By Emelie Rutherford
The Marine Corps’ first and only program executive officer (PEO) said the service’s pursuit of advanced technology and contractual relations with the defense industry are among the factors making it tricky to control costs with weapon systems.
William Taylor, the program executive officer for Land Systems, steers eight high-profile procurement programs, including the Expeditionary Fighting Vehicle (EFV), Joint Light Tactical Vehicle (JLTV), Medium Tactical Vehicle Replacement (MTVR), and Marine Personnel Carrier (MPC). Taylor was the Marine Corps’ first-ever PEO when he started the job as a colonel in early 2007, and soon after he retired from the service last year he returned to the post that was converted to a Senior Executive Service billet.
Nearly three years after starting as the PEO, Taylor, the former program manager for the V-22 tilt-rotor aircraft, talked to Defense Daily in September about his growing organization.
And his message for the defense industry, he said, is clear.
“The biggest (issue) is we need them to take seriously the criticality of cost containment and working together towards that goal,” he said.
Taylor said controlling costs is his biggest challenge these days, from a program standpoint. And major contributing pressures, he said, are the weapon systems’ requirements.
“It always seems we’re chasing technology, and technology is more complex, it takes more time to develop, and it costs more to field,” he said. “That’s the way of the world.”
Another major cost-containment factor is “the fundamental way in which we enter agreements with industry,” he said. “And what I’m really referring to is cost-type contracts.”
Taylor said it’s “just a fact of life” that under cost-type contracts prime contractors are not incentivized to control costs.
While he said he would not propose pursuing only firm-fixed-price contracts with defense firms, Taylor said he sees value in deals between the government and industry that include incentive fees.
“But they’ve got to be incentivized correctly,” he said. “It’s got to be linked to a critical path and it’s got to be spread across the spectrum of cost, schedule, and performance; not just one at the expense of everything else.” Taylor further cited concerns with executive compensation, when he said business leaders’ performance is judged not on controlling costs for government customers but on bringing in revenue for their firms.
“There’s a dichotomy there,” he said.
He called the push Washington politicians are making towards having more firm-fixed-price Pentagon contracts is a “noble goal.” Still, he warned the quality of products can suffer under those arrangements if companies first reserve their allocation of profit and allow the systems, left with fewer resources, to suffer.
Another “pressure on cost control,” Taylor said, “is the relative ability and relative success with respect to industry’s ability to manage programs through earned-value management.”
“You look at their track record, it’s not good,” he said, adding only a small number of prime contractors in the defense industry have such compliant management systems.
“So it’s a struggle to get to the point where the primes are viewed as actually managing by earned-value management, instead of simply delivering it as a contract (requirement),” he said.
Taylor sees cost-controlling help coming via the new Weapon Systems Acquisition Reform Act of 2009, which President Obama signed into law on May 22.
“I actually view it as a good thing, where we are now required by law in doing cost estimating to reflect cost estimates with an 80 percent confidence level,” he said.
“That’s a big one…Now, being required to show a program cost estimate with an 80 percent confidence level, is a truer depiction of what a program is really going to cost the service. And it causes them to pause and reflect, ‘Boy, can we really afford this capability? How bad do we really want it?'”
Nearly three years into his stint at PEO, Taylor said he is pleased all the programs in his portfolio “are relatively stable and in a pretty good state of health” following a series of hiccups and restructures. His first day on the job then-Navy Secretary Donald Winter was briefed on the EFV program’s cost breach, which triggered a thorough review and Pentagon recertification under the so-called Nunn-McCurdy rules. After the PEO was stood up, other programs that Taylor said were not properly structured in the beginning had troubles as well.
The EFV effort, which is being reviewed by Pentagon leaders in the current Quadrennial Defense Review (QDR), unavoidably has taken up a large chunk of Taylor’s time. While he said critics tend to focus on cost, schedule, and reliability problems that plagued the program in the past, now the General Dynamics [GD] effort is “in great shape.”
The revamped EFV program has successfully gone through reviews including a late-2008 critical design review, and officials are working to build new, redesigned prototypes now for delivery to the government next year.
“Since the Nunn-McCurdy restructure, the program has passed one of its five reliability knowledge points successfully, so they now finally have a legitimate reliability growth plan, and right now that growth curve predicts that they’re going to exceed their reliability (key performance parameter) KPP,” Taylor said.
“I hope we continue to support it,” he added. While some observers speculate the QDR will call for killing the EFV, Taylor noted that the Pentagon’s Joint Requirements Oversight Council (JROC) has officially validated the requirement for the amphibious wheeled vehicle after the Nunn-McCurdy certification deemed in critical to national security.
