Description
Organization: NAVSEA, PEO (DD21)
Team Name: DD 21 Program Acquisition Team
Related Acquisition Topic(s): Commercial Practices, Commercial and Non Developmental Items (CANDI), Cost As an Independent Variable (CAIV), Financial Management, Integrated Digital Environment (IDE), Integrated Product Teams (IPT), Integrated Product and Process Development (IPPD), Other Transaction Authority (OTA), Paperless Program Office, Risk Management, Simulation Based Acquisition, Total System Performance Responsibility
Description:
The DD 21 Program received Milestone I approval from USD (A&T) on 12 January 1998. The Milestone I Acquisition Decision Memorandum (ADM) approved the DD 21 Program's revolutionary ship acquisition strategy and specified preeminent objectives. This acquisition strategy has permitted a new, and unique, ship acquisition environment where the roles of the Navy and Industry have been changed markedly from the previous way of acquiring Navy ships.
The DD 21 Program is the first ACAT ID shipbuilding program to implement innovative and best acquisition practices that are applicable to system engineering development and construction of a complex warship System (which includes the complete engineering development, all of the ship's systems, all computer programs, the ship, and logistic life cycle support). These innovative and best acquisition practices began with the identification of the overall DD 21 Class System requirements and will continue with the fulfillment of the DD 21 Program Manager's preeminent objectives of production costs, operating and support costs and shipboard manning levels.
This innovative ship acquisition approach uses team-based organizations that engage the Program's stakeholders early in all facets of the Program and eliminate traditional organizational structures that restrict open communications, increase the time required to engineer and construct the ship, and increase life cycle costs. The DD 21 Program Acquisition Team currently consists of diverse stakeholder communities including OSD, SECNAV, OPNAV, PEO DD 21, the DD 21 Program Office, Navy Systems Commands, Navy Laboratories and Field Activities, support contractors, Industry shipbuilders and system integrators, and the fleet. This Team, including Industry shipbuilders and their integrators will have a common goal of ensuring each ship delivered to the fleet meets the operational and life cycle requirements. DD 21 Program initiatives fall within all five of the judging criteria designated for this award. They are:
1. Reducing Life Cycle Cost: The DD 21 Program Manager established very aggressive life cycle cost objectives that were approved by USD (A&T) in the Milestone I Acquisition Decision Memorandum (ADM). While ship engineering development and construction (acquisition lead time) costs represent a significant portion of that total life cycle cost, the single most costly category is the ship's operating and support (O&S) cost. The DD 21 Program O&S cost objective has been set at only 30% of the DDG 51 Class demonstrated O&S cost. A significant portion of this 70% reduction is represented by the supporting shipboard manning objective of 95 personnel. The manning objective is approximately 72% reduction from the DDG 51 Class shipboard personnel of approximately 345. This 70% reduction in O&S cost over the DDG 51 Class actual O&S cost is very aggressive and will significantly contribute to the DoD objective of reducing the annual support cost of all fielded DoD Systems by 20 percent by the Year 2005.
In order to achieve the DD 21 Program cost objectives, the Program Manager is using a revolutionary process of acquiring Navy ships which includes:
(a) Using the Full Service Contractor concept with early Industry involvement in engineering development, including concept formulation.
(b) Using the authority of Section 845 of the National Defense Act for FY 1994 (Public Law 103-160), Section 804 of the National Defense Act for FY 1997 (Public Law 104-201) and U.S.C. Section 2371 during "contracting" Phases I and II.
(c) Extensive use of prototyping (Smart Product Model) to economically optimize ship performance.
(d) Using state-of-the-art engineering tools, modeling and simulation, and computer aided design and manufacturing.
(e) Emphasizing use of commercial items, commercial processes, integrated production, dual use technologies, and non-developmental items.
