Foundation Forum
November 13, 1998
"Partnerships in Space -- Panel Q&A
Session"
Gen. Shaud: We are not running out of questions. We could be
here until next Tuesday. The first question turns the cube a little
different way. It says: How do you assess U.S. competitiveness in space
compared to other nations, compared to Europe? What is the U.S.
government's appropriate role in supporting U.S. competitiveness?
Lt. Gen. Lyles: Let me ask Mike and Jim to comment on that and
then I'll ask Gene also. So, we'll get both the industry and government
perspective.
Mr. Henshaw: I d like you to start with the letter A and
give it to Jim. (laughter).
Mr. Albaugh: Ok, I ll take a shot at that. Several years ago
and I'll talk from a launch perspective we got a real wake-up
call when the curtain came down and all of a sudden there were launch
vehicles available both from China and also from Russia. I think the
EELV program has really afforded us an opportunity to look at launch in
a different way and that is not just: Where do we need to go? but Where
do we need to go and how much will people be willing to pay for it? I
think the new launch vehicles that we are building right now, the EELVs
and the RLVs that we are working on, will hold us in very good stead
against the Europeans and certainly what has come from behind the
(former) Iron Curtain. If I look at the Russian vehicles, for instance,
they are really Cold War vehicles. They are complex. They weren t
designed necessarily for the reliability that is demanded over here. I
believe, as their economies become more market driven, we are going to
be extremely competitive.
Lt. Gen. Lyles: Mike, before you comment on that, let me just
ask you to expand on that a little bit. Think of it in terms of the
broader perspective that is happening around the world. Think of third
world countries North Korea, Iran and others who are developing
launch capabilities and how they might also make that an even more
complicated picture.
Mr. Henshaw: Today when we cut a deal with a Japanese firm or
an Indonesian firm or wherever it is, in Europe, for a particular
satellite system that is turn key launch vehicle and space craft
we find that a certain amount of that work needs to go back to that
country. Part of the demand of that country is to get up on the curve in
the ability to build space products. One in particular the Japanese
remote sensing system that many in the room are chasing in a very tense
time for Japan, given the events of the last six months one of the
requirements is that we bring them up the curve on satellite technology.
As you might know they buy most, but not all, their spacecraft from
the United States Loral, ourselves, others. The question concerned
our competitivenes. I believe we are very competitive in the spacecraft
world. But it will be eroding quickly as consortiums award Matra, Alenia
and Alcetal big chunks of spacecraft work. We have to get leaner
ever day to maintain that lead. In the launch vehicle world, I think you
ll find EELV, if it is done right by this country and these contractors,
competitive worldwide. I believe it will snatch the bacon out of the
hands of international launch vehicle providers. So, I would say, today,
there are a lot of launch vehicles. But there will be more for this
country as we grasp lean manufacturing and lead processes and compete
like the United States is set up for competing against these two
corporations. Every day a launch vehicle, pound to orbit, is less and
less and less. We can take back share from Ariane and othrs because of
that acquisition reform. The proof of whether acquisition reform in EELV
made any difference is whether we take back that share or not. I would
say we are competitive, we can do it. We can t get lazy over it. We have
to keep going down in the cost of pounds to orbit.
Maj. Gen. Tattini: I probably can t add much to what Jim or
Mike said with, perhaps, one exception. I would agree 100 percent. In
the satellite industry, we are still, far and away, the most competitive
source there is in the world. We will recapture, hopefully, a good
percentage of our launch-based share. But, at the same time, where one
has to caution is the licensing arrangement. Some of what we do to this
industry in our nation s capital that ultimately will be very telling on
whether they will stay competitive or not as we go forward into this
next decade. They alluded some to our launch-based studies. Also an area
of satellite control that is ripe for additional looking at is
commercialization and how we coalesce those kinds of capabilities. That
also is another one of those areas as we go through the mission areas of
what we do here. I think both Jim's assessment and Mike's assessment of
this are right on currently.
Mr. Albaugh: Just one more comment on that. We really don t
look at our business as being an American business. It is really a
global business. If you look at what Mike is working on and what we are
working on at Boeing, we have international partners. It is very
arrogant of us to think that we have all the technologies available here
in the United States to solve your problems in the best way possible. I
know in our program, certainly in satellite programs, we are using
expertise that we can gain internationally. On the launch side, Gil
Schluter down at Huntington Beach has Asian partners and European
partners. If you look at the new Atlas vehicle, it will have a Russian
engine. I don t think of it in terms necessarily of a head-to-head
competition. It is really how can we maximize all the technologies that
are available worldwide. That is the only way we will come up with the
lowest cost solution.
Gen. Shaud: Next, we have perhaps the most asked question.
With the partnering and merging going on, especially in industry, what
does this do to the competitiveness and creative energy of small and
mid-sized companies and is this of concern to you?
