Best Practices: DOD Teaming Practices Not Achieving Potential	 
Results (10-APR-01, GAO-01-510).				 
								 
GAO examined how best practices could help the Department of	 
Defense (DOD) maximize the benefits of integrated product teams  
in its development of weapon systems. GAO conducted eight case	 
studies: three from leading commercial firms; four from DOD	 
programs experiencing cost, schedule, and performance problems;  
and one from a DOD program that has been meeting its objectives. 
GAO found that effective integrated product teams can make	 
significant development decisions quickly and without relying on 
heavy consultations with organizations outside of the team. These
teams have developed and delivered superior products within	 
predicted time frames and budgets--often cutting calendar time in
half compared with earlier products delivered without such teams.
Officials from the more successful programs GAO reviewed--three  
commercial and one from DOD--all cited integrated product teams  
as a main factor in achieving such results. In the four DOD	 
programs that were not meeting cost and schedule objectives, GAO 
found that the teams did not operate as effectively. Their	 
decision-making processes were sequential and involved numerous  
outside consultations for information and approval.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-510 					        
    ACCNO:   A00808						        
    TITLE:   Best Practices: DOD Teaming Practices Not Achieving      
             Potential Results                                                
     DATE:   04/10/2001 
  SUBJECT:   Military research and development			 
	     Weapons systems					 
	     Private sector practices				 
	     Decision making					 

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GAO-01-510

Report to the Chairman and Ranking Member, Subcommittee on Readiness and
Management Support, Committee on Armed Services, U. S. Senate

United States General Accounting Office

GAO

April 2001 BEST PRACTICES DOD Teaming Practices Not Achieving Potential
Results

GAO- 01- 510

Page i GAO- 01- 510 Best Practices Letter 1

Executive Summary 2

Chapter 1 Introduction 8 The Rise of IPTs in Product Development 9 Adoption
of the IPT Concept in DOD 12 Objectives, Scope, and Methodology 14

Chapter 2 IPTS Help Programs Achieve Better Outcomes 19 IPTs Can Improve the
Decision- Making Process 19 Less Effective Teams Had a More Sequential
Decision- Making

Process 21 Improved Product Outcomes Attributed to IPTs 25

Chapter 3 Authority and Knowledge Are Key to IPT Effectiveness 28 The Best
IPTs Had the Knowledge, Authority, and Other Elements

to Be Effective 28 Most DOD Teams Did Not Possess the Key Ingredients of
IPTs 35

Chapter 4 Differences in DOD and Commercial Teaming Approach Reflect
Different Environments 39 Commercial Firms Provided a Different, Supportive
Environment

for IPTs 39 DOD Environment Not As Conducive to IPTs 44 Amphibious Vehicle
Program Found Ways to Provide a More

Supportive IPT Environment 49 Previous GAO Recommendations and DOD Actions
Are Aimed at

Making the Weapon System Environment More Conducive to Best Practices 51

Chapter 5 Conclusions and Recommendations 53 Conclusions 53 Recommendations
for Executive Action 54 Agency Comments and Our Evaluation 55

Appendix I Comments From the Department of Defense 56 Contents

Page ii GAO- 01- 510 Best Practices Appendix II GAO Contacts and Staff
Acknowledgments 59

Related GAO Products 60

Tables

Table 1: Effective IPTs Also Had Successful Product Development Outcomes 25

Figures

Figure 1: Functional Approach to Product Development 10 Figure 2: IPT
Approach to Product Development 11 Figure 3: Players in Commercial Product
Development 13 Figure 4: Players in DOD's Product Development Programs 13
Figure 5: Decision- Making Process Employed by 3M's Pluto Team 20 Figure 6:
Decision Process Followed by the Advanced Amphibious

Assault Vehicle Firepower IPT 21 Figure 7: Sequential Decision- Making
Process for Adding Vehicles

to Accommodate More Weapon System Weight 22 Figure 8: How Advanced
Amphibious Assault Vehicle Gun

Calibration Decision Would Have Been Made Without IPTs 24 Figure 9:
Organization of 3M's Pluto IPT 29 Figure 10: Hewlett- Packard Printer 31
Figure 11: The Marine Corps Advanced Amphibious Assault

Vehicle 33 Figure 12: DaimlerChrysler's Town and Country Minivan 40 Figure
13: 3M Dental Products 42 Figure 14: Percentage of DOD IPT Members That
Perceived Key

Product Elements As Outside the Team's Control 46 Over half of the team
members believe the key product elements-

cost, schedule, requirements are outside of the team's control. 46

Page 1 GAO- 01- 510 Best Practices

April 10, 2001 The Honorable James Inhofe Chairman The Honorable Daniel
Akaka Ranking Member Subcommittee on Readiness and Management Support
Committee on Armed Services United States Senate

As you requested, this report examines how best practices can help the
Department of Defense maximize the benefits of integrated product teams in
its development of weapon systems. It examines the factors that are critical
to making integrated product teams effective, including the environment in
which such teams operate. We make recommendations to the Secretary of
Defense on how to better support the use of integrated product teams on
weapon system programs.

We are sending copies of this report to the Honorable Donald H. Rumsfeld,
Secretary of Defense; the Honorable Joseph W. Westphal, Acting Secretary of
the Army; the Honorable Robert B. Pirie, Jr., Acting Secretary of the Navy;
the Honorable Lawrence Delaney, Acting Secretary of the Air Force; the
Honorable Mitchell E. Daniels, Jr., Director, Office of Management and
Budget; and to interested congressional committees. We will also make copies
available to others upon request.

If you have any questions regarding this report, please call me at (202)
512- 4841. Other key contacts are listed in appendix II.

Katherine V. Schinasi Director Acquisition and Sourcing Management

United States General Accounting Office Washington, DC 20548

Executive Summary Page 2 GAO- 01- 510 Best Practices

Although the Department of Defense (DOD) has boosted its annual weapon
system investment from about $80 billion 4 years ago to about $100 billion
for fiscal year 2001, its buying power will be weakened if weapons continue
to cost more and take longer to develop than planned. DOD wants to improve
program outcomes by reducing weapon system development cost and time, while
still producing weapons that meet user needs. It has a long way to go; long-
standing practices that impede delivery of new weapons within estimates have
proven resistant to reform. GAO issued a series of reports on the success
leading commercial firms have had in significantly reducing the time and
money it takes to develop new and more sophisticated products- the kinds of
results that DOD seeks. Leading commercial firms find that integrated
product teams- teams that are responsible for all the activities of
development, from design to manufacturing- are key to achievement of such
results. The practices of leading commercial firms can help DOD maximize the
benefits of integrated product teams in its development of weapon systems.

In response to a request from the Chairman and the Ranking Member,
Subcommittee on Readiness and Management Support, Senate Committee on Armed
Services, GAO examined (1) whether and how integrated product teams affect
decision- making and product outcomes, (2) what factors are key to creating
effective integrated product teams, and (3) how the environment in which
products are managed affects the prospects for effective integrated product
teams.

Integrated product teams bring together the different professions or areas
of expertise needed to design and manufacture a new product, such as
engineering, manufacturing, purchasing, and finance. The essence of the
integrated product team approach is to concentrate this expertise in a
single organization together with the authority to design, develop, test,
manufacture, and deliver a product. The hallmark of these teams is their
ability to efficiently make decisions that cross lines of expertise. In
contrast, when the people with the necessary expertise reside in separate
organizations, they tend to work on new products sequentially. For example,
a product might be handed off from a concept group to a design group, a cost
group, a test group, and a manufacturing group before being delivered to the
customer. Often, factors such as how to manufacture or repair the product
are assessed after it has been designed and tested, forcing redesign and
rework from the preceding groups.

Commercial firms came to see this approach as taking too long and being too
costly and in the 1980s, began using integrated product teams as a way
Executive Summary

Purpose Background

Executive Summary Page 3 GAO- 01- 510 Best Practices

to get better results faster. In 1995, DOD adopted integrated product teams
in an attempt to improve its weapon system acquisitions. DOD's intention was
to use the teams in the same manner as commercial firms- to integrate
different functional disciplines into a team responsible for all aspects of
a new weapon.

To gain insights on how DOD's implementation of integrated product teams
compares with the practices of leading commercial firms, GAO conducted eight
case studies: three from leading commercial firms; four from DOD programs
experiencing cost, schedule, and performance problems; and one from a DOD
program that has been meeting its objectives. Within these case studies, GAO
examined 18 teams in detail, including over 100 interviews with team members
and leaders.

Integrated product teams work. Effective integrated product teams can make
significant product development decisions quickly and without relying
heavily on consultations with organizations outside the team. These teams
have developed and delivered superior products within predicted time frames
and budgets- often cutting calendar time in half compared with earlier
products developed without such teams. Officials from the more successful
programs GAO reviewed- three commercial and one from DOD- all cited
integrated product teams as a main factor in achieving such results. In the
four DOD programs that were not meeting cost and schedule objectives, GAO
found that the teams did not operate as effectively. Their decision- making
processes were sequential and involved numerous outside consultations for
information and approval.

Two elements are essential to determining whether a team is in fact an
integrated product team: the knowledge and authority needed to recognize
problems and make cross- cutting decisions expeditiously. Knowledge is
sufficient when the team has the right mix of expertise to master the
different facets of product development. Authority is present when the team
is responsible for making both day- to- day decisions and delivering the
product. In the programs experiencing problems, the teams either did not
have the authority or the right mix of expertise to be considered integrated
product teams. If a team lacks expertise, it will miss opportunities to
recognize potential problems early; without authority, it can do little
about them. Although these teams were called integrated product teams, by
and large they were not.

Leading commercial firms took steps to create an environment more conducive
to the integrated product team approach. They committed to Results in Brief

Executive Summary Page 4 GAO- 01- 510 Best Practices

making the approach integral to the product development process and backed
up that commitment through actions to ensure that implementation was not
left to chance. Importantly, the pressures of competing in the commercial
market meshed well with the decisionmaking advantages of integrated product
teams. While DOD endorses the integrated product team approach, it has not
taken steps to ensure that the approach is implemented at the program
execution level. In essence, the approach has been left to germinate in an
unchanged environment that is not necessarily conducive to integrated
product teams. For example, the pressures to launch and fund new programs
create incentives that pose obstacles for integrated product teams.
Implementation is thus more dependent on the ingenuity of individuals
working on the programs.

