In the mid-1960 successful development contracts were generally followed by production contracts with little or no likelihood that the contracts would have to face competition. To ensure this, contracts based on the initial competitions started to include, along with the development effort, requirements for substantial production quantities. Observing this trend, Robert H. Charles, ASD (Installations and Logistics), conceived the total package procurement (TPP) concept. The objectives of this concept were as follows:
- Limit or eliminate “buy-in” considerations
- Motivate contractors to design for economical production, and minimize any tendency for production redesign
- Encourage subcontracts with, and obtain components from, the most efficient supply sources
- Encourage contractor efficiency through competition, and thereby reduce costs.
According to Charles, TPP would allow the government, like any buyer in the commercial world, “…to make a choice between competing products on the basis, not of estimates, but of binding commitments concerning performance and price of operational equipment.”
The reasons for the failure of the TPP concept are many. The “heating-up” of the economy and the onset of inflationary pressure – both unrelated to a specific program – may have been partially responsible for the failure of the TPP concept. More importantly, the concept did not provide contractors with sufficient management flexibility to cope with all of the problems as they became known. Contractors had to make substantial production commitments to meet delivery schedules before completion of design and verification by testing. Costly redesign and rework followed. Continued trade-off analysis was stifled because of the rigidity of the contracts.
That was from David Acker’s excellent “Acquiring Defense Systems: A Quest for the Best.” Of the many problems with the TPP concept was the very notion that government, just because of the contracting arrangement, is actually buying major weapon systems just “like any buyer in the commercial world.” The government is paying upfront for development of a new system valued in the billions, and makes many of the choices regarding requirements and technical specifications itself. All this refinement in the pre-contract process led to the lack of flexibility in contract execution. As Charles testified later upon recognizing the disaster:
We wanted a transport which has only a few basic requirements, such as cargo area, cruise speed, range, payload, takeoff and landing distances and conditions, and navigational capabilities. But it took us over 1,500 pages to say this. In reply, the five competitors sent in… 240,000 pages.
You can find more on the TPP concept and how it contributed to scandal and Lockheed’s too-big-to-fail bailout in my podcast episode with William Hartung.
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