Lt. Gen. Lyles: I'd give it to Mike, but he is going to give
it back to Jim anyway.
Mr. Henshaw: I don t know what the numbers are for Jim, but I
assume they are similar. Almost 60 percent of the work we have that
comes into Lockheed Martin has been from customers, either you or
commercial, as redistributed to others very quickly. We are systems
integrators, we are not vertically integrated. Of that 60 percent, a
good 10 percent of that, that would be then 6 percent of the overall, is
targeted to small and disadvantaged and minority owned businesses and
businesses that if we don't invest in. Suddenly we wake up one day and
don t have a source of rad-hardened parts. Suddenly we don't have a
source of boards to put into product. It is not just domestically, it is
internationally, as well. Every time we launch a telecommunication GEO
bird, 70 percent of that bird was made somewhere else through
subcontracting. A good third of that is done internationally because
there is no one here that builds some of the things that we need to go
into that bird. I would say small, disadvantaged business, business that
has to be nurtured and awarded real money on real programs, must go on
at or above the percentages that are there today or we run out of those
specialties. The greatest haven and greatest source of growth for a
small and disadvantaged business, are those that are in businesses that
are threatened by others going out of that business. Because then we
grasp them, certify them and bring them into the family for long-term
agreements because they offer what must be seen as a strategic kind of
offering. That is what we are doing.
Mr. Albaugh: One of the problems that companies ike Boeing and
Lockheed have is that we've got all the answers and we are adverse to
risk. As a result, we wind up doing things the way we have always done
them. I look out and see some of what the small businesses are doing
they are very innovative. They don't understand what risk is. They take
it every day. You look at the Kistler-Kelly pioneering rotary rocket.
They ve got great ideas. I wish that sometimes our folks would come up
with ideas like that. I think that companies like Boeing and Lockheed
Martin and the Air Force have an obligation to keep these companies
nurtured, to give them the money they need to develop their products and
we certainly are always looking to those companies to see which ones are
appropriate to invest in. We can learn a lot from them in terms of the
kinds of ideas they come up with.
Gen. Shaud: DoD has been stressing acquisition reform for some
time now. Has this helped the acquisition process, particularly in the
space world?
Lt. Gen. Kadish: Since I am a very keen user of space
activities I will comment as an "expert." I think, yes, is the
answer to that question (laughter). I get that question a lot as does
everybody on this panel, but in a more generic sense. It is not very
easy for people who work in this business for many years to see
acquisition-reform-of-the-month initiative that comes out because we are
in a very dynamic business. A lot of people I work with, as peers and
with subordinates, feel they are charged with acquisition reform every
time they do something as a normal course of their process. It is very
difficult for people to accept those kinds of things from time to time.
But I can tell you from a leadership perspective, at least from what
I deal with, is that the acquisition reform movement, especially in the
last few years, has had a major impact on the way we do business. There
is not doubt about it. We are better off for it. What we need to do is
make it much more institutional than calling it reform all the time
because sooner or later, you have to reach a steady state. It is more of
an improvement issue. I like to think of it as acquisition improvement,
as opposed to reform, and take it out of the pejorative context. I think
it has been very effective and I will speak on behalf of my space
brothers that it has affected them, as well.
Mr. Henshaw: The one that comes to mind is SBIRS. It began to
scratch the surface of acquisition improvement, streamlining, more total
system responsibility authority to your industry teammate,
electronically knowing every day exactly where you are on the desk of
the government, so there is no mystery. Some of those kind of big cave
issues. Cost as an independent variable probably over used, but on SBIRS,
used every day to figure out how we weather budgetary storms and other
storms; to estimate what the requirements then come out the other end,
if the funding were cut this way or that way. There has been
improvement. We are ready in this nation for acquisition improvement
phase two, which is more linkage commercially to much of what we talked
about here today and a system of systems acquisitions.
Mr. Albaugh: No question about the improvement. At first, when
this started back in the early 1990s, we looked at it as something that
we needed to do to satisfy our customers. We needed to work on SPI,
things like that. As we got into it, we realized that there could be
some real strategic advantages to us by working this. I applaud what the
DoD is doing in this regard because I have to go and justify to the
people in Seattle that they spend their discretionary (money) on my
programs as opposed to building a new airplane. We have to have
acquisition streamlining. The costs of going through a proposal, the
costs of contracting, the demands of the talent that we have to support
the government programs, those compete with what is going on in the
commercial side. I think that the Defense programs have to be very
streamlined and they have to have the kinds of profits that are
attractive to people that can put their money both in the commercial
side and the Defense side and I see us moving in the right direction.
Mr. Henshaw: I was thinking when Jim was talking about
deciding between Defense business and commercial business, the average
$200 million job in a commercial bid and proposal costs about $150,000
to bid. It is in this many papers, the proposal. Yet the one Jim and I
just shipped back East, cost tens of millions of dollars to propose and
filled up an airplane a piece. Under the guise of acquisition reform,
somehow we are missing this. I just offer that. It is a lot easier to
spend $150,000 on a proposal that you get a little something back on
than it is to spend tens of millions.