GAO makes recommendations on how DOD can better support the implementation
of integrated product teams on weapon system programs.

Integrated product teams improved both the speed and quality of the
decision- making process. These teams made decisions involving significant
trade- offs without relying unduly on other organizations for information or
approval. For example, a 3M team developing a new dental material decided,
based on its own analyses, to trade off some sophistication in the material
to get it to market sooner. Officials from the Advanced Amphibious Assault
Vehicle Program report that their teams reduced the time needed to make a
system design decision from 6 months to about a week. The teams at the four
remaining DOD programs had a less efficient decision- making approach. When
these teams faced a significant issue beyond their knowledge and authority,
they went through a lengthy, sequential process to obtain information and
approval. On one program, for example, a trade- off between reducing
performance requirements or increasing weight took a team 6 months and
numerous consultations with other teams, the contractor, program managers,
and service officials.

GAO observed a consistency between the effectiveness of teams and product
outcomes on the eight cases studied: programs that were meeting product
development objectives had more effective teams than the programs that were
having problems. In addition to meeting objectives, the successful programs
were often surpassing the performance of their predecessors in both time to
market and performance. For example, Principal Findings

Integrated Product Teams Help Programs Achieve Better Outcomes

Executive Summary Page 5 GAO- 01- 510 Best Practices

Hewlett- Packard officials stated that an integrated product team cut cycle
time and increased productivity six- fold. The four programs with less
effective teams were experiencing problems including cost growth, schedule
delays, and/ or performance difficulties. While not unusual for weapon
system programs, these are the kinds of problems DOD hoped integrated
product teams could help solve.

Integrated product teams in leading commercial firms and the Advanced
Amphibious Assault Vehicle program had the right mix of expertise to develop
new products. Their teams were responsible for developing and delivering the
product and making day- to- day decisions on cost, design, performance,
quality, test, and manufacturing issues. The combination of product
responsibility and expertise put the teams in a position to have enough
information to tackle crucial issues- like trade- offs- without having to
rely heavily on outside organizations. The 3M team's decision on the dental
material is an excellent example.

Other factors significantly enhanced team effectiveness. Collocating key
members facilitated communication, built trust, and contributed to unity of
purpose- all key elements of effective decision- making. For example, at the
Advanced Amphibious Assault Vehicle Program, because representatives from
the contractor and the DOD program office are located in the same building,
there is little or no delay in getting answers or sharing information to
make decisions. In instances where physical collocation is not possible,
leading firms link team members through electronic means- such as by shared
databases and software. On the more effective teams, team leaders selected
members, rather than having members assigned by another organization. This
allowed team members to demonstrate commitment and alignment with the team's
goals.

GAO examined 12 teams in detail from the DOD programs experiencing
development problems. Seven of these teams did not have responsibility for
day- to- day decisions on the range of product development issues, nor did
they bear responsibility for delivering the product. Rather, they were
limited to a segment of the product development process, such as monitoring
system performance requirements, testing the system, or providing logistics
during fielding. The remaining five teams that could claim product
responsibility were missing representatives from key areas of expertise,
such as cost and testing, or from key organizations, like the contractor.
Regardless of whether product responsibility or expertise was lacking, the
effect on a team was the same- it was not capable of identifying problems
and resolving them expeditiously through a Expertise and Authority

Are Key to Effective Integrated Product Teams

Executive Summary Page 6 GAO- 01- 510 Best Practices

collaborative decision- making process. Moreover, the teams did not enjoy
collocation and control over membership.

Corporate leaders from DaimlerChrysler, 3M, and Hewlett- Packard
demonstrated their commitment to integrated product teams by reorganizing to
better align their structure with the teams and making targeted investments
in physical assets, training, and other forms of help. These changes helped
ensure success at the working level. The firms delegated considerable power
to the teams and held the teams accountable for delivering on set goals.
They made it possible for the typical program manager to succeed in managing
with integrated product teams. DOD did not go much beyond policy statements
to create a supportive environment for integrated product teams. On the
weapon programs experiencing problems, implementation often meant changing
team labels rather than altering lines of authority or team dynamics. Little
training was provided and then only at the initiative of the program.
Program teams were not often involved in setting key product goals, and
program officials observed that unrealistic goals were set before the teams
were formed. Regardless of their efforts, the teams could not make up for
the unachievable goals.

Differences in how commercial firms and DOD managers measure success and in
the pressures they face in starting programs significantly affect the
environment for integrated product teams. Commercial products' success is
measured in terms of the customer's acceptance of the final product and
cycle times short enough to beat the competition. These conditions create
incentives for gaining knowledge early, forming realistic goals and
estimates, and holding teams accountable for delivering the product- all of
which favor an integrated product team approach. In DOD, the pressures to
successfully launch new programs and protect their funding, coupled with
long cycle times, create incentives to be overly optimistic in setting
program goals and to focus on process concerns like obtaining incremental
funding. DOD's necessary reliance on defense contractors introduces another
complication for integrated product teams because the two organizations are
responsible for the product, but they do not necessarily share the same
incentives.

The Marine Corps Advanced Amphibious Assault Vehicle program has many of the
teaming characteristics of leading commercial firms. This accomplishment was
made possible by the unique environment- or culture- that the program's
initial manager created to center around the Differences in DOD and

Commercial Teaming Approach Reflect Different Environments

Executive Summary Page 7 GAO- 01- 510 Best Practices

integrated product team approach. Unlike the other DOD cases, the teams were
not made to fit among standing organizations and procedures.

GAO recommends that the Secretary of Defense designate as integrated product
teams only those teams that will have the day- to- day responsibility for
developing and delivering a product, such as a weapon system, and the cross
section of expertise to do so. GAO recommends the Secretary of Defense use
the practices and characteristics described in this report to develop and
communicate standards for what constitutes an integrated product team. GAO
also recommends that the Secretary of Defense put weapon system program
offices in a better position to create and sustain effective integrated
product teams, such as by giving them responsibility for a deliverable
product, authority to make decisions on that product, and representation
from the critical areas of expertise. Finally, GAO recommends that the
Secretary of Defense help program managers and team leaders become catalysts
for implementing the integrated product team approach by (1) devoting
professional education to make these individuals capable of creating the
culture necessary to foster integrated product teams and (2) drawing lessons
from programs like the Advanced Amphibious Assault Vehicle for bridging the
barriers between program offices and contractors.

DOD agreed with the report and most of its recommendations. DOD partially
concurred with the recommendation that only those teams with day- to- day
responsibility for a product and the necessary cross section of expertise be
designated as integrated product teams. It noted that while such teams are
unique and require certain conditions and investments, the designation
“integrated product team” has spread throughout the workforce
and has benefited other teams as well. DOD does not want to lose those
benefits by limiting the designation. DOD's position reflects the practical
reality that the designation of integrated product teams is now difficult to
restrict. Given the Department's recognition that program office integrated
product teams require certain conditions and investments to succeed that
other integrated product teams may not need, GAO believes that if the
Department takes the actions contained in GAO's other recommendations, the
objective of the recommendation will be achieved. DOD's comments appear in
full in appendix I. Recommendations for

Executive Action Agency Comments

Chapter 1: Introduction Page 8 GAO- 01- 510 Best Practices

Reflecting its urgency to acquire new weapon systems to replace those seen
as outdated and too costly to operate, the Department of Defense (DOD) has
boosted its annual weapon system investment from about $80 billion 4 years
ago to about $100 billion for fiscal year 2001. Over the next 5 years, DOD
plans to spend over $500 billion developing and acquiring weapon systems.
DOD would like to get the most out of this investment and has set goals to
develop new weapons in half the traditional time and within budget.
Historically, DOD has not received predictable returns on weapon system
investments. Although they provide superior capability, they have cost
significantly more and taken much longer to complete than originally
estimated. When one program needs more money than planned, unplanned trade-
offs- such as delaying or canceling other programs- may be necessary. As a
result of such recurrent problems, about 5 years ago we began a body of work
to examine weapon system acquisition issues from a different, more cross-
cutting perspective- one that draws lessons learned from the best commercial
product development efforts to see if they can be applied to weapon system
development. Leading commercial firms have developed increasingly
sophisticated products in significantly less time and at lower costs- the
kinds of results that DOD wants.

Our previous work has shown that leading commercial firms expect their
program managers to deliver high- quality products on time and within
budget. 1 Accordingly, the firms have created an environment and adopted
practices that put their program managers in a good position to succeed in
meeting these expectations. We have also reported on the importance of
having knowledge about a product's technology, design, and producibility at
key junctures in the product development process. A key vehicle leading
commercial firms employ to attain such knowledge is the integrated product
team (IPT). Although organizations may employ various types of teams to
develop new products, an IPT is a particular type of team vested with (1)
the knowledge from the different areas of expertise needed to design,
develop, and manufacture a new product and (2) the authority to use that
knowledge in making decisions about the product. According to leading
commercial firms, IPTs have proven essential to improving product
development outcomes. IPTs have enabled firms like DaimlerChrysler to
significantly reduce the time it takes to develop a new product- by as much
as 50 percent- while at the same time yielding a product more sophisticated
and possessing higher quality

1 Best Practices: Better Management of Technology Development Can Improve
Weapon System Outcomes (GAO/ NSIAD- 99- 162, July 30, 1999). Chapter 1:
Introduction

Chapter 1: Introduction Page 9 GAO- 01- 510 Best Practices

than its predecessors. This report identifies best practices for creating
effective IPTs, such as those from leading commercial firms, which can help
DOD develop and produce better weapon systems significantly faster and at
less cost.

Product development, whether for commercial or defense application, is a
complex undertaking. The process begins with a concept or idea for meeting a
customer's need, the idea is converted to detailed design drawings, and the
design is translated into articles or prototypes that can be tested. During
the product's development, the processes for manufacturing the product must
be also be identified and tested. The development process is characterized
by a tension between competing demands on the product. These demands include
the desire for the highest performance and the most features, the lowest
cost and shortest time to market, and the ease with which the product can be
produced in both quantity and quality. Trade- offs between these demands
must be made to provide the customer a desirable product quickly and at a
reasonable price. If performance features are allowed to dominate, the
product may become too expensive. If costs are cut too much, then the
product's quality may suffer. A product design that ignores the limits of
manufacturing processes may never make it into the hands of the customer.

