Air Force May Hire Outsiders To Oversee Projects

December 28th, 2006  
Team Infidel

Topic: Air Force May Hire Outsiders To Oversee Projects

Wall Street Journal
December 28, 2006
Pg. 3

By Andy Pasztor
The Air Force is considering a potential new approach to managing multibillion-dollar space projects that could help it avoid the costly troubles that plagued previous efforts and lead to a lucrative new role for private-sector contractors.
But the new approach could present its own share of problems, including the potential for conflicts of interest.
The Air Force is considering hiring outside engineers or consultants to oversee systems integration of its next-generation navigational satellites, according to industry and government officials. Typically, the military service that orders a particular system retains primary responsibility and control over systems engineering and integration.
But hiring a separate project integrator could set a precedent for future projects and would be a tacit acknowledgment that both Air Force Space Command and the Pentagon's massive weapons-buying bureaucracy lack the necessary expertise to perform the required oversight role.
The project involves setting up a next-generation U.S. global positioning system, which is widely used by the military and supports consumer applications such as in-car driving directions. The new system would feature stronger signals and be more jam-resistant. While a final price tag has yet to be determined, preliminary specifications for the system call for as many as two dozen satellites costing $100 million or more.
Boeing Co. and Lockheed Martin Corp. are vying to build satellites for the new system, known as GPS III, and may end up competing for the integration work as well. Production go-ahead is expected in 2008, though the newly designed spacecraft may not go into orbit until 2013. So far, the Air Force hasn't made a final decision on whether units of the two prime contractors will be eligible to receive any integration contracts, or if the Pentagon will seek a separate consulting firm to do that work, said the people familiar with the matter.
An Air Force spokesman declined to comment. A Boeing spokeswoman said the company is waiting for official requests for bids. A Lockheed Martin spokesman said the company is still reviewing details to determine if bidding on a potential systems-integration contract for GPS III "makes good business sense."
In the past few weeks, Air Force officials in conjunction with Aerospace Corp., a federally sponsored think tank that advises the Pentagon on acquisition matters, have been reviewing draft versions of the bid requests for GPS III. Air Force acquisition officials are specifically debating whether prime contractors for GPS III or other big-ticket programs should be barred from competing for certain integration contracts in order to avoid potential conflicts of interest, said a person familiar with the matter. The Air Force is seeking a mitigation plan to deal with any conflicts.
While an integrator wouldn't have final say over which company gets business, it would serve as the Air Force's eyes and ears and would play an important role in resolving technical issues and evaluating the performance of other contractors. Even if different parts of the same contractor are prevented from sharing sensitive information by setting up strict organizational divisions, the military recognizes such protections "by themselves will not mitigate" potential conflicts of interest, according to the Air Force's preliminary bid-solicitation document, issued earlier this month.
Having an integrator also doesn't eliminate complications. Boeing is the integrator for the Army's modernization program, called Future Combat System, and has faced scrutiny over costs and the viability of some of the technologies involved. Boeing has defended its work and the system.
Air Force officials already have said they intend to award separate manufacturing contracts for the satellites and related ground facilities.
The Air Force previously chose the international consulting giant Booz Allen Hamilton Inc. to serve as the lead systems integrator for its $16 billion Transformational Communications System. But that program is still in the concept-development phase and, compared to GPS III, a production ramp-up is likely to occur years later.

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