ACQUISITION DEFENSE ACQUISITION UNIVERSITY DEFENSE SYSTEMS MANAGEMENT COLLEGE SCHOOL OF PROGRAM MANAGERS THE LOW ALTITUDE NAVIGATION / COMMON NAVIGATION SYSTEM (LAN/CNS) (A) Case Case Study Mr. John Horn, Professor of Acquisition Management, prepared this case in March 2001 as the basis for class discussion rather than to illustrate either effective or ineffective handling of a program management situation. DISCLAIMER This case was produced in the Department of Defense (DoD) school environment to acquaint students with defense acquisition issues and to provide a basis for classroom discussion of these issues. The views expressed in this case are those of the authors or the case participants and do not reflect the official position or policy of the DoD or those of the United States Government. References in this case to the DoD 5000 series and life cycle phases reflect the use of terminology at the time our research was conducted on the program in question. Published by the Defense Acquisition University Press Fort Belvoir, Virginia 22060-5565 Case number 401-035 Rev Jul 2006The Low Altitude Navigation/Common Navigation System (LAN/CNS) (A) Defense Systems Management College 401-035 Rev July 17, 2006 THE LOW ALTITUDE NAVIGATION / COMMON NAVIGATION SYSTEM (LAN/CNS) (A) Case It was Wednesday evening, November 17, 200 fland Lieutenant Colonel (Lt Col) Susan Hughes was tired. The previous three days had been exhausting; Hughes couldn't stop thinking about the Low Altitude Navigation/Common Navigation System (LAN/CNS) joint program management review (PMR) held at the prime contractor's plant in Sudbury, Wisconsin. "I'm not sure I agree with the optimism that the Army and Lehigh Valley's program managers expressed," she thought. There had been three rebaselines in four years. The cost and schedule performance indices for the past four months were showing improvement, but still the contractor was over cost and behind schedule again. As the Air Force Assistant Program Manager (APM), Hughes was still bothered by the previous year's results of the tests conducted as part of Environmental Qualification testing. After several attempts, the system passed vibration and temperature tests for fixed-wing aircraft parameters. The test results were barely satisfactory. She wondered if all the technical issues were truly behind her. Before Hughes left for the PMR, the Air Force Program Executive Officer for Fighter and Bomber Programs, Brigadier General Carter, told Hughes, "We either need to get well or get out! Give me an achievable plan or let's cut our losses." Brig Gen Carter had wanted her decision the week before, but Hughes managed to get an extension until after the PMR. The General had made it clear that he expected her recommendation the day after the PMR. The truth was, Hughes was hoping for some good news/progress at the PMR. After the meeting, Hughes had been cautiously optimistic. Yes, the engineering team had briefed that the environmental technical issues were resolved, and Lehigh Valley's contract performance charts showed some short-term progress, but Hughes wasn't convinced the program was really back on track. Short- term improvement didn't guarantee long-term success. Hughes was on the calendar to brief Brig Gen Carter early the next morning. "What am I going to say?" she wondered. Looking out the window, she saw Dayton Airport and breathed a sigh, thinking, "I'll be home soon; maybe then I can rest." Brigadier General Carter After graduating from the Air Force Academy and flight training, Brig Gen Carter served an illustrious flying career and transitioned into the acquisition career field as Colonel His time as an Acquisition Category ID (ACAT ID) Program Manager was filled with controversy, but he was held in high esteem by his peers and superiors. In fact, he was awaiting Congressional confirmation for promotion to Major General. Brig Gen Carter was known as a true visionary and a tough leader. He wasn't a micro-manger, but he didn't like surprises either. He expected his program managers to be successful.The Low Altitude Navigation/Common Navigation System (LAN/CNS) (A) Defense Systems Management College 401-035 Rev July 17, 2006 LAN Background The LAN/CNS was an airborne self-directed navigation system. The CNS subsystem located hostile objects in the aircraft's flight-path, and used the LAN system to automatically determine the best route to a specific point. The Air Force and Navy Tactical fighter aircraft would use the CNS subsystem, and Army helicopters would use the LAN/CNS system. Prior to January 1997, the Air Force and Navy managed an advanced