Taking a product from idea to delivery requires expertise from a number of
different professions or functions, which can vary depending on the type of
product. To illustrate, designing a product's features may require the
collaboration of people with expertise in areas such as mechanical,
electrical, materials, and software engineering. People with a financial
management background are needed to accurately estimate the cost of the
product and to keep track of the budget. People expert in test and
evaluation are needed to objectively assess the performance of product
prototypes. Production engineers make sure the design lends itself to proven
manufacturing processes, even developing new processes when necessary.
Quality assurance experts ensure that defects are kept out of the product
design and manufacturing processes. Yet another group of people are
responsible for understanding and representing the customer's needs, often
part of the marketing function in commercial industry.

In commercial industry, how the knowledge of these experts and the authority
for making decisions are brought to bear on the product development process
have evolved considerably. Years ago, as companies grew and additional
products were developed, many tended to organize The Rise of IPTs in

Product Development

Chapter 1: Introduction Page 10 GAO- 01- 510 Best Practices

work around departments and divisions that represented areas of expertise,
referred to as a functional approach to product development. This approach,
with some illustrative functions, is shown in figure 1 below.

Figure 1: Functional Approach to Product Development

Source: GAO.

In this approach, knowledge was segregated or distributed by function, as
was authority. Each organization managed and made decisions on its piece of
a number of different products. Development of a product occurred
sequentially, with people from each function doing their work on the product
and then handing it over to the people from the next function. While each
function attained a high level of expertise, the knowledge needed to
recognize a potential problem often resided in a function that came later in
the product development process. Thus, proposed solutions had to be reworked
in the preceding functions. For example, if the manufacturing group for an
automobile found that the engine compartment was not large enough to hold
the engine, the automobile would be turned back to the design engineers. The
engineers would have to redesign the engine compartment, the financial staff
would have to reassess the costs and the test and evaluation people might
have to reevaluate the vehicle's crash protection performance. After this
additional time and effort- rework- the automobile could once again proceed
to manufacturing.

Rework Rework Rework Move

product Move

product Move

product Engineering

Product A Product B Product C Product D

Engineering

Product A Product B Product C Product D

Finance

Product A Product B Product C Product D

Finance

Product A Product B Product C Product D

Test and Evaluation

Product A Product B Product C Product D

Test and Evaluation

Product A Product B Product C Product D

Manufacturing

Product A Product B Product C Product D

Manufacturing

Product A Product B Product C Product D

Deliver A Deliver B Deliver C Deliver D

Rework Rework Rework Rework Rework Rework Move

product Move

product Move

product Move

product Move

product Move

product Engineering

Product A Product B Product C Product D

Engineering

Product A Product B Product C Product D

Finance

Product A Product B Product C Product D

Finance

Product A Product B Product C Product D

Test and Evaluation

Product A Product B Product C Product D

Test and Evaluation

Product A Product B Product C Product D

Manufacturing

Product A Product B Product C Product D

Manufacturing

Product A Product B Product C Product D

Deliver A Deliver B Deliver C Deliver D

Chapter 1: Introduction Page 11 GAO- 01- 510 Best Practices

In the 1980s, companies began to look for better ways to bring the knowledge
of the people in different functions together in the design phase of a new
product to reduce rework and shorten cycle times. They organized teams made
up of a cross section of the different functional disciplines and gave them
responsibility for developing an entire product. These efforts evolved into
the IPT approach as it is known today. In the 1990s, Boeing received acclaim
for the success of its 777 aircraft, which was developed by using design/
build teams, which were IPTs.

The essence of the IPT approach is to concentrate in a single organization
the different areas of expertise needed to develop a product, together with
the authority and responsibility to design, develop, test, and manufacture
the product. Figure 2 illustrates some of the areas of expertise that can be
brought into the structure of an IPT organization.

Figure 2: IPT Approach to Product Development

Source: GAO.

Under the IPT approach, each team possesses the knowledge to collaboratively
identify problems and propose solutions, minimizing the amount of rework
that has to be done. When this knowledge is accompanied by the authority to
make key product decisions, IPTs can make trade- offs between competing
demands and more quickly make design changes, if necessary. For example,
design engineers on a Caterpillar IPT initially proposed that very large
differential gears be used to transmit power from the engine to the rear
wheels on a large vehicle. While other team members did not see a problem,
an experienced production engineer on the team noted that no gear
manufacturer made a gear that large and that to create such a production
capability would be

Product A Product B Product C Product D

Deliver A Deliver

A Engineering Finance Manufacturing Test and

Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver B Deliver

B Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver C Deliver

C Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Engineering Finance Manufacturing Test and

Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver D Deliver

D

Product A Product B Product C Product D

Deliver A Deliver

A Engineering Finance Manufacturing Test and

Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver A Deliver

A Engineering Finance Manufacturing Test and

Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver B Deliver

B Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver B Deliver

B Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver C Deliver

C Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver C Deliver

C Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Engineering Finance Manufacturing Test and

Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver D Deliver

D Engineering Finance

Manufacturing Test and Evaluation Engineering Finance

Manufacturing Test and Evaluation

Deliver D Deliver

D Deliver D Deliver

D

Chapter 1: Introduction Page 12 GAO- 01- 510 Best Practices

risky. Consequently, the design engineers revised the design to enable
existing differential gears to be used, saving significant time in the
process. In the functional approach to product development, this design
problem might not have been discovered until late in product development,
when the manufacturing organization got involved.

DOD accepts IPTs as a vehicle for getting better acquisition outcomes. This
acceptance was formalized in May 1995, when the Secretary of Defense
directed that the concept of IPTs be applied throughout the acquisition
process to the maximum extent possible. DOD employs three basic levels of
IPTs: (1) the Overarching IPT works above the program level and its primary
responsibility is to advise the Defense Acquisition Executive on issues
related to all of the programs the executive is responsible for, (2) the
Working- Level IPT also works above the program level and links the program
manager to the Overarching IPT, and (3) the Program IPT represents the
program level and executes the tasks to design, develop, and manufacture a
weapon system. The first two types of IPTs perform oversight on a program
and other than the program manager, do not typically include people from the
program office. Within DOD, IPTs were to become the main element of an
overall management approach that calls for considering all aspects of a
weapon system, including performance features, manufacturing processes, and
logistic support, throughout design and development.

While the basic DOD and commercial product development processes are
similar, the number and responsibilities of key players differ. In the
commercial world, there are two main players in product development- the
product developer and the customer. Figure 3 describes the role of the
product developer and the customer in commercial product development.
Adoption of the IPT

Concept in DOD

Chapter 1: Introduction Page 13 GAO- 01- 510 Best Practices

Figure 3: Players in Commercial Product Development

Source: GAO.

The DOD process for product development and acquisition is somewhat more
complex because it involves at least three major players- the DOD customer,
the DOD program office, and the product developer, as illustrated in figure
4.

Figure 4: Players in DOD's Product Development Programs

Source: GAO.

The additional player complicates the task of taking a product from concept
to delivery because the knowledge and authority to accomplish the tasks are
distributed between the product developer and the program management office.
Thus, to concentrate knowledge and authority in IPTs for weapon systems,
organizational and functional barriers must be bridged.

An organization that is buying a product to be built to the buyers
specifications and needs An organization

that is buying a product to be built to the buyer's specifications and needs

A manufacturing firm that is responsible for developing and producing the
product. The firm has a product team that has the knowledge, capabilities
and resources to translate the customer's specifications and needs into a
product that can be designed and produced with agreed- upon resources A firm
that is responsible for developing

and producing the product. The firm has a product team that has the
knowledge, capabilities and resources to translate the customer's
specifications and needs into a product that can be designed and produced
with agreed- upon resources

Customer Product Developer DOD program office Customer

Product developer

The warfighting community that uses weapons to perform combat missions and
creates the demand for new weapons The warfighting

community that uses weapons to perform combat missions and creates the
demand for new weapons

The DOD acquisition workforce that develops a strategy for acquiring a new
weapon and marshals the resources to execute the strategy The DOD
acquisition

workforce that develops a strategy for acquiring a new weapon and marshals
the resources to execute the strategy

The defense firm that designs, develops, and manufactures the weapon system

Chapter 1: Introduction Page 14 GAO- 01- 510 Best Practices

The Chairman and the Ranking Member, Subcommittee on Readiness and
Management Support, Senate Committee on Armed Services, requested that we
conduct a body of work to examine various aspects of the acquisition process
to identify best practices that can improve the outcomes of weapon system
programs. To date, we have issued reports on advanced quality concepts,
earned value management techniques used to assess progress on major
acquisition programs, management of a product's transition from development
to production, management of the supplier base, technology maturation,
training program offices on the application of best practices, testing and
evaluation, and setting product requirements (see related GAO products at
the end of this report.)

This report covers the use of IPTs in new product development. Our overall
objective was to evaluate best practices for creating effective IPTs which
can help management of weapon systems. Specifically, we examined (1) whether
and how integrated product teams affect decisionmaking and product outcomes,
(2) what factors are key to creating effective integrated product teams, and
(3) how the environment in which products are managed affects the prospects
for effective integrated product teams.

