The Role of Open System Architecture in
Promoting Competition and Improving
Efficiencies
Dr. Nayantara
Hensel
Economic
Currents
Chief Economist
Department of the Navy
Evolution of the Defense Sector
•
•
The defense sector in the US has witnessed many changes over the past
twenty years.
– Cycles of growth and shrinkage in the budgets
– Globalization of the defense sector
– Substantive consolidation of defense contractors during the 1990’s in
the wake of excess capacity,
– An evolution in the demand for certain types of weapons systems in the
post 9 /11 era
The economy continues to face high unemployment and slow growth, as
well as increasing fiscal pressure with the burgeoning debt and deficit.
– The ratio of gross federal debt to GDP rose from 57.3% in 2000 to
69.2% in 2008 to 83.4% in 2009. Projections suggest that it will continue
to rise.
– The US deficit for FY 2009 was $1.4 trillion, which was 9.9% of GDP.
– The deficit has only climbed to 5% or more of GDP four times since the
end of World War II.
US Debt as a Percent of GDP
US Debt as a Percent of GDP, 1999-2015 (est.)
110.0
100.0
Gross Federal Debt as
a Percent of GDP
80.0
70.0
60.0
Gross Federal Debt
minus amount held by
government accounts
as a percent of GDP
50.0
40.0
30.0
20.0
10.0
2015 est.
2014 est.
2013 est.
2012 est.
2011 est.
2010 est.
Year
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0.0
1999
Percent of GDP
90.0
Underlying raw data from Office of Management and Budget (OMB)
US Government Expenditures as a Percent
of GDP, 1948-2009
US Government Expenditures as a Percent of
GDP, 1948-2009
40.0
Total Government
Spending as a
Percent of GDP
Defense Spending
as a Percent of
GDP
Federal Payments
for Individuals as a
Percent of GDP
30.0
25.0
20.0
15.0
10.0
5.0
0.0
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
Percent of GDP
35.0
Year
Underlying raw data from Office of Management and Budget (OMB)
CBO Projections of Defense Outlays and Interest
on Debt: 2010-2020
Projections as a Percent of GDP for US Defense Outlays and Interest
on Debt: 2010-2020
5
Percent of GDP
4.5
Defense
Outlays
Interest
on Debt
4
3.5
3
2.5
2
1.5
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
1
Fiscal Year
Source of underlying data: the Congressional Budget Office’s Budget and Economic Outlook:
Fiscal Years 2010 to 2020, Table 3-1, p.48
DoD Initiatives to Promote Efficiency
• In the context of significant broader economic and fiscal pressures,
Secretary Gates has encouraged saving $100 billion over the next 5
years
• Dr. Carter, USD (AT&L), issued a Memorandum on September 14,
2010, which focused on “doing more without more.”
– The guidance affects the $400 billion of the $700 billion defense
budget that is spent annually on contracts for goods and
services.
– “Require open systems architectures and set rules for acquisition
of technical data rights”
• “At Milestone B, I will require that a business case analysis
be conducted in concert with engineering trade analysis that
would outline an approach for using open systems
architectures and acquiring technical data rights to ensure
sustained consideration of competition in the acquisition of
weapons systems” (p. 10)
Maximize Use of Open Systems Approach (OSA) for
System Design Can Reduce Costs and Enable Greater
Competition
• Helps to establish an environment that reduces total ownership cost
of systems
• Prevents vendor lock-in
• Use of Commercial-off-the-Shelf (COTS) technologies provides an
expanded universe of sources for hardware and software
components while leveraging the rapid advances in technologies
• Facilitates increased competition to enhance innovation, improve
component quality, and decrease acquisition and life cycle costs. .
– Acquiring capabilities in smaller modules rather than through
complex, integrated systems that can only be built by a small
number of large systems providers creates a market that
supports a greater number of potential competitors
Examples of Potential Actions to Assist in
Implementation
• ACAT I through III programs could formally report to the
Defense Acquisition Executive / Service Acquisition
Executive on incorporation of a modular open systems
approach in their systems architectures, including how
they will control the overall architecture, key interface
mechanisms and system design.
• ACAT I through III programs could also report on the
implementation of their Data Management Strategy,
including how the Government will enforce its intellectual
product rights at each phase of the acquisition process.
Examples of Potential Actions to Assist in
Implementation
• Milestone reviews could verify that the technical data
packages that the Government is receiving include the
correct artifacts in the appropriate formats. Reviews
could assess the associated development process
information and tools to validate their adequacy.
– These reviews could describe how design data is being
disclosed to appropriate parties as part of the Program’s efforts
to use competitive sourcing at appropriate sublevels for both
software and hardware system components.
