Boeing Making Improvements In Managing GMD Program, Obering Says

By John Robinson

Boeing [BA], which last year was harshly penalized for its performance as the prime contractor on the ground based missile defense (GMD) system, has made great strides in the management of the multi- billion dollar program, according to the director of the Missile Defense Agency (MDA).

“I have been very pleased with the steps that they have taken,” Air Force Lt. Gen. Trey Obering said in a May 12 interview. “I think they got very aggressive and worked very hard with their contractor team. I have seen a tremendous turnaround in the approaches across the board. “

Late last year, Obering reduced Boeing’s potential award fee by $107 million, faulting the team for problems with systems engineering, mission assurance and quality management. The award fee reduction followed a low point in the program in which two consecutive flight tests (IFT-13C and IFT-14) aborted. Following the test failures, Obering stood up two expert review teams, the Independent Review Team and the Mission Readiness Task Force, to examine the failures and recommend improvements to the program.

Both groups found no fundamental technical flaw in the program but recommended more robust flight and ground test readiness.

The FY ’05 award fee for Boeing was broken down into two periods.

The first, and most damaging to Boeing financially, lasted from October 2004 until March 31, 2005, and included the two aborted flights. Boeing could have earned as much as $119 million during the period. The award fee review board recommended only $63 million, just under 53 percent of its potential award fee. Obering overruled the recommendation, trimming Boeing’s award fee down to $52.1 million, just under 44 percent.

Overall, Boeing earned about $300 million, or 73.6 percent, out of a possible $407 million over the two periods.

“We did significantly impact them last year…based on what we thought was a performance that was not up to speed,” Obering said.

Since the adverse award fee, the GMD team has registered some successes. Last December, it successfully conducted a launch of an operationally-configured Ground-Based Interceptor.

In late February, the Missile Defense Agency said that it had successfully completed a test involving an upgraded early warning radar tracking a target missile. Neither test carries the credibility of a high profile intercept test, but are signs of progress, officials said.

The true test will be later this year, when MDA conducts this first of two planned intercept flights. The outcome of those tests will be the key factor in the determination of the next award fee in October.

The failure to fly in the two aborted tests provided the GMD team an opportunity to “step up the quality of the management system,” Pat Shanahan, Boeing’s vice president and general manager for Missile Defense Systems in charge of the industry GMD team, told Defense Daily, sister publication of Space & Missle Defense Report, in a May 22 interview. Several leadership changes were made, including naming new program managers for the industry and government teams.

As for the problems in systems engineering, Shanahan acknowledged that the company was not “resolving issues quickly enough.” The team has addressed this concern by improving the coordination of testing.

“The discipline in terms of defining the test, coordinating the test and analyzing the results has dramatically improved,” he said.

“The difference in the process today is that it is much more rigorous.”

Among several notable improvements, which could bode well for the upcoming tests, Obering singled out a “wholesale turnaround” in the performance of the Raytheon [RTN] plant in Tucson, Ariz., that produces kill vehicles for the program.

Shanahan noted that Boeing became more intimately involved in this aspect of the program.

“Our role changed,” Shanahan said. “There was an environment of inclusion where Boeing people were actually involved in the daily management and it helped work problems both ways.” Boeing and the government sent additional staff to work alongside Raytheon at the Tucson plant.

Shanahan added that the new management structure helped solve problems between the contractor and the program office and other issues on the factory floor.

“That was a big barrier we took down,” he said. The GMD team was also able to correct a supply problem to the Tucson plant. Overall, the cumulative result was the team “really broke loose the delivery of all the kill vehicles,” Shanahan said.

Obering noted that the Tucson facility has stepped up a major level in their quality control and productivity.

“So, I’m pretty encouraged by that,” he said. “If that pans out, then they’ll be rewarded–that’s what award fees are for. If it doesn’t, we’ll continue to penalize them.”