Description
Organization: NAVAIR, PEO (AIR), PMA-299
Team Name: SH-60R and CH-60S Integrated Product Team
Related Acquisition Topic(s): Commercial Practices, Financial Management, Integrated Product Teams (IPT), Open Systems, Other Transaction Authority (OTA), Partnering, Performance Based Acquisition, Performance Based Business Environment, Risk Management
Description:
Background: Both the SH-60R and CH-60S programs are managed by PEO(A)'s Multi-Mission Helicopter Program Office, PMA-299. The SH-60R is being developed to replace the SH-60B and SH-60F "area control" (antisubmarine and antisurface warfare) aircraft, and the CH-60S is being developed to replace the CH-46D and HH-60H combat support and combat search and rescue aircraft. Although the aircraft will perform different missions, they are both variants of the Army's UH-60 "Blackhawk". With this as a consideration, the thought of both aircraft being able to perform their two different missions, utilizing identical avionics packages, was pursued.
After careful study, the teams decided that both aircraft could in fact operate using an identical suite of core avionics, and a coordinated effort, known as the Common Cockpit program, was developed. The two separate managing IPT's (SH-60R and CH-60S) then began serious collaboration on how to proceed with the procurement and development of the Common Cockpit.
A review of all procurement alternatives was performed. Several alternatives were available: · Issue a modification to the existing SH-60R E&MD contract with LM and issue a modification to the CH-60 study Basic Ordering Agreement (BOA) order with SA. The modification to the existing SH-60R contract would have been the result of a Value Engineering Change proposal submitted by LM against that contract. · Issue a new contract with LM and have SA act as a subcontractor. · Issue a new contract with SA and have LM act as a subcontractor. · Issue a new contract (stand-alone or BOA order) with LM and issue a new contract (stand-alone or BOA order) with Sikorsky, with the government acting as the interface/integrator. This alternative has several permutations. · Issue an 845 OT with LM having Sikorsky as a "Partner" · Issue an 845 OT with SA having LM as a "Partner"
The way forward was complicated by the fact that the CH-60 program had not yet completed a Milestone II review and therefore was not authorized to expend R&D funds under an E&MD contract. After a thorough analysis, both teams concluded that issuing an 845 with LM, and having SA partner with them, was the most expeditious and cost efficient way to proceed. The Justification and Authorization to pursue a sole source 845 OT with LM was then written and approved by the NAVAIR Procuring Contracting Officer.
Criteria Applicable to Achievement:
Reducing Life Cycle Cost
The concept of a cockpit common to both SH-60R and CH-60S aircraft brings to mind obvious Life Cycle Costs savings: Infrastructure Savings (estimated at $1.0B) · Common Operational Flight Trainer configuration · Weapon System Trainers configurations significantly common · Common Avionics Maintenance Trainer configuration · Smaller investment in training of trainers · Potential for consolidation of fleet replacement and training squadrons · Secondary benefit of having CH and SH aircrew being able to inter-operate
Operations and Support Savings (estimated at $1.7B) · Reduced number of different WRAs reduces inventory/pipeline/spares procurement costs · Reduced number of Intermediate level test sets and operational test program sets · Significantly common Integrated Electronic Technical Manual · Reduced training requirement for Intermediate level maintenance technicians
But additionally, the use of an 845 OT allowed the Navy to reduce the acquisition costs. The second most cost efficient alternative was to allow LM to propose a Value Engineering Change. If this approach had been pursued, the government would have been committed to providing up to half of the anticipated procurement savings ($105.8M) to LM. Use of an 845 OT avoided this cost of roughly $53M.
By procuring a common set of avionics for the two aircraft, the government also avoided a cost of roughly $80M that would have been spent procuring different support equipment and components for the CH-60S aircraft.
Making the Acquisition System More Efficient, Responsive and Timely
Section 845 Other Transactions (845 OTs) are contract actions between the government and industry for development of prototype equipment that may be suitable for joint military and commercial use, and are authorized outside the normal specified contract authority of the Federal Acquisition Regulations (FAR). While intended to provide a mechanism for improving acquisition efficiency and timeliness, the use of 845 OTs has only recently been authorized for use by acquisition program offices in the development of prototype equipment for military application. (Of the ten (10) 845 OTs issued by the Naval Air Systems Command since they were first authorized, the one issued for the Common Cockpit prototype development is by far the largest ($61.8M; exceeding the next largest 845 OT award by approximately $16M.)). Therefore, their use imposes a contracting risk in and of itself based upon the uncertainty of responsibility and accountability between the government and industry team members. To address this risk, this particular 845 OT includes a set of payable milestones that all of the team members have agreed upon and believe will allow the team members to manage the risks associated with the development and provide a definable level of accountability. The payable milestones include activities such as design reviews, laboratory certification, completion of proof of compliance testing, delivery of software, flight readiness review and correction of deficiencies.
The establishment of these payable milestones does not eliminate the technical risk of the development. But structuring the 845 with these milestones has motivated Lockheed-Martin to manage the program development within specified performance parameters and cost constraints so as to receive the milestone payment. In addition, the prescribed payable milestones allow the government to incur obligations only if Lockheed-Martin successfully accomplishes the milestone requirement. Setting up the 845 in this manner gives the teams the opportunity to manage the risk of development as opposed to avoiding it.
Integrating Defense with the Commercial Base and Practices
In several ways, the 845 OT used for this procurement satisfies the above criteria. First, use of the 845 allowed both Lockheed Martin and Sikorsky to "Partner" in a way that would allow the government to pursue the development of a common aircraft cockpit for multiple procurement programs. This provides both companies an advantage in that it allows them to work together to satisfy our mission requirements while at the same time, giving them the opportunity to influence the design in a way that will allow them to offer variations of the design to other government militaries as well as other commercial customers.
Secondly, the government insisted from the beginning that the Common Cockpit be developed first and foremost using commercial off-the-shelf hardware and software. To this end, LM and SA proposed an open architecture which relied heavily on components existing in the commercial marketplace. Commercial items include a mass storage device based on industry standard PCMCIA, a Fibre-Channel computer network, single board computers in most of the proposed mission processors using the Power PC processor, and display components from previously developed and qualified displays. It will be the implementation of the open architecture and adherence to use of commercial interface standards that will give each aircraft the plug and play capability available on most home PCs these days. This capability will allow for each aircraft to maintain technological superiority in the future, as components will be able to be installed while expending significantly less non-recurring costs.
Finally, as a "partner" with the government in the development of the common cockpit and architecture, the contractor participates not only in the programmatic risk but also financial risk in being able to develop a product meeting the specified military performance and future commercial market requirements. The contractor is authorized to make those investments within the program that will benefit the system's ultimate competitiveness in the commercial marketplace. Both the contractor and the government benefit through leveraging this joint development.
