Strategic Risk Management

1. ASN (RD&A) Program Management Seminar on Risk Management Strategic Risk Management Col Bob Lyons, Jr. Deputy Director, AFMC Acquisition Center of Excellence 9 May 2002

2. Most of us know a lot – too much – about the way we did things in the past Why are We Here? • WW II to fall of Soviet Union ~50 years • Concentrated on Performance • Gulf War to 11 Sep 02 ~ 10 years • Concentrated on Cost • 11 Sep 02 to now < 1 year • Concentrating on Schedule

3. 140 No of Months 120 Army 100 Navy 80 Program Start to IOC 60 Air Force 40 Average Cycle Times (By SAR Reporting Years) 20 0 1983 1969 1971 1973 1975 1977 1979 1981 1985 1987 1989 1991 1993 1995 1997 Source: DSB Briefing, Dan Czelusniak, 12 June 1998 Bad Juju The highest score does not win!

4. Current StateLengthy Cycle, Disenfranchised Users Warfighter Says “I need it!” Eureka! Warfighter Says “Finally!!” AVG: 3 Yrs AVG: 8 YRS Concept Development Test Deliveries Down Select Sustain Technology Production Award Requirements Unstable/Unclear Requirements No Buy-in on Test Faulty Cost Estimate Weak Systems Engineering Unstable Funding Serial, Big-Bang Solution Drives Cycle Time

5. Current State • Unstable/Unclear Requirements • No Buy-in on Test • Faulty Cost Estimate • Weak Systems Engineering • Unstable Funding

6. Traditional System:Formula for problems • Serial, “big-bang” solution drives cycle time • Difficult to adjust requirements to reflect asymmetric threats or warfighter “use and learn” experience • No requirement for collaboration among various players (users, acquirers, testers, etc.) • Technology reach too long and process lacks flexibility for timely insertion • Too much time for things to go wrong (budget instability, schedule changes, cost increases, etc.)

7. Militaries are mostly conservative, risk averse New Leadership Direction • SECAF’s Warrenton Massacre and Roslyn Hostage Crisis • CSAF: • Schedule is the enemy • Take some risk to get some payoff! • Don’t worry about failing

8. Spiral 1 Deliver Use & Learn Sustain Spiral N Spiral 2 Deliver Deliver Use & Learn Use & Learn Desired End StateCollaborative, Spiral Capability-Based Process Expectation Management Process Incubation/Concept Demo Collaborative Requirements/Ops Assess Warfighter Says I need it! Pull Push Eureka! “It’s Timely” … Continuous Warfighter Feedback Collaborative Requirements Seamless Verification Realistic Cost Estimates Focused Systems Engineering Stable Funding Technology Requirements Spiral, Parallel, Effects-Driven4:1 Cycle Time Reduction

9. Desired End State • Collaborative Requirements • Seamless Verification • Realistic Cost Estimates • Focused Systems Engineering • Stable Funding

10. Do we have the right focus and attitude? How’s our vision? What’s going on your head? Leadership is the key • Leadership is about focus and attitude • Integrity, teamwork, logic • Leaders carry vision relentlessly and continuously • Affected by: • Psychology • Training, experience, culture • Complexity of systems, technologies, environment

11. Thoughts on risk • Risk events are things that might happen • Could be good or bad • Risk has two components: • Probability of occurrence • Consequence of occurrence • The components of risk are separable • Big consequences don’t equal high probability of occurrences

12. News you can use • We equip forces for war! • That’s what acquisition and sustainment are • We’re in charge; people do what we do • Our troops follow our lead • Our contractors follow our lead • Maxim: “Fortune favors the prepared mind.” • Minim: “Fortune favors the lucky.”

13. The beginning

14. Back-up

15. Tenet The United States Air Force has unparalleled combat capability. However, we now face a battlefield characterized by unpredictable, asymmetric threats that demands fundamental changes in the way we conceive, acquire and sustain our capability. Agility, urgency, discipline and collaboration are paramount. We can no longer treat requirements, acquisition, and sustainment as isolated, independent processes. We must build strong, enduring partnerships among our warfighting, acquisition and sustainment professionals, so that our warfighters have the tools they need to fight and win wars.

16. Imperatives Imperative Effect 1. Change the way we work! Require Secretariat, AF Staffs and MAJCOMs to rapidly reengineer our processes to achieve a 4:1 improvement Cycle time reduced 4:1 2. Establish Accountability! Performance standards must motivate agility, urgency, discipline and collaboration Incentivize responsiveness 3. Establish collaborative spiral requirements and development as the preferred approach Accelerates capability to Warfighter 4. Replace DT and OT with one integrated test/verification process Expand the use of operational assessments Accelerates capability to Warfighter

17. Imperatives Imperative Effect 5. Revitalize and re-train our workforce Focus on successfully achieving warfighting capabilities Workforce responsive and innovative 6. Improve Communication Communicate with Senior Leadership on major issues to ensure early alerts and prevent surprises Improved Situational Awareness 7. Use Investment Dollars for Top Priorities Ruthlessly eliminate investments that are lowestpriority to focus on top priorities. Fence programs that are meeting expectations Field Top-priority capabilities sooner 8. Cancel programs Cancel programs that fail to perform or are of marginal utility More effective use of modernization resources

18. How We Get ThereTransforming Existing Processes and Creating New Processes 1. Correlate technology, technology transition and concept development to “task-force effects” (AFMC/CC and SAF/AQ) 2. Create collaborative spiral requirements and program management process (SAF/AQ and AF/XO) 3. Replace DT and OT with one integrated test/verification process (AFOTEC/CC) 4. Institutionalize funding stability (SECAF/CSAF) 5. Continue sustainment transformation (AF/IL and AFMC/CC) A Full-Spectrum Assault on Cycle-Time Process Drivers

19. How We Get ThereTransition Roadmap Get results from Pathfinders today while transforming the processes for tomorrow Global Hawk GTN UCAV M2C2 SBR KC-767 Pathfinder Results Pathfinder Results Spiral 1: Pathfinders6 Months Spiral 2: Capture Processes6-12 months Spiral 3: Deploy & Institutionalize1-2 Years

20. Pathfinders • Technology Transition Process Initiative (Owner: AFMC) • Space Based Radar • Multi-mission Command and Control Aircraft • AC-130 Gunship • Collaborative Requirements/Program Initiation Process (Owner: ACE) • KC-767 Tanker • Global Hawk • UCAV • Global Transportation Network • Seamless Verification Initiative Process (Owner: AFOTEC) • Small Diameter Bomb • B-1 DSUP • KC-767 • C-5 Avionics Modernization Program

21. Sustainment Pathfinders ?? • Current State: Not enough spares at the right locations to support the warfighter. Total response time too long. Too many weapon systems in depot for too long. Sustainment costs are too high. • New End State: Sufficient spares available to support operations; response times within warfighter lead time; depot level maintenance on schedule; and costs match programmed resources. • Pathfinder: KC-135, C-5, F-16 PDM; Landing gear and avionics components. • Metric: Total response time; # of MICAPs; # of Backorders; Depot time; Costs • Process Owner: AF/IL; AFMC/CC

22. “How we can” (Risk Management) “Why we can’t” (Risk Aversion) Must become “Don’t tell me no………....tell me how!” Questions? Customer View