We follow a similar overall methodology for conducting best practices
reviews of DOD's process for developing new weapon systems. We start by
identifying an aspect of weapon system development- in this report, the use
of integrated product teams- that has been shown to have a significant
impact on the outcomes of new product developments. Our sources for such
information include the large body of individual weapon system reviews we
have conducted over many years; studies from other sources, such as the
Defense Science Board; and discussions with defense experts, including past
and current DOD officials, defense industry representatives, and analysts
from private organizations that study defense issues. Before beginning a
review of a particular topic, we confirm with DOD officials that the topic
is one in which the potential for improvement is significant. Once we have
identified the topic, we use a case study approach because case studies
provide the in- depth knowledge needed to understand individual practices.
They show how practices affect program outcomes as well as issues
surrounding their adoption and implementation. In selecting case studies, we
look for examples of (1) excellent practices from leading commercial firms,
(2) typical or prevailing practices within DOD organizations, and (3) where
possible, DOD organizations that exhibit excellent practices. Objectives,
Scope,

and Methodology

Chapter 1: Introduction Page 15 GAO- 01- 510 Best Practices

To obtain information about teaming practices and identify the best
practices in the use of IPTs in the commercial world, we conducted
literature searches and contacted university faculty, industry associations,
and consultants in the use of product development teams. We selected several
companies known for their exceptional use of integrated teams in product
development that resulted in better product performance and reduced
development cycle time. We visited each company to discuss (1) the way teams
contribute to better product development outcomes, (2) the structure and
organization of teams, and (3) the organizational support and commitment
needed to enable teams to achieve their potential. In addition, we obtained
an understanding of the overall teaming process and the practices that the
companies believed were critical for successful teams. We selected at least
one team from each company for an in- depth review. After our visits, we
prepared individual company summaries from which we developed a model that
represents best teaming practices. The firms we visited and a description of
the teams we selected follows.

? DaimlerChrysler, an automobile manufacturer located in Auburn Hills,
Michigan. DaimlerChrysler's Minivan Platform team is responsible for the
design, development, and production of new minivans. Team Epic, part of the
minivan platform team, designs and develops electric vehicles.

? 3M, a manufacturer of a variety of industrial and consumer products
located in St. Paul, Minnesota. 3M's Pluto team is responsible for the
development of a new dental material.

? Hewlett- Packard, a high technology electronic products manufacturer
located in Palo Alto, California. Hewlett- Packard's Snakes Program is
responsible for developing new computer workstations.

Our report summarizes a number of best commercial practices in the use of
IPTs. As such, we do not suggest that all commercial firms use best
practices or imply that all commercial practices represent the best. Due to
the highly competitive nature of the businesses these firms are involved
with, we do not always attribute an individual practice to a specific
company.

To obtain insights into the dynamics of IPTs used in new weapon system
development efforts, we conducted case studies of five DOD weapon systems.
At the program offices, we interviewed key managers for an overall
perspective of the program. We focused our work on the teams responsible for
executing the development of the weapon system and we interviewed members of
those teams. We selected at least three different teams at each program
office. The programs were Advanced Amphibious Assault Vehicle, CH- 60S Fleet
Combat Support Helicopter, Extended

Chapter 1: Introduction Page 16 GAO- 01- 510 Best Practices

Range Guided Munitions, Global Broadcast Service, and Land Warrior. A
description of each program follows.

? The Advanced Amphibious Assault Vehicle is an Acquisition Category I 2
Marine Corps program. It is a high- speed amphibious armored personnel
carrier that will replace the current family of amphibious assault vehicles.
Its purpose is to transport troops from ships to the shore. The vehicle is
estimated to weigh about 37 tons and be able to carry 17 combat- equipped
Marines plus a crew of 3. It is to travel in excess of 20 knots in the water
and travel over land at 45 mph. Its armament includes a 7.62 mm machine gun
and a 30 mm cannon. Total budgeted program cost is about $8. 7 billion for
1,013 vehicles. It is expected to begin fielding in fiscal year 2006.

? The CH- 60S Fleet Combat Support Helicopter is an Acquisition Category I
Navy program. The CH- 60S helicopter is the replacement for the current CH-
46D. It is a combination of the Army's UH- 60 Blackhawk and the Navy's SH-
60 Seahawk and is designed to provide the Navy with a capability to
replenish forces performing search and rescue missions and airborne mine
countermeasures missions at sea. Program costs are estimated at $4.3
billion. The program began in 1998 with initial fielding expected in 2002.

? The Extended Range Guided Munition is an Acquisition Category II Navy
program. The weapon is a projectile, 5 inches in diameter, that is fired
from guns aboard Navy surface ships. The projectile incorporates a rocket
motor, an internal global positioning system, and an inertial navigation
system. These systems will give the projectile guidance and control to a
fixed target location determined prior to firing. The rocket motor will
provide greater range capabilities than current projectiles. The program
began in 1996 and is expected to begin fielding in 2004.

2 DOD makes distinctions among categories of weapon systems, primarily
according to the level of investment required. Acquisition Category I
programs are defined as major defense acquisition programs estimated to cost
over $365 million for research, development, test and evaluation, or have
procurement costs of more than $2. 190 billion (both in fiscal year 2000
constant dollars). Acquisition Category II programs are defined as
acquisition programs estimated to cost over $140 million for research,
development, test and evaluation, or have procurement costs of more than
$660 million (both in fiscal year 2000 constant dollars).

Chapter 1: Introduction Page 17 GAO- 01- 510 Best Practices

? The Global Broadcast Service is an Acquisition Category I joint- service
program. It will augment and interface with other communications systems and
provide continuous, high speed, one- way flow of high- volume data, audio,
imagery, and video information to forces around the globe. It consists of a
satellites, fixed and transportable transmitters, and fixed and
transportable receivers. The program began in 1996 and is expected to begin
production in late 2002.

? The Land Warrior is an Acquisition Category II Army program. It is an
integrated fighting system for dismounted combat soldiers. It consists of
five subsystems: computer/ radio, software, protective clothing and
individual equipment, integrated helmet assembly, and weapons. The Army
currently expects to procure 34,000 units for a total cost of about $2.1
billion. The Land Warrior is designed to enhance lethality, command and
control, survivability, mobility, and sustain individual soldiers and
infantry units. The program began in 1996, and production is expected to
begin in fiscal year 2003.

To select DOD programs, we identified programs from each of the services
that had experienced problems in meeting cost, schedule, or performance
goals and at least one program that was meeting its development objectives.
We selected programs in the engineering, manufacturing, and development
phase of the acquisition process so that the teaming practices being
reviewed would reflect those of a single prime contractor and enough
progress would have been made to determine whether the program was meeting
its objectives. We also selected weapon programs that entered this phase
after the 1995 policy was implemented to ensure that the programs had a
reasonable chance to implement the IPT policy. To address potential
variances due to program size, we selected programs from different
acquisition category levels. The Land Warrior program provided a range of
analytical information. The performance problems described in the report
occurred in 1999 and earlier, and revealed limitations in the program's
teaming arrangements. The report also covers the current program manager's
efforts to overcome these limitations through teaming and other actions.

We selected three teams from each program office to review in detail. We
used a structured questionnaire to interview approximately 80 IPT leaders,
members, and contractors. Individual team leaders and members also completed
a survey we had prepared regarding how respondents viewed their teams and
their role on the teams. The information collected from the interviews and
the survey was compiled into a database to facilitate a comparative
analysis. Through the analysis, we determined a team's

Chapter 1: Introduction Page 18 GAO- 01- 510 Best Practices

composition, product responsibility, and the environment in which the team
operates. In addition, we collected information regarding the process used
by the teams to make significant decisions. We flowcharted commercial and
DOD program office team decisions to identify the number and level of
organizations required to make actual decisions, as well as the length of
time it took to make the decision.

To better understand the environment under which IPTs operate, we reviewed
current DOD policy directives and guidance on using IPTs in weapon system
program offices. We met with officials from the Office of the Secretary of
Defense and the services responsible for the implementation of IPTs in DOD.
We analyzed studies on IPTs conducted by external organizations such as the
Center for Naval Analyses and the Institute for Defense Analyses. We
reviewed evaluations conducted on implementation of IPTs by the Army, the
Navy, and the National Center for Advanced Technologies.

We also drew on knowledge gained from our prior best practices work. In
particular, we have developed a good base of knowledge regarding differences
in the commercial and DOD environments as they relate to developing new
products. We applied this knowledge in our assessment of the environmental
factors that affect the implementation of IPTs in both sectors.

We conducted our review from December 1999 through February 2001 in
accordance with generally accepted government auditing standards.

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 19 GAO- 01- 510 Best Practices

Of the eight programs we reviewed, four exhibited the characteristics
considered the hallmark of IPTs- the ability to efficiently make product
development decisions that cut across different lines of expertise. Compared
with the other four programs, these IPTs had the knowledge and authority to
make decisions in less time, with fewer consultations outside the team, and
with fewer reviews and approvals. At the time of our review, their products
were developed or were being developed within the time frames and budgets
originally estimated. In most cases, the IPTs developed products that
outperformed previous products that were developed without IPTs. The IPTs
were credited with making these results possible; they were thus not only
more efficient; they were also more effective.

The teams from the remaining four programs relied heavily on consultations
with individuals outside of the team to obtain the knowledge and approval to
make significant decisions. While no team is expected to operate in
isolation, the degree of outside consultations made the decision- making
process of these teams much longer and less efficient- much like the process
that predated IPTs. The four programs with less effective teams all
experienced difficulty in meeting product development objectives- manifested
by cost growth, schedule delays, and/ or performance problems. While it is
difficult to prove a direct cause and effect relationship, in some cases,
managers cited the teams' ineffectiveness as directly contributing to the
problems; in other cases, the teams were not in a position to solve or
prevent problems.

Officials at the leading commercial firms and DOD's Advanced Amphibious
Assault Vehicle program believe that because of the knowledge and authority
that resided in their IPTs, the teams required fewer external reviews and
approvals. Consequently, the decision- making process was significantly
shortened- from months to a week or less. While IPTs do not work in
isolation, effective IPTs are self- sufficient, containing the variety of
expertise to recognize early when decisions are needed, such as trade- offs
between competing demands, and the authority necessary to make these
decisions. An example is 3M's Pluto IPT, which was responsible for
developing a technology capable of producing a low shrinking dental
material. The team needed to make a choice concerning the first product to
be marketed based on this new technology. The choice was between producing a
simpler material that could be delivered to customers sooner or taking more
time to deliver a more technically advanced material. The team assessed the
trade- offs and decided in favor of delivering the simpler product sooner
and the more technically Chapter 2: IPTs Help Programs Achieve

Better Outcomes IPTs Can Improve the Decision- Making Process

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 20 GAO- 01- 510 Best Practices

advanced material later. Figure 5 depicts the decision- making process used
by this IPT.

