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2004 Speeches
Jim Albaugh

Jim Albaugh

Boeing Integrated Defense Systems

The Boeing Company

"Systems Integration and Defense Transformation"

American Enterprise Institute

Washington, D.C.

January 23, 2004

I'm in an enviable position in that I have an opportunity to address some of the comments that were made earlier. There are many subjects that we agree on and a few that we don't.

One of the things that I won't agree to, though, Eugene [Eugene Gholz, University of Kentucky], is the fact that the weak armed services go the LSI [Lead Systems Integrator] route while the others don't. And if asked the question later, I will not respond. Let me just go on the record to say that.

First of all, let me say that the concept of LSI is relatively new. It's a very important and viable operating model; one that has real advantages in bringing the necessary capabilities to the armed services.

The question that has been raised today is, why do we need to have the LSI concept? I think you need to start with the customer, and certainly our customer is the Department of Defense, and as the Secretary of Defense said, "The first few years of the 21st century have taught us that the future is full of open and hidden dangers," and certainly Admiral Cebrowski talked about that.

We don't know what the true face of our adversary will be or their exact method of engagement. One thing we do know, though, is that the conflicts of the 21st century will be very different from the ones of the 20th century.

The future demands that we move toward a capabilities-based approach and a joint force that will be fully integrated, expeditionary in nature, networked, decentralized, adaptable, and able to achieve decision superiority and be very lethal. That summarizes many of the things that the admiral said earlier this morning.

In short, we no longer live in a predictable environment, where specific threats drive detailed requirements. We cannot afford extended development and acquisition programs that are "obsoleted" by the speed of technology change or no longer suited to the new face of the enemy.

We need capabilities against uncertain and changing threats, capabilities that require more than what a single platform or a single system can provide, and we need them quicker than we've had in the past and in a fashion that enables constant enhancement without starting over.

Fundamental capabilities are needed, such as; integrated command and control; mobility; precision engagement; and global situational awareness -- all things related to System-of-Systems.

In the lexicon of today, we need network-centric operations. The power of the network is truly awesome, and there many examples of that. By sharing data, by sharing knowledge, by sharing capabilities, you get a tremendous force multiplier across both old and new systems.

I like to think of the Ground-based Mid-course Defense program as really the first true System-of-Systems program. There, the contractor took disparate systems, none of which were designed to do the missile defense mission. And, by tying them together with a communications system and by writing command and control software, they were able to provide a capability, a networked system that could intercept a re-entry vehicle in space at extremely high speeds. Again, the power of the network; the power of sharing information; the power of sharing capabilities.

Of note, the contractor that did that program built none of the hardware. So what did they do? They were the systems integrator. They provided the architecture design, the development and enforcement. They managed multiple complex interface requirements. They incorporated multiple systems and/or platforms into a single macro system. All of this was done in close coordination with the customer and, in many cases, the customer was on the integrated product development teams.

Now, given that statement of work, what is the role of the lead system integrator? It means assigning an industry lead total systems integration and systems optimization responsibility. It also means assigning that contractor with the responsibility for resource allocation; subcontractor allocation, implementation and coordination; and program management; and for bringing the "best of industry" contractors from around the world, for bringing government labs and educational institutions to the program.

The list that I just ticked off is pretty consistent with what Eugene said earlier. But where I would differ with Eugene is that it is not about products. It's about capabilities, and our job is to make sure that we bring the best combination of products, of sensors, of software to provide the optimum solution for our customer.

My view is that too many companies have gotten into trouble with the approach of perpetuating the products that have made them successful in the past. In the future, contractors will only survive if they truly are capabilities driven.

Fundamentally, the LSI model is a style of operation. It is not a contract type. It focuses on optimization at the systems level versus the platform level. It does not favor any particular technology or platform. It enables trades of risk, cost and capability, and it opens competition at multiple work levels, giving small and large companies from around the world equal opportunity to compete. In doing so, it encourages, indeed demands, "best of industry" solutions and innovation.

Partitioning work via the LSI approach also allows graceful upgrade without revamping the entire program. It also drives perpetual innovation through spiral development. In the past, we have upgraded hardware. In the future, we can upgrade systems by improving the network, by improving software, and by changes in the mix of platforms.

