Why the defense industry competes for “required” systems where 80-90% of the cost is preset

Here is Robert J. Judson, Adjunct Prof at NPS, at a 1975 congressional hearing:

You will see, if you look next at all of the contributors to military design activities that we are involved with using commands, development commands headquarters staffs. Federal contract research centers, industry, and Government laboratories. All of these contributors are providing unvalidated design input… There has been nothing in the process is to now to challenge them… we have prematurely specified operational concepts, the technologies to be used, the preliminary design and performance requirements. Collectively, these elements represent 80 to 90 percent of ultimate program costs.

 

… Finally, when we do get to industry competition, we find they are competing for a so-called required system. Industry has very limited technical latitude to propose their own ideas: they must promise tile customer what he wants. It is here that we get the buy-ins. where we forget design continuity, but where we require the contractor to accept total systems performance responsibility.

This is one of the fundamental reasons that “competitive” processes in DoD are actually anything but. Here’s a reproduction of an image he presented:


This is what the alphabetical labels mean:

(A) Situation at beginning: needs and goals independent of system solution not established/approved. Pressures exist to commit prematurely to single system approach; mission responsibilities unclear.

(B) Unvalidated design inputs, old technology stretched, subsystems drive systems, systems seek needs.

(c) Unchallenged technical decisions; operational concept, technologies to be used, preliminary design, performance requirements; These preset 80-90 percent of the ultimate program cost.

(D) Compete to develop a “required” system, limited technical latitude, promises what customer wants buy-ins, no design continuity but accepts total system performance responsibility.

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