CONFLICT AND AMBIGUITY
IMPLEMENTING EVOLUTIONARY ACQUISITION
Richard K. Sylvester and Joseph A. Ferrara

In October 2000, the Secretary of Defense announced that a new policy of "evolutionary acquisition" would become the preferred approach to acquiring defense systems. Implementation of the new policy has been far from automatic. Today - two years after issuance of the evolutionary acquisition policy - the Department continues to struggle to adopt a consistent approach to policy implementation, but also to achieve the kind of lasting cultural change that is critical to long-term policy success. The roots of this implementation struggle are explored, paying particular attention to the concept of policy ambiguity and how such ambiguity can drive organizational conflict. Organizational conflict is inevitable, but not necessarily counterproductive. In fact, the original policy can be improved as the organization undergoes an iterative process of interpretation, conflict, and refinement.

PATRIOT PAC-2 DEVELOPMENT AND DEPLOYMENT IN THE GULF WAR
J. Daniel Sherman

This case study explores the development of the Patriot PAC-2 and its historic deployment in the Gulf War from the vantage point of five senior technical managers. In addition to in-depth interviews with these senior managers, U.S. Army Aviation and Missile Command (U.S. Army Command) historical documents, unclassified government reports, and other public sources were reviewed for information regarding PAC-2 development. Patriot PAC-2 is a case study in effective project management that resulted in the extraordinary acceleration in the final stages of development, production, and deployment in time to play a historic role in the Gulf War. The Patriot PAC-2 lessons may benefit future project managers engaged in the final stages of system development prior to a major conflict.

THE CIA'S IN-Q-TEL MODEL ITS APPLICABILITY
Wendy Molzahn

In July 1999, the Central Intelligence Agency (CIA) chartered and funded a newly established corporation, In-Q-Tel, Inc., to search the private sector for promising commercial technologies and to invest in the development of new technologies to support the Agency's critical intelligence missions. Overviews are provided of the structure, processes, and problems associated with the In-Q-Tel model; the Department of Defense's (DoD) current ability, through innovative programs and flexible contracting authorities, to attract cutting-edge technologies; and the potential costs and benefits of establishing a "venture catalyst" firm similar to In-Q-Tel for DoD. Finally, it is recommended that DoD establish a "venture catalyst" firm as a tool to attract new technologies in addition to - rather than as a replacement for - existing programs and authorities. Success will depend on DoD's ability to transform its culture to accommodate innovation, risk, and flexibility.

PROGRAM PLANNING OF ASYNCHRONOUS ON-LINE COURSES
DESIGN COMPLEXITIES AND ETHICS
Jay W. Gould III

The advent of the World Wide Web provided the feasibility of instant feedback between student and instructor analogous to the teaching methodology of ancient Greece. However, modern lecture halls or classrooms notably diminish the student's knowledge expectancy, suggesting a normal distribution curve. Research results affirm that learning is the sole responsibility of the student. However, unless the design team responsible for developing the distance education course addresses on-line variances and the instructors acknowledge their responsibility to provide motivation by putting a personal instructional touch into the "tube," the attainable two-sigma shift to the right will not be achieved. Therefore, has the Web's distance asynchronous on-line instruction defined a solution for the long-held dilemma of finding an educational methodology that will achieve results analogous to tutorial education and, if so, under what conditions would those similar results be achieved?

MANAGING THE DEVELOPMENT OF TECHNOLOGY-BASED COURSES
SUCCESS FACTORS FROM EIGHT GOVERNMENT TRAINING COURSES
John Bennett, Ellen Bunker, and Kurt Rowley

A study was conducted to determine whether success factors identified in traditional higher education distance learning research literature were important to technology-based course development efforts at Defense Acquisition University (DAU). The study included a literature review, a list of candidate success factors from the literature, data collected through interviews with eight faculty course development managers, and data analysis to correlate findings with the research literature. The study indicates that many of the success factors found in the literature were also important to management of the DAU course development projects. A number of additional success factors identified were important for the DAU courses and may be important for other distance education development environments. Recommendations for development managers of distance education courses are proposed.

Spring 2003

Risk Community Building Inside the Program Management community of Practice (PM COP)
Lt Col John Driessnack, USAF, and Noel Dickover, with assistance from Marie Smith

So, if we have known for at least the past 30 years that risk management is critical, why the need for a special edition of the Acquisition Review Quarterly? Frankly, we have observed that the implementation of risk management is often shallow and not well integrated with other program management tools. We believe that if we expand and integrate risk management with other program management tools, such as earned value management, we can achieve true transformation in the defense acquisition process.

