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Happy Friday!
Our top story continues what has become a series of articles and conversations about the use of fixed price contracts.
This week brings commentary from Andrew Hunter, chief of acquisition for the Air Force, who says the Air Force will continue to use the contracting mechanism despite the complaints from industry about losses.
- His justification refers to new acquisition strategies for capabilities like the Collaborative Combat Aircraft (CCA) that mirror Derek Tournear's vision for SDA -- short contracts, multiple vendors, and opportunities for vendors not selected in one phase to get back in on subsequent contracts.
The Air Force is moving out on contracts for the first increment of the Collaborative Combat Aircraft program, as Hunter mentioned.
- Awards are expected in the next few months, and the goal is to get two or three of the top five companies on contract to begin development.
In other news out of the Air Force Association warfare symposium, Frank Kendall and other leaders announced a new structure for the Air Force meant to make the service more responsive to global threats.
- It includes a new Integrated Capabilities Command that takes requirements planning away from individual Major Commands in the Air Force and Field Commands in the Space Force.
- The reorg also includes the creation of a Space Futures Command, similar to Army Futures Command, which evaluates, wargames, and designs future warfighting capabilities.
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Operational Air Force wings will be restructured as “units of action,” with each designated as a Deployable Combat Wing, an In-Place Combat Wing, or a Combat Generation Wing.
The Replicator Project has selected its first capabilities, which are maritime. And that's about as much information as will be revealed at this time.
- The next capability for Replicator: software that will connect the sensors and drones to work together.
Rebellion Defense has won a contract to design software for the Navy's Project Overmatch effort, with a focus on dashboards.
The President's Budget is projected to be a month late, again. Anticipated delivery date to Congress is March 11, three days after the current continuing resolution expires.
At the big Navy event this week, WEST24, leaders announced the latest plans for unmanned systems.
- Admiral Paparo shared that the Navy plans to establish a second unmanned surface drone squadron in May.
- CNO Lisa Franchetti voiced optimism that manned-unmanned fleets will be operational in the next decade. She also previewed a potential robotics rating to help with these efforts.
Also at WEST, NPS President Ann Rondeau moderated a panel on “Neurons and Networks: Educating and Innovating Our Way to Decision Advantage." She was joined by Lt. Gen. Matthew Glavy, Deputy Commandant for Information for the Marine Corps, and Rear Adm. Doug Small, commander of Naval Information Warfare Systems Command, as well as two graduate students.
ARP has again partnered with the American Society of Naval Engineers to produce a special issue of the Naval Engineers Journal showcasing some of the research presented at last year's symposium.
- As we gear up for this year's symposium--coming up in less than three months--take some time to review one of many conversations the symposium facilitated with researchers like you.
Make your plans now to join us in Monterey!
Program is posted online!
Register now to join us for this action-packed two-day event.
This Week's Top Story
Despite huge industry losses, Air Force ‘not getting rid of fixed-price contracts’: Hunter
Michael Marrow, Breaking Defense
Industry giants like Northrop Grumman and Boeing may have lost billions of dollars recently on their fixed-price deals with the Pentagon, but the Air Force is not moving away from the contracting mechanism even as corporate resistance to the model mounts, according to the service’s top weapons buyer.
Speaking during a discussion hosted by the Atlantic Council on Friday, Andrew Hunter expressed concern that companies have had to absorb huge losses on fixed-price programs as inflation and supply chain woes have pushed costs higher in recent years. However, the Air Force’s acquisition czar emphasized that the fixed-price model should remain in place especially when combined with a different acquisition approach.
“I do care,” Hunter said when asked about losses on programs like Boeing’s KC-46A Pegasus air refueling tanker whose charges have topped $7 billion. “Without industry’s capabilities, we’re never going to get to where we have to go. So we want our industry partners to be there for us in the long run, and we do not want to undermine their long run viability by the way in which we approach programs.”
In the past, Hunter explained, companies were broadly incentivized to bid “aggressively” on programs to win decades of business. As a result, contractors were at risk of bleeding cash especially on fixed-price deals if costs rose on the bids they offered.
But Hunter said a “next-gen approach” affords an opportunity to do things differently. Efforts like the Air Force’s Collaborative Combat Aircraft (CCA) drone wingmen are now adopting a model of “continuous competition,” which means that a vendor has another chance at an on-ramp down the road if it loses out in an earlier contest. Companies won’t need to bid “super aggressively” in response to this approach, he said, “because that next competition is just around the corner.”
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