Figure 5: Decision- Making Process Employed by 3M's Pluto Team

3M's Pluto IPT had the knowledge and authority to make a significant trade-
off between product performance and schedule.

Source: GAO.

Pluto team members represented the key areas of expertise needed for the
product and were able to assess the technical feasibility of the two options
as well as the cost and schedule trade- offs. The team conducted the
necessary evaluations and research to make its decision, which was supported
by upper management.

Officials from the Advanced Amphibious Assault Vehicle program cite similar
experiences with IPTs. For example, the Firepower IPT developing the 30- mm
gun challenged a requirement that the targeting system maintain accurate
calibration for several days at a time. The team's design engineers believed
the requirement would be costly to achieve. The team's user representative
reported that gun operators, as a standard practice, calibrated the
targeting system daily before each mission. Therefore, the

Above Program

Within Program

Within Team

Team confers with manager on decision Team confers

with manager on decision Team decides on simpler product Team decides on

simpler product Team has knowledge and authority to assess feasibility

of options and conduct evaluations and market research Team has knowledge
and authority to assess feasibility

of options and conduct evaluations and market research

Month 1 Month 2 Month 3 Month 4 Simpler

product Sooner? Simpler

product Sooner?

More advanced

product? More

advanced product? Team leader challenges

team with choice Team leader challenges team with

choice Above

Program Within Program

Within Team

Team confers with manager on decision Team confers

with manager on decision Team decides on simpler product Team decides on

simpler product Team has knowledge and authority to assess feasibility

of options and conduct evaluations and market research Team has knowledge
and authority to assess feasibility

of options and conduct evaluations and market research

Month 1 Month 2 Month 3 Month 4 Month 1 Month 2 Month 3 Month 4 Simpler

product Sooner? Simpler

product Sooner?

More advanced

product? More

advanced product? Simpler

product Sooner? Simpler

product Sooner?

More advanced

product? More

advanced product? Team leader challenges

team with choice Team leader challenges team with

choice

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 21 GAO- 01- 510 Best Practices

requirement for maintaining accuracy could be reduced to 1 day- a tradeoff
that made for a less sophisticated and less costly design. Such a decision
can prevent problems later in the development cycle that additional
technical sophistication can cause. Figure 6 depicts the decision- making
process used by this IPT.

Figure 6: Decision Process Followed by the Advanced Amphibious Assault
Vehicle Firepower IPT

The Firepower IPT made a significant decision to trade performance and
reduce cost. Source: GAO.

The mix of expertise on the Firepower IPT provided the knowledge to identify
the problem and reach a decision to make the trade- off between cost and
performance. The IPT was able to make the decision in 1 week and only had to
consult with one organization outside of the team- the group that set the
original performance requirements.

The teams at the four remaining DOD programs had a less efficient decision-
making approach. These teams had to routinely consult with several
organizations because the knowledge and authority to make significant
decisions did not reside within the team. When these teams were faced with a
significant issue that outstripped their knowledge and Less Effective Teams

Had a More Sequential DecisionMaking Process

Other Organizations

Within Program Office

Within Product Team

Day 1

Day 2

Day 5

Day 6 Day

3 Day

4 Design to

original requirement?

Design to original requirement?

Change requirement ease design?

Change requirement ease design?

Team decides to reduce requirement and lower design risk

Team decides to reduce requirement and lower design risk Recognition

that calibration requirement poses design

challenge Recognition

that calibration requirement poses design

challenge Team confers with

organization that established requirements

Team confers with organization that established requirements

Team assesses user needs for calibration

Team assesses user needs for calibration Other

Organizations Within Program Office

Within Product Team

Day 1

Day 2

Day 5

Day 6 Day

3 Day

4 Day

1 Day

1 Day

2 Day

2 Day

5 Day

5 Day

6 Day

6 Day

3 Day

3 Day

4 Day

4 Design to

original requirement?

Design to original requirement?

Change requirement ease design?

Change requirement to

ease design? Team decides

to reduce requirement and lower design risk

Team decides to reduce requirement and lower design risk Recognition

that calibration requirement poses design

challenge Recognition

that calibration requirement poses design

challenge Team confers with

organization that established requirements

Team confers with organization that established requirements

Team assesses user needs for calibration

Team assesses user needs for calibration

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 22 GAO- 01- 510 Best Practices

authority, decision- making involved a lengthy and inefficient sequential
process to obtain information and approval.

In one case, a contractor team working on a weapon system found that a
performance requirement could not be met without increasing the weight of
the weapon system. The consequence of the increased weight was that more
vehicles would be required to transport the system, increasing the logistic
burden on the users. The problem was referred to the program office team
that was responsible for ensuring that the contractor met performance
requirement or the type of vehicles required. The team lacked the authority
to change the performance requirement. After 6 months and numerous requests
for knowledge and authority, the decision was made to accept the added
weight and to increase the number of vehicles. Figure 7 depicts the
decision- making process the team used.

Figure 7: Sequential Decision- Making Process for Adding Vehicles to
Accommodate More Weapon System Weight

This DOD team, when faced with a significant trade- off issue, required 6
months to reach a decision and had to involve many players from various
levels outside of the team.

Source: GAO.

The program office team expended a great deal of effort to collect, analyze,
and exchange information with six other teams within the program office
(such as logistics and testing), the program manager level, the prime
contractor, and representatives from all three military services that were
to use the weapon system. Moreover, the team had to consult

Within Program

Within team Above

Program Month

1 Month

2 Month

5 Month

6 Month

3 Month

4 Team considers

the option of adding transport vehicles Team considers

the option of adding transport vehicles

Information exchanged with services Information

exchanged with services

Team reevaluates impact of option Team reevaluates

impact of option Option discussed

with program management

team Option discussed

with program management

team Team recommends

adding transport vehicles Team recommends

adding transport vehicles Information

exchanged with services Information

exchanged with services

Information obtained from

6 other teams Information

obtained from 6 other teams Contractor

informs team of issue Contractor

informs team of issue Information

obtained from 6 other teams Information

obtained from 6 other teams

Program management Team makes

decisions to add vehicles

Program management Team makes

decisions to add vehicles Within

Program Within

Program Within team Within

team Above

Program Above

Program Month

1 Month

1 Month

2 Month

2 Month

5 Month

5 Month

6 Month

6 Month

3 Month

3 Month

4 Month

4 Team considers

the option of adding transport vehicles Team considers

the option of adding transport vehicles

Information exchanged with services Information

exchanged with services

Team reevaluates impact of option Team reevaluates

impact of option Option discussed

with program management

team Option discussed

with program management

team Team recommends

adding transport vehicles Team recommends

adding transport vehicles Information

exchanged with services Information

exchanged with services

Information obtained from

6 other teams Information

obtained from 6 other teams Contractor

informs team of issue Contractor

informs team of issue Information

obtained from 6 other teams Information

obtained from 6 other teams

Program management Team makes

decisions to add vehicles

Program management team makes

decisions to add vehicles

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 23 GAO- 01- 510 Best Practices

with these organizations each time new information was obtained- a form of
rework. Despite this complicated process, a representative from the prime
contractor observed that the decision should have taken less time to make.
Furthermore, the representative stated that the contractor was not
significantly involved in making the decision and questioned the decision
because it increased the complexity of the design and placed additional
vehicle and manpower burdens on the system's user.

Officials from the Advanced Amphibious Assault Vehicle program painted a
similarly complex picture when they analyzed how the gun calibration
decision would have been made without IPTs. They estimated that the decision
would have taken 6 months to reach because the required knowledge and
authority would have been much more widely dispersed among other teams and
organizations. Figure 8 depicts the program office's assessment of how the
decision to meet the gun calibration requirement would have been made
without an IPT.

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 24 GAO- 01- 510 Best Practices

Figure 8: How Advanced Amphibious Assault Vehicle Gun Calibration Decision
Would Have Been Made Without IPTs

Making the same gun calibration decision on the Advanced Amphibious Assault
Vehicle program without an IPT would have required more time to obtain
knowledge and authority outside the team, particularly above the program
level.

Source: GAO.

This decision would have required sequential consultation with six different
functional organizations, the program management office, the user community,
and the defense contractor. When facing such a decision path, it is
understandable that the team that had the original idea might decide not to
propose the change, finding it easier to pursue the technical solution
rather than the requirement trade- off. Representatives from the other
weapon system programs that experienced problems meeting development
objectives described similar processes that required the teams to consult
with multiple organizations for information, concurrence, or authorization
before a decision could be made.

Within DOD Program Office

Within Contractor Program Office Other

Organizations Month

1 Month

2 Month

5 Month

6 Month

3 Month

4 Proposal referred

to DOD Contracting Representative Proposal referred

to DOD Contracting Representative Contractor team

gets corporate approval to seek change Contractor team gets corporate

approval to seek change

Design to original requirement?

Design to original requirement?

Change requirement to ease design?

Change requirement to ease design?

Program office assesses

proposal Program

office assesses

proposal Program office seeks information

from engineering and cost experts and consults with users Program office
seeks information from engineering and cost experts and consults with users

Change referred to DOD Contracting

Representative Change referred

to DOD Contracting Representative

Change sent to corporate headquarters Change sent

to corporate headquarters

Team implements

change Team

implements change Contractor

identifies trade- off Contractor

identifies trade- off

Program office gets approval

to make change Program

office gets approval

to make change Within

DOD Program Office

Within Contractor Program Office Other

Organizations Month

1 Month

1 Month

2 Month

2 Month

5 Month

5 Month

6 Month

6 Month

3 Month

3 Month

4 Month

4 Proposal referred

to DOD Contracting Representative Proposal referred

to DOD Contracting Representative Contractor team

gets corporate approval to seek change Contractor team gets corporate

approval to seek change

Design to original requirement?

Design to original requirement?

Change requirement to ease design?

Change requirement to ease design?

Program office assesses

proposal Program

office assesses

proposal Program office seeks information

from engineering and cost experts and consults with users Program office
seeks information from engineering and cost experts and consults with users

Change referred to DOD Contracting

Representative Change referred

to DOD Contracting Representative

Change sent to corporate headquarters Change sent

to corporate headquarters

Team implements

change Team

implements change Contractor

identifies trade- off Contractor

identifies trade- off

Program office gets approval

to make change Program

office gets approval

to make change

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 25 GAO- 01- 510 Best Practices

We observed a consistency between the effectiveness of teams and product
outcomes on the eight cases we studied: programs that were meeting product
development objectives had more effective IPTs than the programs that were
having problems. Table 1 depicts the product outcomes for the eight cases.