The Relationship Between Cost Growth and Schedule Growth
Richard L. Coleman, Jessica R. Summerville, and Megan E. Dameron

Considerable speculation has been put forward regarding schedule changes and cost growth. Surprising new findings from Selected Acquisition Reports will show the connection between cost and schedule as well as cost growth and schedule changes. The probability distribution function of the size growth data will be presented. The paper will demonstrate that knowledge of program cost does not allow for prediction of program duration, neither is the reverse possible. A longer version of this paper has been received enthusiastically at the Department of Defense Cost Analysis Symposium, the Society for Cost Estimating and Analysis, the Program Management Institute Symposium, the Air Force Institute of Technology, and the Aeronautical Systems Center/Industry Cost and Schedule workshop.

Managing Risk in a Program Office Environment
Bill Shepherd

People in program offices make decisions every day. Sometimes the alternatives are clear with unambiguous outcomes, but more often the options are less certain and have far-reaching, unintended consequences. An effective risk management program can provide program managers with the information they need to make smart decisions in the face of this uncertainty. Although the techniques for risk management are well documented and not technically difficult, a variety of factors make them hard to implement effectively. This article describes what risk management is, identifies some of the typical challenges, and provides specific examples and recommendations on how to implement an effective risk management program.

Understanding Risk Management in the DoD
Mike Bolles

Although the Department of Defense's (DoD's) current risk management direction presents a comprehensive and robust approach to identifying, assessing, and managing risk, it does not adequately emphasize the interface between risk management and contract administration. In essence, a well-crafted, risk-appropriate contract can temper the sensitivity between technical risk and the probability of cost and schedule overruns, while a poorly crafted contract can actually increase the probability of cost and schedule overruns. By better linking sound risk management practices with sound contract administration practices, the DoD stands to continue being the bellwether federal agency for pushing the state-of-the-art in effective risk management.

Risk-Based Decision Support Techniques for Programs and Projects
Barney Roberts, Clayton Smith, and David Frost

This article is designed for the project management professional who intends to make risk-based decision making a fundamental, integrating principle of the project's operating processes. It is about making decisions using information that relates possible future outcomes to the risk inherent to decisions made. A project manager needs to make two types of decisions: those that relate to the business aspects of a project and those that relate to the performance aspects of the product. Part 1 details the project-focused tools and techniques and Part 2 details the product-focused tools and techniques. Advanced integrated quantitative techniques and tools that have been proven to have high utility to decision makers are presented.

Development of Risk Management Defense Extensions to the PMI Project Management Body of Knowledge
Edmund H. Conrow

This article describes the risk management defense extensions to the 2000 Project Management Institute (PMI) Project Management Body of Knowledge (2000 PMBOK® Guide). The Department of Defense (DoD) Draft Extension was developed to provide recommended tailoring of the 2000 PMBOK® Guide to Department of Defense-specific applications. The focus of this article is on Department of Defense-specific tailoring associated with risk management information that appears in Chapter 11 of the 2000 PMBOK® Guide, including key supplemental information and enhancements.

An Index to Measure a System's Performance Risk
Paul R. Garvey and Chien-Ching Cho

Technical Performance Measures (TPMs) are traditionally defined and evaluated to assess how well a system is achieving its performance requirements. Typically, dozens of TPMs are defined for a system. Although they generate useful information and data about a system's performance, little is available in the program management community on how to integrate these measures into a meaningful measure of the system's overall performance risk. This paper presents how individual TPMs may be combined to measure and monitor the overall performance risk of a system. The approach consists of integrating individual technical performance measures in a way that produces an overall risk index. The computed index shows the degree of performance risk presently in the system. It identifies risk-driving TPMs, enables monitoring time-history trends, and reveals where management should target strategies to lessen or eliminate the performance risks of the system.

The Risk Assessment Process Used in the Army's Health Hazard Assessment Program
LTC George R. Murnyak, USA (Ret), LTC Michael J. Leggieri, Jr., USA (Ret), and LTC Welford C. Roberts, USA (Ret)

Health hazard assessment is a critical aspect of a risk management acquisition program. Past programs developed without attention to human systems integration have suffered expensive delays, created long-term health and safety problems, and encountered difficulty and expenses during maintenance and demilitarization/disposal. The Army Health Hazard Assessment (HHA) Program uses risk assessment techniques to characterize health hazards associated with new materiel systems. This article provides the acquisition community with an overview of the risk assessment process used in preparing HHA reports and the key roles played by Army Medical Department organizations. This paper also shows how HHA Reports are integral components of a Program Manager's overall risk management plan.

