On August 17, 2009 DefenseNews.com published an article (authored by William Matthews) that had such an eye-catching lead-in, we had to see for ourselves whether or not it was for real.  The article started as follows:

In April, U.S. Defense Secretary Robert Gates terminated TSAT, an ambitious communications satellite program that was over budget, behind schedule and plagued by technical problems.  In its place, he substituted AEHF - the Advanced Extremely High Frequency satellite - a less ambitious communications satellite program that also is over budget, behind schedule and plagued by technical problems. … TSAT, the Transformational Satellite communications system, cost U.S. taxpayers $2.5 billion before Gates pulled its plug. AEHF was expected to cost $5.6 billion in 2001 when the program was getting under way, but today the price tag is more than $10 billion for fewer satellites, according to the Government Accountability Office (GAO).  TSAT was at least four years behind schedule. Launch of the first satellite had been pushed back to 2019.  The first AEHF was supposed to be launched in 2008, then 2009, and now Lockheed is aiming for late 2010.

Now that’s how to write a story!  So what’s the story behind the story?  Let’s look.

The Advanced Extremely High Frequency (AEHF) satellite is designed to replace the 20 year-old MILSTAR military satellite communication system by providing “near-worldwide, secure, survivable satellite communications to support strategic and tactical forces of the United States and its international partners during all levels of conflict,” according to globalsecurity.org.  The website notes that the AEHF system will provide 12 times the data throughput of the MILSTAR system, so that “for every one link of the old Milstar, the Air Force now has 12 operating at four times the speed.”

After the loss of MILSTAR Flight 3 in April, 1999, the Department of Defense (DOD) created the AEHF program consisting of a consortium of Lockheed Martin, Hughes Aircraft Co., and TRW (now Northrop Grumman).  GlobalSecurity.org reports that –

On 16 November 2001 the U.S. Air Force awarded a $2.698 billion System Development and Demonstration [SDD] contract for the Advanced Extremely High Frequency satellite program to a team comprised of Lockheed Martin Corp., Lockheed Martin Missiles and Space, Sunnyvale, Calif. and TRW Inc., Space and Electronics, Redondo Beach, Calif. The contractor team is led by Lockheed Martin as the prime integrator and provider of the Spacecraft Bus and ground command and control segments with TRW providing the satellite payload. The contract will culminate in the delivery of two AEHF satellites and the ground command and control system. The first of two satellites under this contract was scheduled for launch in 2006.

Since early system definition studies in 1999, the AEHF program has gone through a series of design changes.  For example, GlobalSecurity.org reports that on May 18, 2004 Lockheed Martin Corp., Space Systems Co. and Northrop Grumman Space Technology, were (together) awarded a $149 million contract modification which incorporated within-scope changes resulting from a revision to the AEHF KI-54 Cryptographic Interface Control Document (ICD). The KI-54 ICD modification required to AEHF team to redesign the Host Accessory Logic Application Specific Integrated Circuit (HAL ASIC) in the AEHF communication payload. This effort also led to a four months program extension.  In December 2004, the U.S. Air Force reported that the AEHF program had experienced unavoidable delays and cost growth because of delayed delivery of signal-encryption products, which had resulted in a delay of command and control terminals. As a result of these schedule impacts, the AEHF program was delayed by 12 months.  Additional reports noted that the program incurred cost growth from unplanned payload component testing and replacement of existing critical electronic components that were disqualified for space flight. The cost and schedule impacts were expected to increase the overall cost of the AEHF program by roughly 20 percent.

