Meet The New Boss, Not The Same As The Old Boss

Press conferences can be strange events, because they lack a narrative. The attending reptiles ask questions in sequence, but everyone has a different angle so the Q&A's don't follow a logical sequence. Looking at your notes afterwards can be a bit like reading a comic strip where the frames have been cut up and reassembled at random.

So I didn't want to comment too much on JSF program boss VAdm Dave Venlet's media roundtable last week (the first program office media event in the US for 18 months) until I had time to focus on the notes.

There was good news on flight test. Testing is progressing "on or above the line" set by the revised plan. The program is notching up test hours "in the high 30s to 50" per week range, and Venlet is "very pleased" with productivity in terms of test points per flight.

However, Venlet added, this is the new plan "which is drastically unlike the old plan", which, he said bluntly, "was declared to have failed" at the time of last year's Nunn-McCurdy breach. Venlet is not about to declare victory. The program, he says, "comes forward without a record to generate confidence."

It's a similar story on production. Some six months ago, the JSF program rescheduled production and adopted a plan called Shop Operations Plan 5, which acknowledges that the first three low rate initial production lots are behind schedule. The SOP-5 plan "has not deviated more than a couple of days in six months."

Every previous plan, Venlet says, "deviated one day for every two days of calendar time ... Stability is starting to appear in the production activity." Until now, the program chief says, "the flight line was chock-full of rework activity."

So the good news is that the flight test and LRIP activity is now reality-based, versus previous plans which (as some of us suggested at the time) were based on optimism that made Pollyanna look like Malthus.

Venlet also talked about two important issues on the immediate horizon: the pricing of LRIP-5 and the definition of operation and support costs.

"The cost of production is being reassessed," he said. Venlet noted that the LRIP-4 price was settled in September 2010 and the contract was signed in November, "and we'll do everything we can to beat that schedule." There will also be a team working alongside the negotiators to examine Lockheed Martin's proposal and look for changes that would help meet the "should cost" goal set by Pentagon acquisition chief Ashton Carter.

Lockheed Martin, Venlet reminded us, says that it can come in below the predictions of the Cost Assessment & Program Evaluation (CAPE) office. But, he said "if LRIP-4 goes to its ceiling price" [that is, the cost above which the contractor team eats the overruns] "that means a decrement of their fee. Lockheed Martin can't lose money for very long. For LRIP-4 and LRIP-5, they need to have a good return."

One colleague emailed me to ask why Venlet was (apparently) giving Lockheed Martin a "get out of jail free card" on LRIP overruns. My interpretation is different:  I think that what Venlet was saying was that he's not about to sign an LRIP-5 contract that makes Lockheed Martin look good, but that's a recipe for trouble two years down the line, when it blows through its ceiling and the supply chain starts bleeding cash like a stuck pig.

But that (pace JSF fans) is my interpretation.

Operational costs: Venlet was asked about projections for O&S, particularly in the light of the fact that it was Navair under his command that developed, and supplied to Congress, a set of very scary O&S costs, much higher than current aircraft. Far from disavowing those estimates, Venlet noted that "the service chiefs look at the wedge for estimated costs and it makes their knees weak."

(If anyone, anywhere, has heard that kind of language from a program manager before, please let me know.)

Venlet has launched a "TBR-like activity" on sustainment. (TBR, the technical baseline review, was the effort last year that threw the previous production and test plans in the trashcan.) The leader of this "design review of sustainment" is Todd Mellon, the Navair logistics expert that Venlet brought into the JPO. The idea, Venlet says, "is to let the actuals teach us the right way to incentivize the contractors."

The plan so far has been to rely on performance-based logistics (PBL) which in its simplest form means that the contractors are paid to deliver performance metrics (flying hours and availability, for example). "We are not walking away from PBL," Venlet says, but everything -- the balance of organic and contractor work, where facilities are located and how they are grouped -- is being reassessed. "The previous assessments were based on assumptions about the requirement," says Venlet.

One problem is that Mellon's review, which will extend into next year, won't inform the next stage in the post-Nunn-McCurdy review process, which is to re-establish Milestone B approval for the SDD and LRIP program. (MS-B approval, originally granted in 2001, was automatically revoked after the Nunn-McCurdy breach.) It is due to be the subject of a Defense Acquisition Board meeting at the end of May. Before that, Venlet needs to have the service chiefs' assessments of when they'll be ready to declare initial operational capability, and the program is also going to complete a mini-SAR (selected acquisition report) to update cost estimates.

Procurement costs, though, also affect O&S, because they determine the number of aircraft acquired and the price of spares (which come off the same supply chain). "Combined," says Venlet, those factors "make it impossible to give you any [O&S] number that is something to build on, going forward."

Maybe there should be some knees wobbling in the Hague, Oslo and Ottawa.

Tags: ar99, jsf, tacair