For decades, a mammoth military-industrial complex operated in splendid isolation from a much lower-tech civilian economy. Today's downsized military can no longer afford an entire industrial sector dedicated to making things according to rigid, detailed military specifications-and it can no longer afford to ignore civilian manufacturers who churn out ever-better computers at ever-lower prices. So, slowly and quietly, the military is opening up its weapons acquisition programs to exploit the efficiencies of the civilian high-tech market.
One of the Pentagon's favorite examples is the Global Positioning System, which allows troops on the march, on the sea, or on the wing to pinpoint their position within 4 meters. While it is military navigation satellites that make GPS possible, commercial industry caught on to the system's potential so much faster than the military that in the 1991 Gulf War, the Defense Department had to supplement its own GPS receivers with 10,000 hastily purchased civilian models.
After the war, the military launched an all-out drive to create its own Precision Lightweight GPS Receiver (PLGR). Whereas a traditional military competition evaluates rival companies' proposals on paper against reams of strictly defined specifications, the office in charge of the lightweight GPS tested working models against straightforward performance criteria-allowing the contractors to use the latest and cheapest civilian components.
The result? The military's original, 1980s-vintage receiver was "this $25,000, 20-pound iron box," said Tyler W. Trickey, a marketing manager at Rockwell Collins. Rockwell's lightweight GPS weighed 2.5 pounds and in 1993 cost $1,272. The 1998 version is less than $1,000.
GPS receivers are not weapons themselves, but they guide many of the military's smart bombs to their targets. One example is the AGM-86C Conventional Air-Launched Cruise Missile (CALCM). GPS guidance was added to the cruise missile in 1986, replacing its original and decidedly inferior system of tracking landmarks on the ground. According to the Air Force, cruise missiles employed in the recent Desert Fox strikes on Iraq came closer to their targets than expected 85 percent of the time.
In fact, says Congressional Research Service analyst Bert H. Cooper Jr., the entire cruise missile program is "a real bargain." The Air Force took some of its surplus nuclear cruise missiles, many of which were due to be destroyed under arms control agreements anyway, and simply replaced the warheads with ordinary explosives. As a result, million-dollar missiles got a new lease on life for well under $200,000 apiece.
The military has now begun converting its massive arsenal of free-falling "dumb bombs" into smart weapons. A conversion kit called JDAM (for Joint Direct Attack Munition) slaps steering fins and GPS guidance systems onto existing bombs. Military officials, contractors, and even normally skeptical outside experts agree that the dumb-bomb conversion is a dramatic success.
But the project did not start out smoothly: "I did it the old way, and decided it wasn't working," recalled former program manager Terry Little. "The first part of JDAM was pretty business-as-usual-pretty miserable."
Little was striving to hold the kit's price down to $40,000 apiece when he received congressional authorization to rip up the rule book and start over. Emulating the GPS procurement changes, Little abandoned rigid technical specifications in favor of performance targets and testing actual hardware from rival manufacturers. To date, Boeing Co. has delivered several thousand kits at about $18,000 apiece-less than half the original price.
Missile and bomb conversions pose relatively simple engineering problems, however, and skeptics argue that acquisition reforms could not tame the cost of an all-new weapon.
But Little has taken on precisely that challenge in his new role as program manager for the Joint Air-to-Surface Stand-Off Missile (JASSM), a long-range smart missile intended to let Air Force and Navy pilots "stand off" at a distance from their targets when firing.
Little has refined the techniques he had used in the bomb-kit program. One key improvement was an extensive assessment of contractors' "past performance" on earlier weapons. That did not make contractors happy, and one losing bidder protested the new technique, but the General Accounting Office upheld Little's decision.
The initial stand-off missile competition, Little said frankly, cost "about three times as much" as a traditional competition, which would have chosen a paper design without testing actual hardware or evaluating past performance. The pay-off, he said, was the confidence that, unlike so many earlier programs, this one seemed to ensure that once a winner was chosen, no unexpected manufacturing problems would drive up the weapon's price. The military was willing to pay as much as $700,000 for each stand-off missile, but had set an objective of $400,000. Lockheed Martin has now committed to building 1,106 missiles at $274,000 apiece.
Still, some experts doubt that this method for making a cheaper missile would work on a full-scale airplane program. Little disagreed: "It'll work for anything. The real key to making this happen is not so much in the technique, which is relatively simple; it's in the execution of it. We spend a lot of time in the department worrying about strategies and processes, and sometimes we lose sight of the fact that success really depends a lot more on execution."