EVENTS

Date:	Friday, January 23, 2004
Time:	12:00 PM -- 2:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

January 2004
Systems Integration and Defense Transformation

The concept of "systems integration" lies at the center of the Bush administration's pledge to transform the American military and modernize the Pentagon's antiquated procurement policy. Championed in the development of such next generation technologies as missile defense and the Army's Future Combat System, systems integration promises to shift greater responsibility to the private sector in linking the complex and disparate pieces of the American military machine into a unified whole. Even as the concept is put into practice, however, it remains the source of significant uncertainty and controversy.

What exactly is systems integration? What are its consequences for defense transformation and defense procurement? Will systems integration accelerate the pace of innovation and advancement, as its proponents claim? Or will it impede oversight and accountability, while stifling competition, as its detractors fear?

In the second AEI Supply-Side Briefing on the future of the defense industry, these and other questions were examined by a panel of experts on January 23. Vice Admiral Arthur Cebrowski, USN (retired), director of the Pentagon Office of Force Transformation, offered opening remarks, and Boeing Integrated Defense Systems CEO Jim Albaugh delivered the keynote address.

Admiral Arthur Cebrowski, USN (Retired)
Office of Force Transformation, U.S. Department of Defense

Defense transformation is happening much faster than the Pentagon leadership expected that it would, and it is happening from the bottom up. Interoperability and jointness are being pushed down to the tactical level of war, which was previously the jealously guarded domain of the services.

The transformation project recognizes that national security is no longer strictly a defense matter. In addition, the U.S. military is increasingly tasked with being not just punitive, but preventative. This requires wholesale changes in intelligence, in order to achieve unambiguous warnings about threats. It is in the interest of our nation to keep the larger global system up and running, which means that "war" is now defined along a spectrum of competition. To use Tom Friedman's term, the U.S. military must now face a battlefield in which America's superempowered individuals engage superempowered enemy individuals.

This enemy is under pressure, making it retreat to more complex terrain. The value of social-cultural intelligence has consequently come to exceed that of military intelligence, which will require a shift in our capabilities and priorities as well.

Another new trend is the increased internationalization and "civilian-ization" of defense. As armies get smaller, the number of people involved in a competition goes up, and most of them are civilians.

Because of the operational and military vulnerabilities of forward garrisons, there will be increasing emphasis on maneuver from the sea and for long ranges-what are called strategic distances.

There will also be changes in logistics, using the transparency generated from the information technologies to create predictability and to wring efficiencies from that. The trouble is on the tactical level where war actually takes place. There, the same transparency afforded by the information technologies is used to create adaptability and unpredictability, and the ultimate measure on the battlefield is effectiveness, not efficiency. In other words, the front end of logistics is wholly incompatible with the front end of warfare.

Transformation will also provoke a broadened approach to space. Cost per kilogram on orbit is a problem. Capability per kilogram, however, is soaring because of advances in information technologies, which make it possible to reach for other approaches and other business models. For instance, microsatellites make it possible to reach for alternative forms of lift. Broadly speaking, the world is moving into the age of the small, the fast, and the many.

There are barriers to transformation, which can be broken into four parts. There are barriers related to the basic processes within the Department of Defense: acquisition requirements, program budgeting, and personnel management. There are also physical barriers, as the speed of information remains shackled to certain physical realities. There are also financial barriers, part of which has to do with the willingness to devalue things. There's never enough money, so where to go for cuts? As a general rule, it is better to go to the bottom, not the top.

Lastly, there are cultural barriers-related to the attitudes, values, and beliefs of the military. Culture is ultimately a function of leadership, which is changing. Last year, in the service road maps, the services highly prized independence. This year, they highly prize interdependence. Last year, they talked about achieving jointness on the operational level of war. This year, they talk about achieving jointness at the tactical level of war. Last year, they said that transformation was for a small, cutting-edge of the force. This year, they say it's for the entire force. These are just a few of the profound changes that are being driven by the defense transformation project.

Eugene Gholz
University of Kentucky

The idea of systems integration is that a number of heterogeneous components, by working together, are capable of achieving more. One example of this is combined arms. Mixing tanks, artillery, and infantry creates a more combat effective force than the sum of the parts might otherwise suggest. The potential for these efficiencies in old-style military operations was limited, however, because all of the parts were clustered together geographically. Today, however, better communications and information technologies permit forces to be spread out and thus, less vulnerable.

There is a tendency to confuse systems integration, in its totality, with a particular component of systems integration-interoperability. If a variety of heterogeneous components in an overall system are expected to work together, it is necessary for them to be able to talk to each other.

Another component of systems integration is that, the more heterogeneous a system becomes, the more difficult the overall project management path is going to be. Systems integration therefore is also concerned with trying to determine what exactly the product is going to consist of; how much it is going to cost; and how long it is going to take to build it.

The most important and the most difficult element of systems integration is defining the components of the system-the system engineering. What is each component going to do by itself, and what is it going to get from the network? What is going to get communicated across the network? All of this requires very difficult choices, some of which are military; others are technical; and still others are political.

Historically speaking, the defense industry has been composed of three distinct entities. Some companies have core competencies in assembling a complicated device-for instance, munitions. Others are experts at hooking up various components into a platform; this is where the current primary intersection between military acquisition and the defense industry lies. The third kind of company specializes in developing the broader architecture required for systems definition.