On 18 June 1998, the Navy and the DD 21 Shipbuilding Alliance and System Integrators announced teaming arrangements with two Teams to produce competing total ship concepts and designs for the DD 21 Program. On 17 August 1998, the Navy announced the award of a $68.5M agreement (or "contract") with the DD 21 Shipbuilding Alliance under of the authority of Section 845/804. These competing Industry Teams rather than the Navy are now developing DD 21 Ship Concept Designs which will be followed by Ship System Design and include the same engineering development as the previous Concept, Preliminary, and Contract Designs developed by the Navy. The end result is that Industry will do all of the DD 21 engineering development and construction. Industry will develop the most efficient solutions to performance requirements based on life cycle cost. Dr. Gansler also commented on the DD 21 acquisition approach in a presentation to the Center of Naval Analysis and said, "Allowing the teams to enjoy maximum design flexibility has allowed us to mitigate risks and future cost while optimizing systems' capabilities. Then requiring shipyard competition on the winning design, between the two remaining yards, will provide us with assured competitive production procurements".
The procurement is being executed in the following "contracting" phases:
(a) Phases I and II: The Shipbuilding Alliance formed two firewalled "Competing Teams" with separate system integrators on each team. The two Teams consist of:
(1) Blue Team - Bath Iron Works (shipbuilder) and Lockheed Martin (system integrator)
(2) Gold Team - Ingalls (shipbuilder) and Raytheon (system integrator)
The two shipbuilders have exchanged certain personnel who are firewalled with the Competing Teams to ensure the competing design will be producible at either shipyard and promote a common Integrated Data Environment (IDE) for the exchange of Program data. The two shipbuilders and two system integrators are participating with the Navy on a Common Process Integrated Process Team (IPT) to promote commonality in producibility and Integrated Data Environment. The Common Process IPT has access to non-competition sensitive material only.
(b) Phase III: The solicitation for Phase III will be released to the two teams in a limited competition. The Navy will select the design to be completed in Phase III and award an Agreement (or Contract) to the team leader of the selected design. That team leader will become the Full Service Contractor that will support DD 21 over its life cycle. The shipbuilder whose design is not selected during Phase III becomes the second shipbuilder who will participate in Phases III and IV in order to remain current on the engineering and producibility aspects of the DD 21, but must compete for construction of the DD 21 follow ships.
(c) Phase IV: The Full Service Contractor will complete the DD 21 Detail Design and Construction during Phase IV.
(d) Phase V: The Full Service Contractor will execute logistic life cycle support of DD 21.
2. Efficient, Responsive, and Timely Acquisition: As a part of the DD 21 Program approved revolutionary acquisition strategy, a number of functionally oriented Integrated Product/Process Teams (IPTs) were formed prior to Milestone I. These IPTs and their Working Integrated Product/Process Teams (WIPTs) counterparts proved to be most useful in establishing Program requirements. This IPT/WIPT approach permitted the first hand participation of the most experienced Government acquisition professionals, from OSD, SECNAV, OPNAV, and various Navy laboratories and Field Activities, in the formulation of the acquisition process to be used by the DD 21 Program. This approach significantly reduced the amount of time required to identify the DD 21 Program operational, technical, and life cycle support requirements when compared with previous shipbuilding programs.
Early industry involvement is also key to enhancing the ship's ability to meet mission needs through the integration and streamlining of the engineering and production phases as well as through the infusion of advanced technology. Early industry involvement has already focused Industry's expertise on the complex challenge of total ship integration, as well as using Industry's resources on resolving DD 21 critical technology areas. The end result is that Industry will do all of the DD 21 engineering development rather than just the Detail Design as was done on previous ship development programs. One of the most significant results of the use of this revolutionary acquisition strategy is that Industry will build a ship of their own (not the Navy's) design.
During these earlier and extended periods (Phases I and II) of direct DD 21 Program participation by Industry, the Navy-Industry interface by members of the DD 21 Program Office Team is critical to the success of the DD 21 Program. This is especially important in the receipt and distribution of Industry data deliverables and the coordination of the flow of data between the Industry Teams and the Navy. In some way every member of the DD 21 Program Office Team is involved in the production, review or oversight of the flow of information (data) between the Navy and the two Industry Teams.
Members of the DD 21 Program Office Team have participated in In-Process Reviews (IPRs) of the Industry Teams' responses and deliverable products of the 17 August 1998 Agreement with the DD 21 Shipbuilding Alliance. These IPRs are of particular significance because their results will influence the selection of the best DD 21 Ship Concept and the final Industry Team selection to complete Ship System Design, Detail Design, and Construction of DD 21.
