Limited Access 

A small cadre of highly competent Air Force people have

managed multi-million dollar acquisitions successfully. In- .

variably they have been allowed to manage. In most of these

cases, the reporting requirements and other information demands were highly constrained. Thus, the limited oversight

served to allow the focus of the Program Director and his

staff to remain fixed on getting the job at hand done. Interviews with those who have worked in SPO's that enjoyed this controlled access oversight arrangement confirm the importance

attached to the characteristic.

Financial Stability

The efficiency gained by maintaining a stable funding

profile is well understood. This multi-year consistency in

allocating program dollars has been another feature of programs

that achieved IOC's in much shorter times than the norm. Stable

11
1

, J'

•

program work content is achieved when planned, programmed and

budgeted resources remain relatively fixed. Programs that exhibited this characteristic have avoided contract grapping and

the attendant losses of time and dollar utility that result.

Financial Flexibility 

There is considerable evidence that programs that have

small production quantities with large unit costs could benefit

from the added flexibility that incremental funding of production

costs provides. Spaced based systems appear to be logical candidates for special application of AFR 172-1, the principle

directive for classification of program content into funding

types. The authority needed is to permit procuring satellites

and space systems equipments using incremental funding up to

the point of deployment of the fully operational system. This

approach could reduce overall system cost while increasing the

program manager's ability to incorporate modifications or block

changes to system units, as has been done in the Defense 'system)'

Meteorological Satellite Program (DSMSP).

Other Authorities 

There are other ingredients such as stable assignments

of Air Force SPO personnel which could contribute to a positive program management •nviornment. Moreover, from the foregoing

paragraphs, it becomes plain that as authorities for autonomous

decision making are added to the repertoire of management tools

given a Program Director the potential for reducing acquisition

times grows. But so does the risk. There is no panacea for

12
correcting the situation. Higher risks are the price for managinc

uncertainty associated with compresaed acq-Asition times. Only

excellence in managing can balance this circumstance.

4.4.4e•

CANDIDATE PROGRAMS •140 •-• • z.v •A.•

Building a list of programs that appear , best suited for

tailored strategies designed to achieve early IOC's is, at •

best, a subjective process.. Nevertheless, application of the

generic characteristics described across the planned development •

program does yield a set of programs that appears reasonable.

No single criterion has been considered dominant in constructing

the list, but rather the convergence of multiple traits has guided

the selectiori. These programs are as follows:

Satellite Early Warning Systems

Seek Talk

WAAM

Strategic Satellite System

Ballistic Missile Early Warning System Upgrade

IMPLEMENTING ACTIONS •

• The Program Element' Monitor for each program listed should

•

carefully review the current program plan in the context of

achieving a compressed successful acquisition. In concert with

the System Program Director, he should develop a basic charter

granting those explicit management authorities needed to achieve

program objectives. The charter should then be submitted to

the Deputy Chief of Staff, Research, Development and Acquisition

13

- . ...mom .11m.. me 10...Im Ammo n•••• n moo • ••n• •n•nn••• •

elMioN.M• 1111.1111•••••n•n• OMR. n•••• • am. 4••10•111
for•review and approval along with a recommendation of who within

OSD 'should ultimately sign it.

Concurrently, proposed changes to Program Management Directive.

should be developed that reflect the management authorities of the

charter. The important consideration in structuring the direction

conveyed by the PMD is to provide broad management authority to

the Program Director. In this regard, PMD's should describe

explicitly those aspects of program management unique to the

program.

During the POM review cycle the set of progiams selected

for special consideration should be reviewed separately and,

in effect, treated as a "set aside" as is done for streamlined

managed programs. Approval of the Chief of Staff and Secretary

should be obtained and subsequently the approval of the Under

Secretary of Defense for Research and Engineering should be

sought. Since program resource stability is a key element in

these tailored strategies a fenced funding profile will be

necessary beginning with the October Budget Estimate Submission.

Clearly the major hurdle in implementation is the mind

set of the bureaucracy at every level which tends to not want

to allow any program the perogatives described. Thus, obtaining

a firm commitment and strong support from the senior leadership

and the rank and file in their staffs is essential. A convincing argument for undertaking the project must be made or

the inertia of the system won't be overcome. To this end, _

•

•

14
a deliberate initiative to inform those effected is needed.

Assuming success in obtaining agreement in the Air Force

and then OSD concurrence, further agreement by OMB and the Con-

.

gressional Committees with oversight responsibilities is needed

to assure stability in resource allocation. Programs that have

had highly contentious issues as to need or concept that are not

yet resolved should be limited as initial candidates since it is

unlikely they would be accepted by these external oversight organiiations. Rey staffers in OMB and Congress responsible for these

programs should be briefed on the Air Force initiative in the

Fall as they prepare for review of the FY 81 President's Budget

Request.

The way AFSC structures SPO's to manage these programs

is a still more important consideration. There is no doubt

that.early agreement to alter the traditional way of doing

business within the product division's is essential. Cooperation in achieving the basic objective of compressing acquisition schedules while maintaining performance and cost goals is

Absolutely necessary. To achieve this AF/RD must obtain AFSC

support early, preferably before the MAJCOM BES submittals.

15