THE USE OF OFFSETS IN FOREIGN MILITARY SALES
Lt Col Robert L. Waller, USAF (Ret)

United States defense firms have increasingly encountered demands from their foreign buyers to provide compensation for selecting U.S. suppliers. These quid pro quo transactions, also known as offsets, compensate the buyers for the economic damage caused by purchasing costly U.S. defense equipment. While these offsets may appear to be solely a form of price cutting, the motives of the foreign buyers can be varied. The behavior of these buyers can be explained by economic incentives ranging from labor market distortions and desires for foreign investment to the need for international financing. In most cases, it appears that offset transactions are a form of commercial policy that the buying governments use to address domestic problems. Defense industry personnel will likely encounter offset transactions and will benefit from a better understanding of the buyers’ motivations.

THE TRANSFORMATION OF CONTRACT INCENTIVE STRUCTURES
Robert Graham

The National Polar-orbiting Operational Environmental Satellite System’s Acquisition and Operations contract for the next generation of weather satellites uses innovative incentive structures to motivate contractor performance. The incentive approach combines an award fee and mission success fee arrangement to include a cost mitigation approach, putting fee at risk and tying corporate executive pay to contract performance. This business approach is complemented by a shared ownership approach to the development and production of the satellites. These innovative approaches give the government the flexibility to share system responsibility while motivating the contractor toward outstanding performance on the contract.

INVESTIGATING THE INTEGRATION OF ACQUIRED FIRMS IN HIGH-TECHNOLOGY INDUSTRIES
IMPLICATIONS FOR INDUSTRIAL POLICY
Maj David R. King, USAF and Lt Col John D. Driessnack, USAF

Acquisition activity persists despite evidence that acquisitions do not improve firm performance. Further, government policy toward the defense industry has advocated consolidation in the name of nominal cost savings. We explore the role acquisitions play toward technology transfer and begin to identify factors associated with acquisition success through a review of existing research on post-acquisition performance that primarily considers acquiring firm stock performance. Using this research as a foundation, we build a model to analyze post-acquisition performance using a sample of high-technology firms. Results suggest critical success factors associated with post-acquistion stock performance are poorly understood. We conclude that proactive government policy toward high-technology industry mergers and acquisitions may be misguided due to difficulty in predicting acquisition outcomes.

WHY THE “T” IN SMART
A CONSTRUCTIVE SYNERGY
LTC Michael D. Proctor, USA (Ret), Amy Posey-Macalintal, and Dennis Kulonda

Department of Defense (DoD) simulation-based acquisition (SBA) is widely discussed in literature. The Army offers a broad vision of SBA concept in the form of Simulation and Modeling for Acquisition, Requirements, and Training (SMART), accenting not only the Acquisition process but also essential contributions from the Requirements and Training communities. This research highlights how organizational training simulation has significantly helped the acquisition process beyond the confines of post-acquisition training.

LESSONS LEARNED FROM THE EARLY STAGES OF DEVELOPMENT OF THE GUARDRAIL COMMON SENSOR FOR THE RADICAL REDUCTION OF CYCLE TIME
J. Daniel Sherman

Nine key participants from the government and prime contractor were interviewed to identify important lessons learned from the early stages of development of the Guardrail Common Sensor. In addition to in-depth interviews, U.S. Army Communications and Electronics Command (CECOM) historical documents, unclassified government reports, and other public sources were reviewed for information regarding the system’s development. The management of the system development deviated from normal acquisition processes in several important ways. These are presented and the implications for flexibility in the acquisition process are discussed.

LETTER TO THE EDITOR
Rowland G. Freeman, III

The fall 2002 issue of the Acquisition Review Quarterly (ARQ) journal contained some very interesting articles. The one, which got most of my attention, is entitled “Using Options to Manage Dynamic Uncertainty in Acquisition Projects.”
The authors make the following statement in their article. “But the processes, methods and tools for developing flexible strategic plans and adapting to changes have not been operationalized adequately to be applied to management of dynamic project uncertainty. Project planning, risk management, and other management decision-making theories also do not provide operational processes to proactively use flexibility to manage project uncertainty (Ceylan & Ford, 2002, p. 248).