navigation system program, and the Army managed the Suite of Integrated Infrared Navigation (SIIN) programs, which had requirements for Army aircraft warning and navigation. All of these programs were Acquisition Category III (ACAT III) programs. On January 18, 1997, the Under Secretary of Defense (USD) for Acquisition and Technology (A&T)) combined the ACAT III programs to form an ACAT I program with the Army as the lead Service and milestone decision authority. The funding and execution responsibilities for the tri-service program were defined in a memorandum of understanding (MOU). The program was funded by the Army and managed by the Army program manager with non-binding inputs from the Air Force and Navy APMs. The Air Force and Navy continued to manage and fund their unique acquisition requirements. On June 23, 1997, the Army Systems Acquisition Review Council (ASARC) recommended that the LAN/CNS program enter into the engineering and manufacturing development (EMD) acquisition phase. This was contingent upon the approval of the operational requirements document (ORD) and upon integrated product team (IPT) coordination of the test evaluation master plan (TEMP). On September 15, 1997, the Chairman of the LAN/CNS TEMP IPT deemed the ASARC TEMP requirement as met, and on September 25, 1997 the ORD was approved. The August 1997 MOU established the cooperative efforts necessary to develop and procure a CNS as an integral part of the LAN system to meet all Service requirements. The key objectives of the MOU were to develop a CNS configuration, resolve platform interface issues, establish communication lines, define program and funding responsibilities, delineate manpower requirements, and document roles and responsibilities. On September 27, 1997, the Government entered into an EMD contract with Lehigh Valley, Inc. for $63.7 million. The tri-service coordinated acquisition program baseline (APB) was approved March 29, 1998. At that time, Milestone III was scheduled for February 2002. The APB changed on June 13, 1999 moving Milestone III to March 2003. On February 2, 2001, the draft APB moved Milestone III to March 2005. This draft APB was pending a validated cost position. As of September 30, 2001 the current contract target price was $171.8 million. The tri-service program office (TSPO) was established with the MOU. The Army members and the Navy member of the TSPO were stationed in St. Louis, Missouri in the beginning. In May 1999, the tri-service program manager (TSPM) retired from government service and the new TSPM reported September 1999. By October 1999, the Army element of the TSPO had moved to Huntsville, Alabama. While a number of personnel made the move to Huntsville, only two key Army people remained with the program: the Army Assistant Program Manager (APM) and the Technical Management Decision Chief. The Army element of the TSPO was not fully staffedThe Low Altitude Navigation/Common Navigation System (LAN/CNS) (A) Defense Systems Management College 401-035 Rev July 17, 2006 until October 2000. The Navy APM also moved from St. Louis to Huntsville whereas the Air Force APM remained stationed at Wright-Patterson Air Force Base in Ohio. Initially, the LAN/CNS program used a four-level management structure for routine management processes. The executive steering group (ESG) consisted of the three service program executive officers, the president of Lehigh Valley, and a representative from the Office of USD(AT&L). They met quarterly for steering and control. The Management Working Group (MWG) consisted of O-6 level members assembled to determine guidance and direction. The Project Management Team (PMT) consisted of the three Service APMs, the Army TSPO, and the chief system engineer to provide the day-to-day leadership. Reporting to the PMT were six working groups: 1) B-Kit, 2) Integration, 3) Test, 4) Logistics, 5) Program Control, and 6) the Computer Resources Working Group. Matrix support, to include contract administration, was provided by the Army Communications Electronic Command (CECOM). By November, 2001, the management structure consisted of the ESG, MWG, PMT, and the six working groups. CNS Background The Air Force intended on outfitting the F-15, F-16, and A-10 with the CNS system, while the Navy's lead aircraft was the Marine's AV-8B followed by F/A-18E/F. The F-16 block 40 upgrade was the Air Force's intended lead aircraft followed by the A-10. The initial program schedule showed that the F-16 aircraft modifications would begin in FY 2000. Upon contract award, the prime contractor began work using the Army's Advanced Development (AD) sensor