Air Force Space & Missile Systems Center (SMC)

1. Air ForceSpace & Missile Systems Center (SMC) NCMA 45th Annual Aerospace & Defense Contract Management Conference Brig Gen Ellen M. Pawlikowski Vice Commander 27 July 2007

2. Space & Missile Systems Center Mission Overview Develop, acquire, field and sustain the world’s best space and missile capabilities for the joint warfighter and the nation Space Force Enhancement Space Superiority Milstar/AEHF/GBS DSCS (Comm) GPS (Navigation) DSP/SBIRS (Surv) DMSP (Weather) NUDET (Nuclear Detection) Space Situation Awareness Defensive Counter Space Offensive Counter Space Space Support Force Application Launch Systems Spacelift Range Sat Control & Network ICBMs Prompt Global Strike Delivering Operationally Responsive Space Warfighting Capabilities to Preserve Peace and Win Conflicts

3. AF Space Organization U.S. Air Force AF Space Command DR. RON SEGA USecAF / DoD EA Space GEN KEVIN CHILTON COMMANDER Acquisition Execution Organize, Train, Equip SMC Space Development, Acquisition, & Sustainment 14th AF Space Forces And Operations 20th AF ICBM Forces SIDC Space Warfare Development

4. FSAPlan AoAPlan FSA SMC’s Role in Space Systems Acquisition“Cradle-to-Grave” Life-Cycle Management Planning & Roadmaps Reqm’ts CONOPs IPP Resources AFSPC Space Development & Test Systems Wings Developmental Planning Ops Wings 14AF, 20AF SMC “Full-Service” MAJCOM–From Needs to Concepts to Solutions to Combat Effects

5. SMC Top Objectives/Priorities • Reestablish structured, disciplined acquisition processes • Systems engineering, Specs/Standards, Program Mgmt, Mission Assurance, Cost Estimating • Rebuild the Space Acquisition Workforce • Military/civilian/FFRDC/SETA, recruiting/training/mentoring, technical program management, leadership development • Strengthen partnerships • Between SMC Wings/Groups/functionals, across DoD space, and with industry • Implement new business model • 4-tiered development process – S&T, technology, system dev/demo, system production • Horizontally integrate capabilities across the space enterprise • Support DOD Executive Agent for Space, integrated space architectures, integrated air-land-maritime-cyber capabilities Institutional Focus on Providing Responsive Space Capabilities for the Joint Warfighter

6. “Back to Basics” Initiatives • Developed SMC Incentive Guide • Created SMC Source Selection Guide • Enhanced Space Enterprise cost estimating capability • Applying foundational principles--higher confidence in execution • Returned critical specs & standards on AF space programs • Adapted successful launch mission assurance to satellite programs • Implementing SE&I Functions in Major Systems Wings • Established System Executability Assessment Team • Established SMC Program Assessment Group (SPAG) • Established AFSO-21 focus areas • Revitalized Development Planning within SMC • Established Industry Benchmarking Forum

7. Case for Incentive Reform • GAO Report, Defense Acquisitions, Dec 2005 • Recommends reform of current incentive practices • Recommends fee tied to acquisition outcomes • OUSD (AT&L)/SAF Policy Letters, Mar-Apr 2006 • Link fees to performance outcomes • Rollover to be used only on an exception basis • PEO/SP (Lt Gen Hamel) Policy, 15 Aug 2006 • Implements GAO recommendations, and USD(AT&L) and SAF policies • SMC migrating from “default” use of CPAF to CPIF/AF • OUSD (Dir, Defense Procurement & Acquisition Policy), 24 Apr 2007 • Defines DoD’s policy for proper use of award fee contracts • SAF/AQ Letter, AF Policy for Award Fee Contracting, 15 Jun 2007 • Endorses OUSD (AT&L) DoD-wide data collection of award/incentive fees paid to contractors & method to evaluate such data regularly • Focus on “Award Fee Realism”

8. Incentive Philosophy • Overarching Philosophy • USecAF’s Stages of Development, Block/Incremental acquisition approach • Contract structure and incentives linked to maturity of requirements • Incentives linked to mission success events and other objective results • Requires contractor stake in the outcome • CPAF contracts are no longer the default • Reasoned approach to contract types & incentives selection

9. PEO/SP Incentive Policy • Consider full range of incentive contract types and features • Emphasis on hybrid incentive types that address cost, schedule, and performance • Discourage overly complex incentive arrangements • Collaboration with industry encouraged • SMC Contracting Directorate chartered to develop new SMC Incentive Guide

10. Industry Inputs on the Incentive Guide • Wants base fee and provisional payments of award and Incentive fees • Disagrees with no fee for mission failure (high risk business) • Want proportionate fee for partial successes • Rollover seen as effective tool • Takes exception to withhold of cost • Wants higher award fee pool in light of objective criteria • Wants negative incentives offset with positive or higher pools

11. Incentivizing Mission Success • Incentives linked to mission success outcomes • CPAF contracts, subjective award fee criteria, no longer the default approach • CPIF contracts, with potential award fee, highly encouraged • Performance, schedule, and cost incentives, and their order of importance to the program to be discussed in acquisition strategies • Award fee plans • Link fees to mission success, achievements, deliverables, and objective results • Emphasis on objective/quantitative award fee criteria

12. Incentivizing Mission Success • Incentives provides for Contractor stake in the outcome – “Fee at risk” • Overarching considerations for incentives • NSS directive, NSS-03-01 on acquisition phase • USAF’s four-stage approach on the maturity of the technology • Product line (spacecraft, launch vehicle, ground systems, and user equipment) • Consider uniqueness of each program & full range of incentives • Cost at and fund to 80% confidence • Emphasize Systems Engineering and Integration • Common Core of Specs and Standards • Apportion Risk Among the Stages • Highest risk in S&T • Base production on mature tech for lowest risk

13. Key Incentive Concepts • Encourages a reasoned approach to contract type and incentives • Incentives based upon maturity of requirements and technology (USecAF’s Stages of Acquisition) • Performance & Mission Success of primary importance • Heavier allocation of positive or negative fees to mission outcomes • “Skin in the Game” … Contractor Accountability • Contractor commits to successful outcome by establishing that no fees are to be earned for mission failures • Fee awarded must be anchored by mission performance • Award Fee still an effective tool with proper structuring • Link fee to mission success, deliverables, objective criteria • Establish both subjective and objective/quantitative criteria

14. Way Forward • Growing dependence on military space capabilities • Preparing for the future fight – SMC is simultaneously modernizing every mission area • Space is no longer a sanctuary – future space assets must operate in a hostile environment • AF space acquisition is “Turning the Corner” – dedicated to delivering a modernized space force to the nation’s warfighters • Incentives must be tied to mission success – “We don’t get a second chance in the space business!” Deepen Joint Commitment and Partnership Between SMC and Industry

15. SMC… Providing the Edge to our Nation’s Warfighters and Allies from the High Frontier