Table 1: Effective IPTs Also Had Successful Product Development Outcomes
Program Cost Status Schedule Status Performance Status

Effective IPTs DaimlerChrysler Product costs

lowered Decreased development cycle months by 50 percent Improved vehicle
designs

Hewlett- Packard Decreased cost by over 60 percent Decreased development

schedule by over 60 percent Improved system integration and product designs

3M Outperform cost goals Product delivery estimates

shortened by 12 to18 months In comparison to current products, improved
performance by 80 percent

Advanced Amphibious Assault Vehicle Current product

unit cost lower than original product estimate

Ahead of original development schedule Demonstrated 5 fold increase in

speed Less Effective IPTs CH- 60S helicopter a Schedule delayed Software and
structural difficulties Extended Range Guided Munition

Increases in development costs Schedule slipped 3 years Redesigning due to
technical

difficulties Global Broadcast Service Experiencing cost

growth Schedule slipped 1 1/ 2 years Software and hardware design shortfalls

Land Warrior b Cost increase of about 50 percent Schedule delayed 4 years
Overweight equipment, inadequate

battery power and design a Program official told us that program costs
increased due to a requirement for additional capabilities

and an increase in the number of helicopters.

b The Land Warrior performance problems cited here primarily reflect the
first version of the system, circa 1999. The system has since been
redesigned but had not completed testing at the time of our review.

Source: GAO analysis of commercial and DOD data.

In addition to meeting product development objectives, the successful
programs were often surpassing the performance of their predecessors in both
time to market and performance. These improvements were attributed in large
part to the effectiveness of the IPTs. The four programs with less effective
teams were experiencing the kinds of problems that, while not unusual for
weapon system programs, DOD hoped IPTs could help solve. Improved Product

Outcomes Attributed to IPTs

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 26 GAO- 01- 510 Best Practices

Officials at leading commercial firms and the Advanced Amphibious Assault
Vehicle program attribute their successful product outcomes directly to
their IPTs. Specifically, DaimlerChrysler officials attributed reduced cycle
time, improved product performance, and better market success to their
switch to IPTs. Hewlett- Packard officials stated that the company's teaming
approach resulted in higher product quality, better design results, and
improved system integration. A Hewlett- Packard official stated that the
Snakes Program team simultaneously developed three computer workstations in
9 months, half the time normally required, with four times the performance
of existing workstations. A HewlettPackard IPT developing printer equipment
increased productivity six- fold, despite using one- quarter fewer
employees, and reduced the product defect rate to 2 percent- of which the
majority were cosmetic defects. In another example, company officials said
that in the past, test equipment was developed at a cost between $25,000 and
$70,000 and required up to 4 years to develop- which was well behind the
performance of their competitors. Now, their IPT approach enables the
company to develop a higher quality product in two- thirds less time and
with a price of $10,000 to $25,000.

A 3M official in the dental products division stated that the Pluto IPT
created a revolutionary dental material that surpasses similar products on
the market. The team leader reported that members developed a material that
shrinks 50 percent less than current materials and can withstand 80 percent
more stress. In addition, team members filed five patents, of which four
have been issued- a valuable benefit to the company. The team leader
attributes the IPT's decision- making- including the trade- off between
product performance and schedule- with shortening the product development
time as much as 18 months. In addition, the team leader believes that the
IPT will outperform the competition because 3M's patents make it difficult
for other companies to bring a product to market in a similar technology
area. Lastly, Advanced Amphibious Assault Vehicle program officials believe
their IPT approach was critical to the program's ability to meet or exceed
its cost, schedule, and performance objectives since it began in 1995-
atypical for large DOD programs.

The remaining four DOD cases we reviewed experienced problems, including
schedule delays, cost overruns, or a failure to meet performance objectives.
For example, the schedule and cost targets were increased for the Extended
Range Guided Munition Program because key performance requirements proved
too difficult to meet within the original estimates. Also, the Land Warrior
program manager restructured the program's Effective IPTs Helped

Reduce Product Cost and Cycle Time

Programs With Less Effective IPTs Experienced Poor Outcomes

Chapter 2: IPTs Help Programs Achieve Better Outcomes

Page 27 GAO- 01- 510 Best Practices

operations, including selecting a new contractor, after the initial version
of the equipment proved too heavy and ineffective in testing. Restructuring
the program and redesigning, developing, and testing an improved version of
the equipment added cost and time to the effort. Finally, the CH- 60S and
Global Broadcast Service programs also experienced schedule delays when
technical problems were revealed as the software or systems were tested; GBS
also experienced cost growth.

It is difficult to isolate a cause and effect relationship between less
effective teams and program problems. However, in some cases, program
officials and team members did link ineffective teams to poor product
outcomes. Several team members attributed poor outcomes to one program's IPT
structure or the IPT's ineffective decision- making process. Specifically,
one team member stated that the inability of the IPT- which was led and
primarily staffed by contractor employees- to make a decision on a key
technical component resulted in an overall program schedule delay, cost
increase, and reduced performance requirements. A team leader from another
program observed that the program's structure- which required teams to
report to one another- slowed the decision- making process and resulted in
difficulties in establishing performance requirements. He added that some of
the discrepancies in the requirements could have been avoided. In another
case, a team member on a program experiencing cost and schedule increases
identified a potential technical issue and proposed a change in the weapon's
design. The contractor, who had final authority, refused the change and
moved forward with the original design. This design was ultimately deemed
unacceptable by the user.

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 28 GAO- 01- 510 Best Practices

Effective IPTs possess the knowledge and authority essential to the kind of
decision- making that is their hallmark. Knowledge is sufficient when the
team has the right mix of expertise to master the different facets of
product development. Authority is present when the team is responsible for
making both day- to- day decisions and delivering the product. These two
elements are essential to determining whether a team is in fact an IPT.
Other factors significantly enhance an IPT's effectiveness. For the programs
we studied, effective IPTs had key members physically collocated where
possible to facilitate the communication, interaction, and overall
operations. When physical collocation was not possible, resources were
provided to connect members through virtual means, such as shared software.
Effective IPTs were also given control over selecting members, and changes
in membership were driven by the team's need for different knowledge or
skills.

In the programs experiencing product development problems, the teams either
did not have responsibility for product development or were missing key
areas of expertise. Although called IPTs, in reality, they were not. If a
team is missing either the knowledge or the authority to recognize and make
difficult decisions, it is ill- equipped to carry out the role expected from
an IPT. Some of these programs had separate DOD and defense contractor
teams, which further dispersed knowledge and authority. Moreover, DOD did
not routinely collocate team members. Less effective teams also did not have
control over their composition. Team membership fluctuated often but did not
appear to be directly tied to the needs of the project; members left and
joined the team due to personnel rotation policies or other reasons.

Research shows that product development responsibility and crossfunctional
membership are fundamental IPT elements. If a team lacks expertise, it will
miss opportunities to recognize potential problems early; without authority,
it can do little about them. IPTs in leading commercial firms and the
Advanced Amphibious Assault Vehicle program had the right cross section of
functional disciplines to develop new products. Their IPTs were responsible
for developing and delivering the product and making day- to- day decisions
on cost, design, performance, quality, test, and manufacturing issues. The
combination of product responsibility and expertise equipped the IPTs with
the information needed to tackle crucial issues- like trade- offs- without
having to rely heavily on organizations outside the IPT. Once so- equipped,
the collocation of team members and control over the selection of members
made the IPTs even better. Chapter 3: Authority and Knowledge Are Key

to IPT Effectiveness The Best IPTs Had the Knowledge, Authority, and Other
Elements to Be Effective

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 29 GAO- 01- 510 Best Practices

Along with being responsible for developing a complex new dental material,
3M's Pluto IPT had the authority to conduct research, select material
attributes based on customer needs, determine the delivery schedule,
estimate the cost of the material, and perform and evaluate the scientific
experiments to create the material. To meet these expectations, the team
possessed all key areas of expertise. Figure 9 illustrates the variety and
types of expertise found on the IPT.

Figure 9: Organization of 3M's Pluto IPT

3M's Pluto IPT has representation from all of the functional disciplines
needed to design, develop, and produce the new dental material.

Source: GAO analysis based on discussions with 3M.

Hewlett- Packard's Snakes IPT consisted of representatives from research and
development, marketing, quality, leadership, finance, and Product
Responsibility and

Cross- functional Membership Are Essential IPT Elements

Team Leader

Marketing Marketing Technical/ Professional

Service Technical/

Professional Service

Material Specialist

Material Specialist Dentist Dentist Hardgoods

Engineer Hardgoods

Engineer Regulation

Specialist Regulation

Specialist Manufacturing

Engineer Manufacturing

Engineer Chemist Chemist Team Leader

Marketing Marketing Technical/ Professional

Service Technical/

Professional Service

Material Specialist

Material Specialist Dentist Dentist Hardgoods

Engineer Hardgoods

Engineer Regulation

Specialist Regulation

Specialist Manufacturing

Engineer Manufacturing

Engineer Chemist Chemist

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 30 GAO- 01- 510 Best Practices

manufacturing. Collectively, the IPT is responsible for designing,
developing, and building new computer workstations. Company officials noted
that the breadth of knowledge on the IPT not only speeds the pace of
development but the amount of innovation as well. They also stated that IPTs
may also include customers and suppliers.

Similarly, Daimler Chrysler's Minivan platform team comprise design
engineers and representatives from planning, finance, marketing,
procurement, and manufacturing. They are vested with full authority to
design, develop, and produce new vehicle lines. Given the complexity of
developing a vehicle, smaller IPTs concentrate on developing component
parts, such as the door. Even the door IPT includes specialists for sheet
metal, glass, hardware, wiring, electrical switches, customer liaison, and
manufacturing. This IPT addresses day- to- day issues on designing door
features, determining performance characteristics, and constructing the
door. Equally important, the IPT is responsible for ensuring the entire door
is ready when production of the vehicle starts. If it is not, the IPT could
delay the entire delivery schedule.