system as the basis for CNS. Incorporation of the fixed-wing tactical aircraft requirements caused significant changes in the design of the sensor that had previously successfully passed AD testing. The required changes were mainly due to differences in operational environment (vibration, temperature, altitude, and airspeed). of the environmental requirements fortactical installations was evidenced by PDR, but the TSPO did not take action until critical design review, The Army did not have the expertise to fully understand the USAF's and USN's fixed-wing tactical aircraft requirements, as a program did ' not have a systems engineer responsible for the entire program! The Army's lack of expertise contributed to the acceptance of fixed-wing tactical aircraft requirements without discussion. The LAN design was demonstrated during the AD phase of the program, but the CNS design was not. The AD warning system was designed for slow moving, low flying, rotary wing aircraft. The operational requirements for the new common navigation system were much different because the CNS was to be designed to meet the requirements for more than 20 platforms including fixed-wing tactical aircraft. It took about que , car ine the END contrast before the Fiesoperational requirements were finalized for CNS high-temperature operating conditions. "Two years later, another operational requirement associated with the 1-18 wow facedi Lehigh Valley expended considerable effort in redesigning the CNS sensor to incorporate fixed- wing tactical aircraft requirements; it believed the fixed-wing technical issues were resolved. For Army purposes, the LAN/CNS program was delayed because of the need to incorporate fixed-; wing requirements into CNS.The low Altitude Navi ationICommon Navi atzion S stem LAN CNS A Defense Systems Management College 401-035 Rev July 17, 2006 The EMD Contract Details The LANICNS contract was awarded in September 199-; based on a performance based statement of work. The contract included cost sharing and award fee provisions, with a total estimated cost of $63.? million. The government would pay the rst $5? million of incurred costs and the contractor would fund the next $6.? million. The contractor's fee was $630,700 and the award fee pool was $8.8 million. Earned Value Management Performance Due to government delays in approving the contract work breakdown structure, Lehigh Valley's performance baseline was not put in place until February l998, so there was no real contract performance visibility until May 1998. Aer the May cost performance report, the PM notied the ESG that the program would experience a cost growth of about $30 million. The program cost performance measurement statistics remained dismal and showed a cyclical trend. There was a period of signicant cost growth and schedule slip followed by a program rebaselining. The average cost variance (CV) was 3-4.6K per month and the average monthly schedule variance (SV) was $1 .?5K over the life of the EMD contract. These variances would have been multiple times higher without the three rebaselinings. The cost and schedule performance indices (CPI and SP1) also showed a cyclical trend. The SP! averaged.95 and the CPI averaged over the contract term. This meant that over the life of the contract, the contractor performed only 85 cents worth of work for every dollar the program ofce paid him. Again, the three rebaslines signicantly improved these indices. The earned value metrics had been much better in the recent months. The last report had showed a monthly CPI of.97 and a monthly SP1 of.91 for the LAN program. The same report showed a monthly CPI 0E9 and a monthly SP1 of.93 for the CNS efforts. (See exhibits l, 2, 3, and 4 for the graphical display of the earned value data.) Funding The initial MOU outlined the funding responsibilities for the Air Force, Navy, and Army. The Army was responsible for funding the entire program development while the Air Force was responsible for funding the Air Force's and Navy's unique xed aircraft requirements. The Navy was responsible for only Navy-Specic requirements. The Air Force and Navy funding rolest'brealrout was determined and based on the Navy funding other joint NavyfAjr Force programs. At program initiation, the Air Force expected the LAN program to cost about $350 million with the Air Force's CNS portion being about $50 million. The Lchigh 1Valley contract was expected to cost $63.? million. As the LAN program progressed, Army funding became tight. To keep the program viable and on schedule, each service APM provided all the research, development, and test and