The number of planned AEHF satellites has fluctuated over time as well.  The original SDD contract called for a “pathfinder” satellite followed by four, higher-capability, satellites, for a total constellation of five.  In reality, the number of AEHF satellites would depend on the progress of another satellite program, the “transformational” communication satellite, or TSAT, program.  In 2002 the Air Force decided not to acquire two AEHF satellites.  In October 2004 the Air Force decided not to acquire the fourth AEHF satellite in order to proceed more quickly with the TSAT program.  The TSAT program was terminated by Secretary of Defense Gates in October 2008, after incurring approximately $2.5 billion in costs.  (DefenseNews.com reported that the TSAT program was “at least four years behind schedule” and that “launch of the first satellite had been pushed back to 2019” at the time of program termination.)  In 2005 a third satellite was added back to the program, at a reported cost of $491 million.  After the TSAT program termination a fourth AEHF satellite was added back to the program resulting in additional cost and schedule impacts that triggered a “Nunn-McCurdy” breach and mandatory Pentagon program review.  According to a September 2008 article in Aviation Week & Space Technology, “The fourth satellite accounts for four-fifths of the FY '09 cost increase in the program. The spacecraft's high price is due to the expense associated with restarting Lockheed Martin's production line.”

Impacts to the program’s cost and schedule, as well as the impacts from the fluctuating number of satellites, compelled the contractors to initiate a program “rebaseline” or “replan” that resulted, in April 2006, in an $454.9 million contract modification to compensate the contractors for the changes as well as the delay of the first AEHF launch date from 2006 to April 2008.  Current reports indicate a planned launch date of 2010 with a total program cost of $9.2 billion.

So to sum up, the DefenseNews.com article had its facts correct, but seems to have taken them out of context.  Like many high-tech developmental programs, the AEHF program has been the victim of Pentagon budget wars.  While the program undoubtedly suffered from many of the pains associated with trying put a highly secure, classified payload into space, it also suffered from a lack of firm strategic leadership from the Pentagon.  The fluctuations in the number of satellites and budgetary uncertainty clearly impacted the contractors at least as much (if not more) than the technical challenges.  While it might serve as a good example of out-of-control defense programs, it might also serve as a good example of the impacts of failed leadership.  It seems that the DefenseNews.com article missed the mark, choosing to take cheap shots rather than dig for the truth.

In its August 13, 3009 edition of Flight Daily News, Flight International magazine asks whether Lockheed Martin can actually ramp-up production of its F-35 “Lightning II” Joint Strike Fighter (JSF) from its current pace of one aircraft per month to an unprecedented pace of 20 aircraft per month, assembling three production variants on the same line while managing a global supply chain. Unsurprisingly, Lockheed Martin says it can—by learning from Airbus and Toyota.

While the program is currently struggling to hold schedule in its system design/development (SDD) prototyping phase, Flight International notes that “current acquisition plans call for dramatically raising output until a new fighter is delivered every working day, excluding holidays and weekends, or about 240 jets in a year.” The US Government Accountability Office (GAO) has reported that “problems and delays are largely the residual effects from the late release of engineering drawings, design changes, delays in establishing a supplier base, and parts shortages, which continue to cause delays and force inefficient production line work-arounds where unfinished work is completed out o f station.”

Moreover, Flight International reports that the JSF’s manufacturing system is still “struggling to overcome the design changes imposed by the [Short Take-off/Vertical Landing (STOVL)] weight attack team (SWAT)” which designed-out nearly 5,000 pounds of weight from the STOVL version—which also affected the design of the other two JSF variants (Conventional Take-off/Landing, or CTOL, and Carrier Variant (CV). The JSF program variants are discussed here. As part of its redesign efforts, the JSF team executed a “major redesign” on the wing’s production method, which saved weight by reducing tolerances for the machined components. One problem: the program’s supply chain “lacked the tools required to meet the new specifications,” which caused schedule slippage. The article quotes the JSF spokesperson as saying – “It’s really about the parts … not arriving on time. It’s not the producibility. The parts did not arrive on time so you have out of station work. … So you’re not doing it in the process you want and it takes longer.” In sum, the JSF program team saved itself significant weight, but only at the cost of disrupting its supply chain and, ultimately, its production line.

Airbus knows about production delays stemming from design issues. Its A380 aircraft deliveries were delayed by nearly two years, because of configuration management and change control problems (different facilities were using different versions of CATIA software). Another issue facing Airbus is management of its far-flung global supply chain. In 2006, the company announced that it was initiating a “full review of the supply chain for its A380 superjumbo following production difficulties which have led to a delay in deliveries ….”