• Programs can provide an economic justification in any
cases where major subsystems are not being
implemented using a modular open systems approach
Impact of Greater Use of OSA
• Can lead to increased design flexibility, improve interoperability, and
provide opportunities for cost reductions and performance
enhancements through expanded competition/re-competition of
subsystems that require smaller integration efforts with lower
associated costs.
• Industry may experience less long-term certainty of involvement in a
given program due to competing continuously for the work.
– BUT, vendors would have an increased opportunity to compete
for work that they have been historically locked out of due to
previous award to competitors.
• Sharing of intellectual property for which the Government has
appropriate data rights can increase collaborative capability with
industry on development and acquisition.
– It can also reduce duplicative spending by leveraging DoD
investments through selective reuse of components across
systems, programs and services.
Impact of Greater Use of OSA
•
•
•
Initial program costs may grow in the short-run
– Due to the increased Government-led design effort necessary to develop
component designs and associated specifications that are modular and that
possess well-defined interfaces.
– Due to costs associated with developing the acquisition infrastructure needed to
support an increased contracting workload (e.g. possibly more contracts required
at the government level, performing more technical oversight and control).
– Investments would also need to be made in tools and mechanisms for crossprogram management and governance related to reuse of components.
Designing components for broad application across multiple programs might cost
more than designs targeted for limited or specific applications due to the need to
accommodate a wider range of environmental considerations and other design
factors.
– BUT, integration costs associated with common components are lower than
creating a new component for the system.
– The earlier these design practices are incorporated in a program, the lower the
cost to implement.
Over the longer term, significant cost savings at the enterprise level will be obtained
from increased competition for and reuse of subsystems during both acquisition and
sustainment phases.
Examples of How OSA Has Led to
Efficiencies
•
•
•
US Navy Acoustic Rapid COTS Insertion (A-RCI) Program
The Navy’s PEO Submarines adopted an acoustic rapid COTS insertion (A-RCI)
process for submarine sonar support based on open architecture principles.
Comparing data from the traditional DoD MILSPEC acquisition model versus an OA
COTS model, PEO Submarines demonstrated significant cost savings over a tenyear period.
–
–
•
•
The development costs expended for the traditional development model were five times that
of the RDT&E expended for the A-RCI model
The production costs associated with the acoustic system developed using the traditional
model would have been almost six times that of the Ship Construction Navy (SCN) funds
expended for A-RCI Model
US Navy E-2 Hawkeye Mission Computing Environment Open Architecture
Program
NAVAIR led the transition to a commercial computing environment, restructured
software to achieve modularity (consistent with MOSA), and adopted Model Driven
Architecture to enhance software reuse. This resulted in reductions of:
–
–
–
Acquisition cycle time from 7 years to 2.5 years,
Cost fell from more than $200M to less than $11M
Central Processing Unit utilization from 80% to 25% with the Single Board Computer,
providing room to expand the mission support software packages as new requirements
emerged.
Other Examples of OSA
• Littoral Combat Ship (LCS) uses open systems at several levels.
– One example is the seaframe-mission package concept of an
open system.
• This seaframe-mission package concept allows the Navy to
build seaframes independent of the specific missions to be
conducted during the life of the ship.
• As new mission requirements are identified, new mission
packages can be assembled, consistent with the limits of the
ICD, and put aboard the ship with confidence that the
systems will be compatible.
– Combat management (software) systems used by the seaframes
are also designed with open systems architectures.
• Allows new software components to be developed
independently (allowing for competition) as mission upgrades
are identified.
Other Examples of OSA
• The VIRGINIA Class SSN program
– Most of the non-propulsion systems (communications, weapons,
fire control, sonar, etc) are common across the entire submarine
fleet and managed as separate programs within the Navy.
• As these systems improve, the updated system is installed
in the latest VIRGINIA or backfit into existing ships.
• There is robust competition within these subsystem
programs, especially at the component supplier level.
– Even the masts/antennas for the VIRGINIA are modular – the
"slots" in the sail structure are common, and masts/antennas can
be "dropped in" to any position.
• They are ready to operate with minimal time and effort –
demonstrating how modularity can reduce platform lifecycle
costs and enhance mission flexibility.
Path Going Forward
• Continued interaction and cooperation across Services
in finding mechanisms to further implement these
concepts. Examples:
– Updating DoD 5101.12M
– Developing a DoD OA Guidebook for Program
Managers
– Working with DAU and educational facilities for
training, etc.
• Hopefully, we will see greater efficiencies, more
competition, and increased innovation in this area, as
well as in other areas within DoD, as we meet the
challenges of “doing more without more.”