evaluation (RDT&E) funds they could sparefaccumulate. By November 2001, the estimated LAN program costs had grown to $560 million with a contract value of $2 1 5 million. The Air Force had provided $152 millitm in RDT&E funds and bad The Low Altitude Navigation/Common Navigation System (LAN/CNS) (A) Defense Systems Management College 401-035 Rev July 17, 2006 earmarked another $69.9 million over the Future Years Defense Plan (FYDP) in the FY 2000 President's Budget. Lt Col Hughes' estimated that had the MOU funding guidelines been strictly followed, the Air Force's funding requirement would have been $80.2 million. The FY 1999 and FY00 President's Budget submission for the LAN and CNS programs are below: FY01 President's Budget Submission Program Prior Budget to Total Element Project # Years FY99 FY00 FY01 FY02 FY03 Complete Program 0604270A D2VT 5,482 1,181 1,183 7,936 )604270F 3891 58,383 35,130 24,670 34,702 152,885 All PEs 58,383 35,130 30,152 35,883 1,183 160,821 FY02 President's Budget Submission Program Project Prior Total Element No. Years FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 Program 0604270A D2VT 146 1,173 834 2,153 0604270A DL20 0 47,424 24,680 14,869 16,526 10,174 10,190 123,863 0604270F 3891 72,233 23,515 34,479 49,538 20,060 199,825 All PEs 72,233 23,661 35,652 97,796 44,740 14,869 16,526 10,174 10,190 325,841 Lt Col Hughes' Dilemma The vast majority of the LAN/CNS program's APB performance to date was unsatisfactory. There had been three program rebaselines. Once again, the Army's and Lehigh Valley's PMs were assuring Hughes that the technical problems were resolved and that there would be no additional cost growth or schedule slips. Hughes could see an improving trend in the monthly SPI and CPI since the August 99 rebaselining; however, the past month's data showed a drop. She wondered, "Is this the beginning of the next downward trend? There always seem to be new technical issues popping-up. There is still a year until flight-testing and the first real rigorous performance assessment; the limited carly'ses is were barely cessful," Lt Col Hughes was not confident that the flight tests would be successful. Because of the past schedule slips, the window to modify the block 40 F-16 aircraft was missed/ Therefore, the A-10 became the Air Force's lead aircraft. Although the operational users had just re-validated the ORD requirements, they were losing confidence in the program. Since the joint mission needs statement and the ORD were initially developed, the mission profile of the A-10 had changed, and the importance of the CNS sensor had decreased. The Air Force had already sunk about $152 million in the program, and Lt Col Hughes had budgeted an additional $69.9 million RDT&B. Hughes didn't want to throw away her investment, but she also didn't want to waste future RDT&E dollars or the budgeted $214 million procurement dollars for a weapon system no longer needed. On the other hand, the LAN PM and contractor were confident that all the major technical hurdles were resolved and that the40] -035 Rev July 11, 2006 program, utilizing its current level of funding, would easily meet all the perfonnance requirements with no additional schedule delays. The General expected a trip report and Hughes' recommendation for CNS in the morning. in her mind, Lt Col Hughes felt she had only two options. She could recommend 0 Continuing along the current course, or - Terminating AF involvement. Hughes knew that this was an important decision for the program and that she had to make the right choice. The Low Altitude Navigation/Common Navigation System (LAN/CNS) (A) Defense Systems Management College 401-035 Rev July 17, 2006 THE LOW ALTITUDE NAVIGATION / COMMON NAVIGATION SYSTEM (LAN/CNS) (A) Case Exhibit 1 LAN/CNS Cumulative Cost and Schedule Variance 5 -5 Dollars - Millions -- -10 -15 -20 Nov-97 Jan-98 Mar-98 00-Is Mar-00 May-00 Sep-00 Sep-01 LO-MON Cum Schedule Variance $ - Cum Cost Variance $Nov-01 Sep-01 Jul-01 May-01 AAA Mar-01 Jan-01 - Monthly CPI Nov-00 Sep-00 Jul-00 May-00 Mar-00 Jan-00 Nov-99 LAN/CNS Monthly Cost and Schedule Performance Indices THE LOW ALTITUDE NAVIGATION / COMMON NAVIGATION SYSTEM (A) Case Exhibit 2 (LAN/CNS) Sep-99 Jul-99 May-99 Mar-99 Jan-99 Monthly SPI Nov-98 Sep-98 Jul-98 May-98 Mar-98 Jan-98 Nov-97 1.50 2.00 1.75 1.25 00'L 0.75 00 0 0.50 0.25Exhibit 3 Monthly Cost Performance Indices 1.20 1.10 1.00 0.90 0.80 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 - LAN/CNS - - CNSExhibit 4 Monthly Schedule Performance Indices 1.30 1.20 1.10 1.00 0.90 0.80 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 LAN/CNS - CNS