3. Integrating Defense and Commercial Practices: The DD 21 Program Manager has provided special emphasis to the integration of DoD and commercial shipbuilding practices. The use of the authority of Section 845 of the National Defense Act for FY 1994 (Public Law 103-160) instead of FAR/DFARS rules during "contracting" Phases I and II has reduced time and cost, and improved Government/Industry working interface. This agreement (contracting approach) has also produced other significant Program benefits. This Section 845 approach also:
(a) Fosters innovation from contractors not traditionally involved with DoD work.
(b) Facilitates non-traditional strategic industry teaming relationships.
(c) Provides philosophical shift to permit industry wider latitude in technical capabilities "trade space" to meet CAIV objectives.
(d) Allows independent R&D to be focused on the developmental effort.
(e) Capitalizes on emerging technologies not readily available to DoD.
The DD 21 Program's acquisition approach allows Industry to implement commercial best practices and utilize all facets of the commercial industrial base. All acquisition requirements invoked on Industry will be tailored to the DD 21 Program. No military specification or standard has been imposed on Industry for DD 21. Special emphasis has also been placed on the use of commercial items, dual use technologies, and non-development items.
4. Promoting Continuous Acquisition Improvement: The Program Manager has been successful in developing a team structure supportive of the DD 21 Program needs, populating that structure with engineers and other technical personnel from headquarters and field activities. The Program Manager has also provided Program briefs to all contractors of the Industry Teams, key Navy Laboratories, key Fleet Commanders, Navy Systems Commands, and Commands throughout the Joint and Allied communities. He has provided major contributions to continuous acquisition improvement through the use of IPTs and requiring competition between the competing Industry Teams. The Program Manager has been very successful in providing necessary acquisition training through DSMC and other training activities for a large proportion of the immediate DD 21 Program Office. The Program Manager has developed and maintained Program metrics to measure technical performance quality, cost and performance to budget and schedule. All program, engineering, production, technical, and logistics support data will be in digital form in accordance with the Continuous Acquisition and Life Cycle Support (CALS) requirements. All of these actions will play a significant role in support of the Program Manager's preeminent objectives of reducing and controlling production costs, operating and support costs and shipboard manning levels.
5. Accomplishing Acquisition Reform Goals: The DD 21 Program actions have already shown great progress in acquisition reform. Dr. Gansler recently stated in a presentation to the National Contract Management Association on 3 December 1998 that, "Significant DD 21 program reform initiatives have included an acquisition approach that leverages industry competition and innovation".
In other areas, the DD 21 Program acquisition process has been streamlined so that the Program Manager is only "buying" those things that are essential and cost effective. Program documentation requirements have been streamlined, and contract requirements have been stated in performance terms rather than design-specific procedures. Requirements for Industry management data is being limited to those essential for effective control. The DD 21 Program Acquisition Team has successfully implemented the use of Integrated Product/Process Teams (IPTs) and an electronic data exchange (the DD 21 Integrated Data Environment (IDE)). The use of these powerful acquisition reform tools has permitted the DD 21 Program acquisition process to proceed more rapidly than previous shipbuilding programs. The IDE permits rapid transmittal of information among the Industry shipbuilding teams and the Government.
Dr. Gansler has also said, "To pay for these new systems [including the DD 21], as you know, we are engaged in an equally important Revolution in Business Affairs. This is the vital challenge of acquisition reform for all the services, and for the Department of Defense, as a whole. We are building the acquisition framework that will enable us to field these higher quality defense products faster and at lower cost, with the support of a first-class logistics system that uses the latest in information technology to get weapons and equipment where they are needed at the right time and with a significant shift of our overall defense resources from infrastructure and support into combat and modernization".
The DD 21 Program Acquisition Team has been very innovative, flexible, and efficient in the efforts required in the planning and execution of the DD 21 Program. The Team has made highly significant contributions to DoD's acquisition processes and programs demonstrating exemplary innovation and best acquisition practices. These actions are indicative of the goals and objectives set by the Program Manager which have already reaped significant Program benefits and will continue to reap greater benefits during the remaining engineering development, and construction and life cycle of each ship.