Similarly, the Firepower IPT on the Advanced Amphibious Assault Vehicle
program has responsibility for designing, developing, prototyping, and
testing the gun system, including the barrel, ammunition feeder, and the
gunner's station. The IPT has members from engineering, testing, logistics,
cost estimating, manufacturing, and modeling and simulation. Importantly,
these members are drawn from the Marine Corps acquisition workforce, weapon
system operators, and the defense contractor and subcontractors responsible
for building the system.

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 31 GAO- 01- 510 Best Practices

All of the IPTs that were producing good outcomes had their core team
members physically working in the same location. Based on actual results,
officials from the three commercial firms and the Advanced Amphibious
Assault Vehicle office shared the view that collocation provided many
benefits and cited it as a key factor to positioning an IPT for success. For
example, collocated IPT members can raise issues earlier, perform tasks
faster, and reach decisions quicker than core members who are geographically
dispersed.

Figure 10: Hewlett- Packard Printer

Hewlett- Packard uses special software, the internet, and communication
devices to virtually collocate remote IPT members that develop new products
such as the printer shown here.

Source: Hewlett- Packard.

When collocated, team members can have frequent ad hoc meetings to share
information and identify issues that could require tradeoffs. Face- toface
informal communication greatly adds to information flow, better Collocated
Members

Provide Benefits to IPTs

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 32 GAO- 01- 510 Best Practices

cohesion, and a full understanding of other members' roles- all of which
help foster team unity and performance. Company representatives told us that
the regular informal interaction reduces the need for formal team meetings-
such meetings account for a small percent of an IPT member's time. Lastly,
company officials told us that collocated teams are able to build trust,
which can improve their functioning.

Company leaders observed negative team dynamics when members were
geographically dispersed. Without constant face- to- face interaction, team
members were inclined to have separate discussions and make decisions
regarding product development without involving one another. On occasion,
this resulted in a disconnect and took the members in opposing directions.
Representatives from one company observed that when members are at remote
locations, it is difficult to have team cohesion, and the individuals must
work harder to achieve the same level of efficiency as the collocated
representatives. Several officials stated that remote IPT members can be
excluded from spontaneous informal communications or interactions. As a case
in point, the leader of one IPT is very concerned that a contemplated move
of some members 1 mile from the core team could damage the team's
effectiveness.

The three commercial firms and the Advanced Amphibious Assault Vehicle
program went to great lengths to collocate IPT members. When Daimler
Chrysler relocated its operations, the firm constructed a facility to house
all platform team members in one location, including 800 to 900 permanent
engineers, 300 to 500 contract engineers; representatives from planning,
finance, procurement, manufacturing; and some key suppliers. Officials at 3M
report that they also constructed a facility to collocate their IPT members.

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 33 GAO- 01- 510 Best Practices

Figure 11: The Marine Corps Advanced Amphibious Assault Vehicle

Collocation has facilitated communications between DOD and contractor
personnel during the development of the Advanced Amphibious Assault Vehicle
shown here.

Source: DOD.

The Advanced Amphibious Assault Vehicle program office and the defense
contractor for the vehicle are collocated- which is atypical for most DOD
programs. The original program manager believed that IPTs are the right way
to manage the program and that collocation was essential to effective IPTs.
As a result, he required the contractor to lease a facility- at DOD's cost-
to house the its research and development operation on one floor and the DOD
program office staff on another floor. A Marine Corps IPT member explained
that a contractor, when not collocated, may work in isolation and
periodically brief DOD. Much of the work done to that point might need to be
redone if issues arose. He added that working side by side with the
contractor has eliminated the need for formal meetings or briefings because
DOD and contractor members are equally informed regarding the program's
status and progress.

Given that the commercial firms we reviewed have worldwide facilities,
physical collocation of every team member, particularly key suppliers, is
not always feasible. When team members can not be physically collocated,

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 34 GAO- 01- 510 Best Practices

leading firms connect remote members through virtual means. The best of
these are shared software and databases that enable team members in one
location to see the results of work done in another location. For example,
if the product designs are stored in a computer database, when one team
member makes a change, the other members can see it in near real- time.
Other companies use advanced equipment to improve their video conferencing
capabilities or enable online team meetings through the Internet. Still,
officials at 3M and Daimler Chrysler believe that virtual collocation does
not replicate the benefits of face- to- face interactions. As a result,
companies temporarily collocate remote members during key phases of product
development to enable them to work side by side with their team.

IPTs at leading commercial firms are given control over selecting members.
The firms believe that it is very important a team have the right expertise
on the team. As a result, team leaders are hand- selected by upper
management based on reputation, knowledge, and/ or expertise. In turn, team
leaders select team members they believe have the expertise and the
interpersonal skills that would match the team's needs.

At 3M, when a new team is formed, an announcement is sent to employees
notifying them of team's purpose, time frame, and skills needed. Employees
are allowed to volunteer for teams. Team leaders select team members from
the pool of volunteers. According to company officials, the self- nomination
process allows staff to demonstrate commitment and alignment with the team
goals and ensures that the team members share a common purpose.

Membership on commercial IPTs can change for different reasons, such as
attrition or promotion. However, we found that the predominant reason to
change members was to meet the changing needs of the team. At one company,
as the product moved through the development phases, the mix of expertise
was sometimes changed as the team's need for knowledge and skills changed.
For example, conceptual staffs, such as design engineers, are needed in the
initial stages but may be replaced with test engineers as the product
proceeds. Control Over Membership

Can Enhance IPTs

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 35 GAO- 01- 510 Best Practices

The four DOD programs that were experiencing problems had teams that lacked
the key elements- product responsibility and cross- functional
representation- found in the successful cases. In our view, these teams were
IPTs in name only. Most of these teams did not have responsibility for
decisions on product development issues or delivering the product. Teams
that could claim product responsibility did not have sufficient cross-
functional representation. Regardless of whether product responsibility or
expertise was lacking teams were incapable of identifying problems and
resolving them expeditiously through a collaborative decision- making
process. Moreover, the teams did not exhibit other characteristics-
collocation and control over membership- that contribute to effectiveness.
Neither characteristic appears to be required or encouraged by DOD policy
and team leaders and members perceived difficulties in adopting these
characteristics within DOD.

Seven of the 12 teams we studied were not responsible for the delivery of a
weapon system or a component, nor were they responsible for day- to- day
decisions on product development issues. Instead, the teams were responsible
for monitoring or managing a part of the development process. For example,
several teams exclusively managed the test process- under DOD guidance-
including reviewing the contractor's test procedures, scheduling the system
for developmental and operational tests, and ensuring that the test
certification requirements were met. Other teams were responsible for
monitoring the contractor to ensure performance requirements were met,
addressing logistics issues when the system was fielded, tracking system
costs, or handling contract management issues. Still other teams primarily
focused on planning, coordinating, or developing acquisition strategies and
program schedules- and bore no direct responsibility for delivering the
weapon system or one of its components.

The remaining five teams that believed they had product responsibility for
the most part excluded representatives from critical product development
functions such as design or manufacturing. Instead of being integrated into
the team, members from the missing functions were consulted by the team as
issues arose, which made decisions take longer. For example, one team co-
leader stated that his team's responsibility was limited to technical
issues; people from other key disciplines, such as cost, were not team
members. When a cost issue occurs, the leader needs to contact cost experts
for their input. Another team leader from the same program stated that his
team is primarily comprised of mechanical engineers with responsibility for
many issues, including design, requirements, Most DOD Teams Did

Not Possess the Key Ingredients of IPTs

DOD Teams Lacked the Knowledge and Authority Necessary for IPTs

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 36 GAO- 01- 510 Best Practices

manufacturing, schedule, and production. However, representatives from cost,
test, quality, or logistics were not team members. Those represented are
invited to participate in team activities when an issue arises. We were told
that a team for one program had all of the key functional disciplines,
including members from the cost and testing functions. However, after
meeting with those individuals, it was clear that they were not real
members; they were either unaware of the team's existence or had not
attended a meeting for a long period of time.

Knowledge and authority were further dispersed on the 12 DOD teams because
their programs operated with two sets of teams- one belonging to DOD and the
other belonging to the contractor. The DOD teams interacted with the defense
contractor staff to solve problems or to provide periodic updates but did
not routinely include representation from the contractors. When DOD program
officials did participate on contractor IPTs, they typically served as the
customer representative, not fully participating team members. Program
office and contractor teams met separately and addressed issues
independently, and involvement was limited to sequential reviews.

When limited by lack of product responsibility or lack of requisite
expertise, a team must go to other teams and organizations to get the
knowledge and authority needed to make decisions. The result is a sequential
decision- making process, with numerous rework loops. Program managers and
team leaders put in extra effort to overcome these limitations. One program
manager created temporary teams on an ad hoc basis to address specific
product issues, such as difficulties in meeting a weight requirement. Team
leaders in other programs informed us that they frequently invite
individuals from other disciplines to participate in their team meetings on
an as- needed basis to obtain a broader perspective. The Land Warrior
program manager went so far as to create a “shadow” IPT
organization to manage the program on a day- to- day basis, while leaving
the formal, functionally organized teams in place. He noted that the formal
structure had been set up and members assigned before he became the program
manager. Finding this structure difficult to manage effectively, he created
the shadow organization and staffed it with team members of his choice.

Most of the DOD teams on the less successful programs were not fully
collocated, and none of the teams were collocated with their contractor
counterparts. Many of the team members found that this made it difficult to
communicate on a real time basis and they had to work harder to DOD Teams
Typically Did

Not Collocate

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 37 GAO- 01- 510 Best Practices

operate well. One leader stated that he is not always aware of what other
teams are doing that may affect his team. A contractor official observed
that the DOD team that she interfaced with could have taken less time if
they were collocated and able to work the issue side by side.