PEO Land Systems is steering the Marine Corps’ part of the massive multi-service JLTV effort to build a replacement Humvee. There have been rumblings about whether the program for the Mine Resistant Ambush Protected All-Terrain Vehicle (M-ATV) being built now for troops in Afghanistan will detract from the JLTV effort. Yet Taylor said there is “an absolute valid need for both.”
The M-ATV and Mine Resistant Ambush Protected vehicle (MRAP) before it are largely off-the-shelf efforts “focused on a very exclusive requirements set: survivability at all costs, and all other requirements were kind of incidental to that,” he said. The developmental JLTV, though, “is satisfying somewhere around 400 other unique requirements that M-ATV and MRAP are not addressing.”
“And JLTV is a legitimate developmental effort and so it’s got all that time to focus on the ballet that occurs between trading off all the various requirements,” he said.
Considering the Marine Corps’ focus on having light vehicles, Taylor said the service for its own needs is looking at the lightest category of JLTV.
The Army awarded contracts to build competing JLTV prototypes last November to BAE Systems, Lockheed Martin [LMT], and a General Dynamics-AM General joint venture called General Tactical Vehicles.
For the MPC, Taylor said the Marine Corps still supports the nascent medium-weight-armored vehicle effort it views “as an absolute valid requirement,” and noted demonstrators will be built this year. The service last year delayed the program by two years, “not because of the program’s affordability but because of its affordability within the context of … being able to afford the entire spectrum of Marine Corps requirements and capabilities,” he said.
“Hopefully right now the plan is to revisit a Milestone A (decision to enter into the technology development phase) around the April 2010 timeframe,” he added. “Some of the QDR and budgetary churn will have settled by then, we’ll have a clearer picture of its affordability within the context of total affordability.”
Taylor highlighted multiple additional efforts underway across PEO Land Systems. It is working with Oshkosh [OSK] and the requirements community on a lighter version of MTVR, with four wheels instead of six and two axles instead of three.
“It could potentially save anywhere from 5,000 to 8,000 pounds on a MTVR, and that’s significant,” Taylor said. “It’s particularly significant when you’re talking about the quantity of vehicles that outfit a (Marine Expeditionary Unit) MEU that deploys on ship.”
The Logistics Vehicle System Replacement (LVSR), which is in the PEO’s portfolio, vehicle reached initial operational capability (IOC) in recent weeks, Taylor said. And its command-and-control programs–the Common Aviation Command and Control System (CAC2S) and Ground-Air Task Oriented Radar (G/ATOR)–are progressing as well.
CAC2S was restructured in the past year and now has “got new life breathed into it,” Taylor said. The program is focused on an initial phase to field an incremental capability, as it is scheduled to reach initial operational capability in 2011.
G/ATOR, a multi-mode radar, has been designate a “special interest” program by the Pentagon acquisition chief’s office.
“That’s an example of on of those very complex systems that the Marine Corps is out in the lead on, and that’s kind of unique,” Taylor said. “Typically, one of the other larger services will take the lead on the major program like that, but in terms of radar technology, the Marine Corp is out in front of all the other services right now in fielding a very complex multi-mode radar in G/ATOR.”
Taylor, the former program manager for the V-22 tilt-rotor aircraft earlier this decade, said the Marine Corps is facing a real challenge as weapon systems grow more complex while the coming years’ budgets are projected to grow only with inflation.
He said he hopes efforts to continue growing his nascent PEO’s workforce can continue.
“Organizationally, the biggest risk (for PEO Land Systems) is the time it takes to put that robust infrastructure in place, the cost, the investment,” he said. “Can the Marine Corps actually afford the investment required to put a robust acquisition infrastructure in place in order to adequately manage these major programs?”
PEO Land Systems was stood up in early 2007. While the Marine Corps got along for years without the PEOs that other services have used for their major programs for decades, officials in 2006 saw the need for one in the Marine Corps as its systems became increasingly complex and costly, with more-robust development phases.
Taylor cited a series of methodical improvements made at the PEO since its standup related to staffing, policy, and program management.
“I think the view is that we’ve brought disciplined, focused management of these programs, and a degree of process and criticality,” he said.
Now, he said he looks forward to taking the organization to “the next level,” which means “working to create a robust infrastructure around which my program managers, all they have to worry about is managing their programs.”
As the Pentagon moves to in-source acquisition jobs lost in the previous outsourcing wave, Taylor looks to personnel needs in PEO Land Systems in areas including cost estimating and engineering.
He said he hopes to bring uniformed personnel to the civilian-dominated PEO staff, and process that started in July. That’s when Col. Michael Micucci, the former program manager for the Light Armored Vehicle and MPC, joined the PEO as its first military deputy.