Traditionally, the military services and the government have been responsible for this third function-otherwise known as systems integration. However, as the technological challenge of this function has grown-coupled with the trend toward privatization in the Pentagon-the military services are no longer capable of doing this by themselves.

Thus, platform makers are today trying to swallow up this systems integration function. The platform makers think that, because they are good at making a platform, they are also good at deciding what should be in each platform and what they should get from the network-which, of course, threatens the companies that actually do specialize in systems integration. For instance, MITRE came into existence in the 1950s as a systems integrator for the SAGE Air Defense System; MITRE got good at managing this system because it didn't manufacture anything, thus avoiding the appearance of malfeasance that would result if a single contractor were in a position where it could both decide what went into a system and then also build that system.

Another reason that the military services are embracing the lead systems integrator (LSI) model is because they think it will be politically advantageous. It is the weak organizations-such as the Army and the Coast Guard-that want LSI. Strong organizations like the Air Force and the Navy do not. The LSI is a way to broaden the political coalition for a project and make weak organizations stronger.

Because there is the potential for conflicts of interest with the LSI model, it would be reasonable to establish a network federally-funded research and development center (FFRDC)-a technical specialist to do trade studies and define the system for transformation.

Vago Muradian
Defense News

There is a transformational drive in the defense industry that is part of a broader shift in the fundamental business of waging war. Platforms, to a great degree, have been maximized in terms of capability. If it is possible to put three hundred bombs on a single B-2, it is highly problematic for the industry that manufactures the aircraft.

Systems integration has a long history. If it were possible to go to the Admiralty Dock in Portsmouth in 1759 and see the HMS Victory, one would see an enormous ship manned by three thousand people-the super-weapon of its day. A wealthy country like Britain could afford only a dozen of these massive ships, given the logistical support necessary to construct and maintain them. Systems integration has always been integral to weapons development. It is the interlacing of systems that has allowed the explosion in commercial technologies that has fostered a "Moore's Law" approach to these issues.

As a natural extension of this consolidation, there has been a rise of gargantuan defense contractors that, from a competitive point of view, are highly challenging. In some regards, they represent the death of competition and its substitution with the management of a monopoly. This in turn has led to the concept of the Lead Systems Integrator (LSI). The reality is that the acquisition work force at the Department of Defense was slashed, so that the Pentagon could no longer be in the business of managing individual subcontracts and sub-sub competitions.

No matter how horizontal any of the defense companies has tried to be, there is still a great deal of verticality in the capabilities within them. Consequently, when total systems procurement is vested in a single company, it raises uncomfortable choices. An example of this is the Aerial Common Sensor. Lockheed and Northrop are both competing for the program, and they have picked the platform. Lockheed has teamed with Embraer, and Northrop has teamed with Gulfstream. This is interesting, because those two aircraft are quite different. One is a much higher-flying, faster, longer-endurance jet; the other is a less-expensive airplane. Hypothetically speaking, imagine that Lockheed designs a significantly better sensor package, but has put it on an airplane that cannot fly as high, and therefore cannot see as much. This will require a tradeoff decision that would not have existed twenty years ago, when the government would have managed separate competitions for the airplane and the sensor package.

Jim Albaugh
Boeing IDS

The concept of LSI is relatively new. Why is it necessary? The U.S. military no longer operates in a predictable environment, where specific threats drive detailed requirements. Rather, there is a need for capabilities that respond against uncertain and changing threats in a faster fashion than in the past. In the lexicon of today, there is a need for network-centric operations, because, by sharing data, knowledge, and capabilities, it is possible to achieve a tremendous force multiplier.

The ground-based mid-course missile defense program, for instance, is the first example of a true systems-to-systems program. In this case, the contractor took many different disparate systems, none of which were designed for missile defense, and tied them together with a communication system and command-and-control software in order to create a capability-a networked system that could intercept a re-entry vehicle in space at high speeds. The contractor that did this-the systems integrator-built none of the hardware. They provided the architecture, design, the development, and enforcement. They managed multiple complex interface requirements. All of this was done in close coordination with the customer and, in many cases, the customer was on the integrated product development teams.

The LSI means assigning an industry lead total systems integration and systems optimization responsibility. It also means assigning that contractor with the responsibility for resource allocation, subcontractor allocation, implementation and coordination and program management, and for bringing the best of industry contractors from around the world, for bringing government labs and educational institutions to the program.

Fundamentally, LSI is a style of operation, focusing on optimization at the systems level rather than the platform level. It enables trades of risk, cost, and capability, and it opens competition at multiple work levels, giving large and small companies the opportunity to compete.

Partitioning work via the LSI approach also allows graceful upgrades without revamping the entire program. It also drives perpetual innovation through spiral development.

Some have argued that the LSI approach limits options and places an unfair amount of authority in the contractor instead of the U.S. government. In reality, by holding the LSI responsible for performance at the systems capability level, the construct drives objectivity and fairness.

Why is industry in this role and not government? First, the acquisition process and culture makes it very difficult for government to act as an effective systems integrator; second, systems integration is not a core mission of the government, while it is a core mission of industry. Industry is better suited to bring the necessary engineering resources to do the systems integration on big, large, complex, large-scale systems integration programs.

This is not to say that the contractors do not have limitations. But with the strong partnership between the LSI and its customer, with clear expectations and flexibility based on trust and a sense of shared destiny, the LSI approach is powerful and effective.

AEI research assistant Vance Serchuk prepared this summary.