Similarly, Boeing’s 787 supply chain issues have been called a “nightmare”  and have resulted in delays to aircraft deliveries. An aerospace-technology.c om article points out that Boeing’s supply chain leads individual suppliers to maximize their own self interest at the expense of the program’s objectives. In the 787 supply chain, “a complicated array of companies share the risk and the profits of the new airliner. That means financial burdens will inevitably shift up and down the line as each company protects its own interest.” Moreover, the article quotes an observer as saying, “If Boeing mismanaged anything, it is that they have tried to introduce an innovation in their supply systems at the same time they have innovated in product and assembly. Boeing should have held all systems and suppliers close to their assembly lines to facilitate cooperation between suppliers and Boeing.” In addition, “Boeing probably underestimated the size of the risks involved,” according to another quote in the aerospace-technology.com article.

So if Airbus and Boeing both stumbled, in terms of program management, supply chain management, and change control, what makes the JSF team think it can do any better. According to the Flight International article, three little words: Toyota Production System. The JSF program team “has sought out lessons from the Toyota Production System,” which is generally considered the leader of lean manufacturing processes and principles. In fact, the JSF team intention is to create a “Fighter Production System” that will be the benchmark for other defense production lines.

The JSF team will need it. They will need to deliver one aircraft every working day; the previous modern-day record was held by the F-16 jet, in which production peaked at 15 per month. Moreover, the plan calls for the unprecedented volume to come from a single production line handling three different variants. Though Lean Principles envision (and even encourage) production line diversity, it will be a first for a defense program—and it will make supply chain and logistics management even more crucial to program success. Is the JSF team up to the challenge?

They are working on it. The Flight International article notes that the JSF program “wants to create a single flowpath inside the final assembly centre for all sections of the F-35.” Certainly that would seem to be a step in the right direction, but the Toyota Production System Lean Principles would seem to dictate that the program work to create a single flow throughout its supply chain, ensuring that parts arrive in time but not so early as to build wasteful inventory buffers between production steps. As Boeing learned to its detriment, focusing on internal management and internal factory efficiencies, while ignoring bottle-necks and inefficiencies in the supply chain, is a fundamental program management error.

Moreover, the JSF team also needs to focus on deploying risk indicators and controls as deeply into its supply chain as possible. They will need real-time status (or as close to is as possible) on parts and components and sub-assemblies in a disparate number of far-flung factories and shop floors, and they won’t get it at a weekly Ft. Worth staff meeting. In my view, they should take a hard look at the Production Control Center Boeing (finally) developed for its 787 program, which I believe is a revolutionary and much needed approach for managing a dispersed supply chain.

To sum up, the JSF program team has set for itself an incredibly ambitious goal of producing a finished aircraft every single working day. It’s set the goal despite early design and supply chain problems, and despite almost universal history among other aircraft programs that says it can’t be done. But at least the team has identified some worthy companies to benchmark against and learn lessons from. The question remains, however, whether the program team can forget the defense industry’s historical program management practices – that don’t work well in the 21^st century – and deploy a truly innovative approach that breaks new ground. If they can, then they may have a chance.

An F-35 Lightning II aircraft flies over Eglin Air Force Base, Fla., April 23, 2009. The aircraft is the first of its type to visit the base, which will be the future home of the Joint Strike Fighter training facility. (DoD photo by Senior Airman Julianne Showalter, U.S. Air Force/Released)

A Lockheed Martin Corporation vintage P-38F Lightning, World War II fighter aircraft, left, and an F-35 Lightning II aircraft are displayed at the Lockheed Martin Corporation facility in Fort Worth, Texas, Feb. 29, 2008, The aircraft are on display during a special ceremony in recognition of the past and present success of the company’s production of fighter aircraft. (U.S. Navy photo by Mass Communication Specialist 2nd Class D. Keith Simmons/Released)