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Lockheed Propulsion Company, Thiokol Corporation, B-173677, June 24, 1974 - Part 3: Selling the Program


bob7947

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On September 12, 1962, President Kennedy told us 

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We choose to go to the Moon... we choose to go to the Moon . . . we choose to go to the Moon in this decade and do the other things not because they are easy but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that were willing to accept, one we are unwilling to postpone and therefore as we set sail we ask God's blessing on the most hazardous and dangerous and greatest adventure of which man has ever embarked.

On July 16, 1969, after a tumultuous decade, we, NASA, its contractors, and astronauts met President Kennedy's challenge, landed on the Moon and returned safely to Earth.  But, what were we ready to do after that?  While I was waiting for Captain Kirk to send us into warp drive much of the nation wanted a break.  There was a national letdown.  NASA's budget was put under pressure and they were asked to work more closely with the Department of Defense (DoD).  Time for a compromise, time for The Dump Truck to the Stars, time for The Space Shuttle.  Just something to keep manned space alive.

The Space Shuttle was a very complex Space Transportation System (STS).  It was composed of the orbiter (Space Glider), external tank in the middle and 2 solid rocket motors on each side of the system.  The external tank was comprised of 2 inner tanks that fed liquid propellant into the orbiter's 3 engines.  The liquid system could be throttled up and back down within limits as needed.  The solid rocket motors were built in segments with an engine and then joined together.  The 2 SRMs were made with propellant that was mixed and cured and provided the shuttle with about 70 percent of its thrust.  The solid propellant surrounded an inner core that was empty.  At the top was a much smaller solid motor that would be ignited and then burn the fuel from the outside in and using the inner core as an exhaust outlet.  Once the SRMs were fired up there was no stopping them until the fuel was spent. 

To give you an idea of the size and weights of the shuttle and SRMs, here are some approximate numbers when all propellant was loaded.

  • the entire system weighed about 2,200 tons and was 184 feet high,
  • the orbiter weighed about 120 tons,
  • the external tank weighed about 700 tons,
  • each SRM was about 154 feet tall and weighed about 600 tons.

The Requirement

In the 1980s, I wrote and taught a course called Introduction to Procurement for GAO auditors.  The course highlighted some gimmicks used in federal contracting.  One of those gimmicks was the Fixed-Price-Incentive-Contract which I wrote about and how it was abused years ago.  Another was concurrency -- "the fact of two or more events or circumstances happening or existing at the same time."  To show concurrency to my class, I would place an image of the system acquisition process on an overhead projector.  Yes, back then, we used overhead projectors to show images on a wall.  After I explained the process, I would walk to the image on the overhead projector and squish it together.  All that remained after the squishing was the beginning and end of the process.  I'd turn to the class and tell them:  That's concurrency.

Here's another gimmick but just a little different.  It is a quote that I used in the Fixed-Price-Incentive Contract article but it is perfect now.

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Once military requirements are defined, the next step is to assemble a small team whose job is to define a weapon system to meet these requirements, and "market" the system within the government, in order to get funding authorized for its development.  Such marketing takes place in a highly competitive environment, which is desirable because we want only the best ideas to survive and be funded.  It is quite clear, however, that this competitive environment for program approval does not encourage realistic estimates of cost and schedule.  So, all too often, when a program finally receives budget approval, it embodies not only overstated requirements but also understated costs.   (emphasis added)

The source for that quote was the President's Blue Ribbon Commission on Defense Procurement (Packard Commission) from 1986.  Although it refers to defense acquisition it can be applied to many acquisitions in the federal government. 

My purpose for the course was to give GAO auditors the desire to find problems with federal contracting and report those problems to Congress.  Whether I was acting as General Bullmoose trying to intimidate operational test and evaluation analysts to approve a system that couldn't work or whether I was trying to make a point I would pour my heart and soul into teaching every class.  Maybe, I could prevent a future disaster from happening.

When we reached the section on systems acquisition, this SRM procurement was my first example.  I call this example "Selling Your Program."   Let's get right to the requirement.  Fortunately, that is memorialized in GAO's protest.

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Each proposer was required to submit a proposal encompassing the entire SRM Project for three increments.  Cost proposals were requested for Increments 1 and 2 which covered all efforts required for the total design, development, test and evaluation (DDT&E) of the SRM, including six developmental flights and all efforts necessary to manufacture, test, and deliver new and refurbished SRM's for 54 flights (108 SRM's).  Increment 3 cost estimates were to comprise all efforts necessary to manufacture, test, and deliver new and refurbished SRM's for 385 flights (770) SRM's).

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The first 2 increments encompassed the years 1973 - 1981, and the third increment 1981 - 1988.

It's time to call up your calulator on your computer and do a little math because I have an important question to ask in Part 4.

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It’s now more true than ever, especially in todays Congressional environment, that any project moving forward has overstated benefits and understated costs.  PMs and senior management already have excuse stories at day I for overruns and less than promised results.

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It is quite clear, however, that this competitive environment for program approval does not encourage realistic estimates of cost and schedule.  So, all too often, when a program finally receives budget approval, it embodies not only overstated requirements but also understated costs.   

A long-standing Government customer of ours recently shared a draft SOW (we're in a sole-source environment) for a forthcoming large and lengthy production contract, and I could not help but think of that SOW as I read these sentences. Some things never change. 

Thank you for sharing this story, Bob! 

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