Gen. Shaud: As resources permit, what might be the next major
new space system initiative after Discover II and the SBIRS spaced-based
radar?
Maj. Gen. Tattini: What one thinks about and what we have
spent some of our time talking about now is perhaps not the next step in
terms of a space system, but how the U.S. military is going to organize
to execute these new capabilities that we have. When you look at
revolution instead of evolution. You talk and you read in the trade
journals about how we are going to execute things like space-based
laser, space-based radar, when we are going to operate SOVs and SMVs.
How are we going to organize ourself to do those kind of things? Rather
than in terms of capability and hardware in space, I think that is going
to be the next thing that we are going to have to come to grips with and
spend some time intellectualizing on, rather than what we are looking at
now systems that we will field in 20 years. The author of the
question wanted me to go out beyond 20 years and I ain't gonna do that.
What I think our challenge is going to be is how to accommodate these
next 20 years of fielding of these capabilities that we are talking
about today.
Lt. Gen. Lyles: One last question before I get to the magic
one about the action items to Secretary Peters and General Myers and
General Babbitt. We mentioned harmonizing requirements early on. I had
it in my chart and some of the other panel members mentioned it. Mike,
you suggested the idea of bringing together at PDRs and CDRs government
and military to look at the design. But then I was struck about a
different paradigm from General Kadish. Before you even get to the point
of PDR and CDR of having experimentation to really understand
requirements. Let me ask between Ron and Mike if there is some marriage
between those two or to see if both can work or work together.
Lt. Gen. Kadish: Absolutely. In fact, this idea of going into
PDR and CDR is a super one to influence the design process. What I worry
about is that we won't have the right influence and that we will take
older paradigms and put them into a newer box. This idea of having an
ongoing consortium relationship combined with an intense experimentation
on the operators and developers and on the industrial side can help us
with that. We are not going to get it all right, but it is a process
that we go through that would lead us to when we do go to the PDR and
CDR we can be much more informed and leverage that investment more
effectively. That is the thought.
Mr. Henshaw: I am thinking as Ron is talking there about what
we used to have which were government evaluation of IRAD (Independent
Research & Development). One of the products that we probably need
to bring back and we have we do it, Boeing does it, TRW, Hughes,
others is technology days where you get exposed to all that. In
answer to you Ron, most all of us have five-year technology plans. What
comes to mind is the digital signal processing and active arrays and
switchable broad band that TRW and we are tied very tight into a real
fine team. That five-year plan, and indeed six- or seven- or eight-year
plan, is what you are getting at. You need to see where we are taking
both our profit dollars and discretionary other dollars and what we are
investing in for active arrays for whatever the piece of technology is.
That would get at it. By the way, CDRs are too late, aren't they? By the
time you get the CDR, you ve bult them one or something. So, it has to
be in the five- or seven-year plan of technology that the government and
commercial industry need to link up at. That would be my suggestion.
Lt. Gen. Kadish: I'd like to add one more thing. I want to be
clear about this idea of experimentation. It is not only the
technologists that get together. What I fear most when I talk about this
is this idea of demonstration comes back in. We demonstrate ourselves to
death. We don't get our dollar-for-dollar investment out of
demonstrations. They certainly have their place, just like the platform
focus, but the idea of experimentation is with the users, the customers,
the developers, the acquirers and the industry together working this
problem and not putting together a demonstration where we can prove the
concept and in fact even invent a concept of operations and then let it
languish for years and years because it didn't have the proper buy-in
and understanding in the concept of operations that the real warfighters
need to have. I want to make that point clear.
Lt. Gen. Lyles: Let me wrap up with this one last hypothetical
question and I forgot to use the adjective hypothetical because we
really don't assign action items to the Secretary of the Air Force
(laughter). But, hypothetically, Ron, if you had that opportunity for an
action?
Lt. Gen. Kadish: I will throw out experimentation and let's
put a consortium together to address these longer term issues.
Mr. Albaugh: National Space Policy. How are we going to pay
for the ranges? How are we going to allocate costs?
Mr. Henshaw: System of systems cross bow, cross service,
actually. We need acquisitions that address the bigger issue of what you
are trying to get at, rather than stovepipe acquisition that there is
probably too much of.
Maj. Gen. Tattini: In our business, we execute probably half
again as much TOA as we did four years ago with over a third reduction
in personnel. At some point we need to probably draw a line there and
cease and desist in terms of some of the continued downward pressure on
the size of the acquisition corps.
Lt. Gen. Lyles: General Shaud, let me turn the forum back to
you. I want to thank the four panel members, outstanding leaders in
everything they are doing in their past years and what they are doing
today. Thank you for giving us the opportunity to be here.
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