Let me use again the Ground-based Mid-course Defense program as an example. By adding additional sensors to that program, we were able to improve our ability to do an intercept; we were able to improve the time lines, and we were able to improve the amount of land area protected.

Now, on FCS [Future Combat Systems], which was referred to by Vago [Vago Muradian, Defense News], the Boeing Company did not bid any hardware at all. The proposal that we turned in was one where we bid a network, and we talked about how we would do trades in order to bring the best of industry. Now, my view is that, in the future, companies that have a strategy of just bringing the best of their company only, bringing the best of Boeing, the best of Lockheed, the best of Raytheon, or the best of Northrop Grumman will lose. The companies that will win will be those that bring the best of industry, and that was our strategy.

On FCS, Boeing, along with the Army, looked at multiple systems, components and decision aids, along with their maturity levels. We did that after we were selected. And based on that assessment, we jointly determined the optimal program to provide the most effective operational capabilities to our customer.

As technology changes, the mix will change. Admiral Cebrowski talked about the individual soldier, and really that's what it's all about. When I talk about what can happen with transformation, what will happen in a future combat system, what it really means is, in the future, no soldier will ever be alone. In the past, the soldiers have had the capability that they brought. They've had the information they brought with them or the information that they might get over a radio.

In the future, those soldiers will have the capabilities of a platoon across the river. They'll have the capability of an F/A-18 flying in from a carrier. They'll have the knowledge that's being gathered by overhead intelligence, satellites. They'll have the knowledge being gathered by a UAV. It's a huge force multiplier.

Some argued that the LSI approach limits options and places an unfair amount of authority in the LSI contractor versus the U.S. government, and certainly the comment on objectivity has been raised and was raised on the panel, and I'm certain that some in the audience probably have that same concern as well. But, in reality, by holding the LSI responsible for performance at the systems capability level, the construct drives objectivity and fairness.

Now, let me just touch on the Future Combat System program again. We were charged by the Army to let 26 different subcontracts, and we took 800 people, and we put them inside a firewall, and they reviewed some 600 proposals, and they let 26 contracts. There were no protests, no protests to the GAO, no protests to the Army, and there were no protests to the Hill. We received one letter of concern which was withdrawn the next day. I think it's a very good example of how an objective review of all of the different proposals will provide the customer with the optimum mix.

Now, of note, and Vago mentioned it, within the Boeing Company, we had quite a number of proposals that we submitted to the lead systems integrator. Only one was selected, and the one that was selected had to undergo a very rigorous review by the Army. And, at the end of the day, it was a great result. It was a great result for the FCS program, a great result for the Army, and a great result for industry.

On the matter of why industry is in this role and not the government, let me just offer a couple of considerations.

First, the acquisition process and culture make it very difficult for government to act as an effective systems integrator;

Second, systems integration is not a core mission of the government, and it is of industry. Industry brings the necessary engineering resources to do the systems integration on big, large, complex, large-scale systems integration programs.

In the past, we defined what we needed based on requirements that were based on threats. Again, in the future, it's going to be based on capabilities. In the past, the government took systems that were procured in silos and then, after the fact, they tried to integrate these at a systems level. It didn't work.

What we're trying to do now is again define the capabilities and then define the best mix of products or programs. Now, this isn't to say that the contractors don't have limitations-- we do. But with the strong partnership between the LSI and its customer, with clear expectations and flexibility based on trust and a sense of shared destiny, the LSI approach is powerful and effective.

And, just to make the distinction between a TSPR, a Total Systems Prime Responsible contractor, and an LSI, they're very different. On some of these TSPR contracts, the government walked away from their responsibilities, their responsibilities for oversight and the responsibilities for controlling the baseline. And when they came back and looked at these programs, after a year or two, they found out that they weren't getting the product that they needed.

On the LSI approach, the government is embedded with the contractor. No decisions are made without the government and no models are used to make a determination without those models being deemed appropriate by the customer.

In summary, transformation has come to mean many things, but most of all, it's a new way of thinking about how our armed forces fight. It is also a mind-set open to new trades and new ways of doing business.

Secretary of Defense Rumsfeld has been clear in his view that our new world reality requires that we change. The LSI operating approach is a change driven by necessity and one that has immense positive and constructive potential.

Thank you very much, and I really do look forward to the questions now.