DOD guidance does not address collocation, despite its advantages, as a
means to enhance IPT effectiveness. DOD officials cite the cost and
logistical difficulties with relocating geographically dispersed programs
and defense contractors as the primary reason for not collocating core team
members. For example, one program manager noted that his program involves a
variety of DOD agencies, commands, and all three services located throughout
the United States and several foreign countries, including Italy and Korea.
The program manager thought it impractical to collocate all of the
organizations. Appropriately, DOD still supports developing the capabilities
for shared databases and other technical means to replicate collocation.
Marine Corps and contractor officials from the amphibious vehicle program
had the same initial misgivings about collocation. Today, they told us they
cannot imagine running a program any other way. Officials from leading
commercial firms stated that they also confronted cost and logistical issues
but believed that the investment to collocate was warranted relative to the
investment made in a new product development.

Most team leaders had little say in the composition of their teams. Team
members also had little input into the teams they were assigned to as the
functional organizations made the assignments. If defense contractor
representatives are included on the team, they are typically chosen by their
organizations without DOD's involvement.

Although some team leaders stated that they would like the opportunity to
select the members, DOD does not routinely empower teams to do so. In fact,
the DOD Integrated Product and Process Development Handbook states that the
“selection of team members for IPTs often lies outside the direct
control of the IPT leader.” According to DOD guidance, IPT members
should be drawn from a functional discipline- organizations such as
engineering and financial management that operate independently of weapon
system programs. Generally, the functional leaders assign team members to
IPTs, and while some negotiation can occur, program and IPT leaders have
little say over choosing members.

DOD teams also did not have control over the membership changes. In general,
we found that membership fluctuated frequently, and the majority DOD Teams
Do Not

Control Membership

Chapter 3: Authority and Knowledge Are Key to IPT Effectiveness

Page 38 GAO- 01- 510 Best Practices

of the team members were not original members. For example, at one program
office, 71 percent of the team members were not original members. One team
member told us that his team has had four different team leaders since he
became a member 2 years ago. Another team member had four different program
managers within 4 years. Unlike commercial firms, where changes in
membership were driven by changes in the team's needs, the reasons for
turnover in DOD teams were seldom driven by the needs of the team. For
example, some military personnel stated that they join and leave teams
frequently because military policy is to rotate people every 3 years, but
they can rotate as often as 18 months. Unsurprisingly, the majority of
military personnel stated that it was not likely that they would be involved
on the IPT through the program's life cycle- which can last 15 years.

Regardless of the reason, team members and leaders observed that frequent
turnover results in a loss of corporate knowledge and sets the team back.
For example, one member stated that when new members join the team, there is
an inclination to revisit issues and past decisions, which can slow the
team's progress. Another team member noted that when the IPT is initially
launched, goals and mission statements are established. When original
members rotate, the IPT can lose sight of the objectives and lose some of
the advances gained in the early stages.

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 39 GAO- 01- 510 Best Practices

Differences in the environment in which teams operate can have a significant
effect on successfully implementing the IPT approach. We found that leading
commercial firms provided a more supportive foundation for IPTs. Company
leaders committed to the IPT approach and backed up that commitment through
actions designed to ensure that implementation was not left to chance. In
short, they created a different, more conducive environment for IPTs. While
DOD endorses the IPT approach and has issued policies and other guidance, it
has not taken steps to ensure that IPTs are implemented at the program
execution level. In essence, the IPT approach has been left to germinate in
an unchanged environment that is not necessarily conducive to IPTs.
Successful implementation is thus more dependent on the ingenuity of
individuals working on programs.

Differences in how commercial firms and DOD managers measure success and in
the pressures they face in starting programs significantly affects the
environment for integrated product teams. Commercial products' success is
measured in terms of the customer's acceptance of the final product and
cycle times short enough to beat the competition. These conditions create
incentives for gaining knowledge early, forming realistic goals and
estimates, and holding teams accountable for delivering the product- all of
which favor an IPT approach. In DOD, the pressures to successfully launch
new programs and protect their funding, coupled with long cycle times,
create incentives to be overly optimistic in setting program goals and to
focus on process- versus product- concerns. DOD's necessary reliance on
defense contractors introduces another complication for IPTs because two
major organizations (DOD and defense contractors) are responsible for the
product, and they do not necessarily share the same incentives. Notably, the
amphibious vehicle program has overcome these obstacles and made IPTs work
in the DOD environment.

DaimlerChrysler, 3M, and Hewlett- Packard all provided an environment that
supported the IPT approach to product development. Corporate leaders not
only embraced the IPT approach, but demonstrated their commitment by
reorganizing to better align their structure with IPTs and making targeted
investments in physical assets, training, and other forms of help. The firms
delegated considerable power to IPTs, such as in setting product development
goals, but held the teams accountable for delivering on those goals. In
addition, the pressures of successfully competing in the marketplace- that
foster realism, short cycle times, and satisfying the customer- play well to
the strengths of the IPT approach. Chapter 4: Differences in DOD and

Commercial Teaming Approach Reflect Different Environments

Commercial Firms Provided a Different, Supportive Environment for IPTs

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 40 GAO- 01- 510 Best Practices

Although DaimlerChrysler and 3M did not plan to restructure their
organizations when they decided to implement IPTs, they found that their
former organizations were at odds with the IPT approach. For example, in the
1980s, DaimlerChrysler (then Chrysler) had separate organizations for key
functions, such as engineering, finance, and manufacturing. Moreover,
engineers were organized around the types of components- such as climate
control- rather than product types. This organization made it difficult even
for all of the engineers working on a particular vehicle to talk with one
another, let alone interact with functions other than engineering, such as
finance. DaimlerChrysler realized that IPTs could not simply be patched
across such organizations. This realization was followed by a corporate
reorganization along platform lines- classes of vehicles- to reinforce the
emphasis on products, rather than functions or components.

Figure 12: DaimlerChrysler's Town and Country Minivan

DaimlerChrysler reorganized around platform teams to better support its IPT
approach. Source: DaimlerChrysler.

The companies took other steps to reinforce their commitment to IPTs. For
example, DaimlerChrysler officials noted that some employees were resistant
to the IPT approach. To encourage employee acceptance and ensure
organizational and product goals were achieved, a two- pronged Leading
Commercial Firms

Demonstrate Commitment Through Action

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 41 GAO- 01- 510 Best Practices

performance appraisal process was instituted that solicited input from both
an IPT member's immediate supervisor and other members and organizations the
member interfaced with. We found that at 3M and Hewlett- Packard, the IPT
leader either prepared the members' performance evaluations or provided
significant input to it. Officials noted that capturing an individual's
performance on an IPT was a driving factor in garnering acceptance of the
IPT approach.

In addition to the physical infrastructure investments made to collocate and
integrate the workplace, the companies invested other resources to ensure
that IPTs were successfully implemented at the product development level. In
an earlier report on best training practices, we noted that leading firms
focus on a few, key initiatives at any one time 1 and deliver targeted,
hands- on training to ensure that implementation is successful at the
product development level. DaimlerChrysler, 3M, and Hewlett- Packard took
the same approach. These companies offered extensive front- end planning
assistance. For example, Hewlett- Packard helps new teams plan and define
their priorities and track their progress. A company official believed this
help could reduce a project's time by 10 to 20 percent. At 3M, the company
provided team sponsors, who were top managers that established the IPT and
assisted the team with leadership and high- level decision- making. In some
cases, the companies provided facilitators that assisted IPTs with hands- on
guidance to enhance their daily performance.

1 Best Practices: DOD Training Can Do More to Help Weapon System Programs
Implement Best Practices (GAO/ NSIAD- 99- 206; Aug. 16, 1999).

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 42 GAO- 01- 510 Best Practices

Figure 13: 3M Dental Products

3M top managers served as team sponsors Source: 3M

According to officials from the leading commercial firms, achievable, clear,
and shared goals are vital to an IPT's success. The goals include the timing
of bringing a product to market, its features, and a cost that will appeal
to customers yet yield an acceptable profit. The three companies routinely
involve their IPTs early in the product development process, giving them the
opportunity and authority to affect a product's goals. While subject to some
constraints, IPT leaders and members were given the flexibility to make
trade- offs between competing objectives. The role 3M's Pluto team played in
trading off product sophistication for an earlier delivery date is a prime
example of a team being given both the opportunity to be involved in goal-
setting and the authority to affect the goals.

There is a consequence for IPTs having such influence over product goals-
the product's success is readily measurable, and the teams are held
accountable for its success. If the product is delivered late, does not
perform as expected, or costs more than it could sell for profitably, the
Companies Give IPTs

Control Over the Product but Hold Them Accountable

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 43 GAO- 01- 510 Best Practices

IPT is responsible. If a product fails because it does not meet one or more
of its goals, the team is held accountable for that failure. This
consequence helps the team to be aggressive but realistic in setting goals
and motivates the team toward achievement of goals as it develops the
product.

Based on our current and previous work on best practices, 2 the demands
leading commercial firms make of new product developments create a set of
incentives that mesh well with the IPT approach. These firms insist on a
solid business case for starting a new product, which centers on designing
and manufacturing a product that will sell well enough to make an acceptable
profit. Barring an unforeseen change in the market, if the firm delivers the
right product on time and for the right price, the customer will buy and the
product succeeds. To ensure success, leading commercial firms insist on
having high levels of knowledge about the technological, design, and
production content of the product. In particular, before a new product
development is launched, leading firms ensure that technology development is
complete and that immature technology is not allowed onto a product. To meet
market demands and stay competitive, the firms consciously limit cycle time-
the length of time it takes to develop a new product. The leading commercial
firms we have visited had cycle times that ranged from 18 months to just
over 4 years.

With product success clearly defined in terms of customer acceptance and
cycle times kept short, accountability is readily established in terms of
delivering a quality product on time. This reality helps keep an IPT focused
on the product itself, can minimize membership changes, and fosters trade-
offs. Candor in recognizing risks early and realism in making estimates are
fostered because doing otherwise, such as overselling product performance or
delivery dates, can set the team up for disappointing the customer and
failing. Similarly, the leading firms' insistence on demonstrated knowledge
about technology maturity and other aspects of the product reinforces
realism because knowledge is more directly linked to product success than
promises or projections. The IPT, with its full cross section of expertise,
is ideally suited to having the key aspects of product knowledge on hand to
provide realism, minimize surprises, and quickly respond to potential
problems.

2 See related GAO products. Incentives in Commercial

Environment Are Conducive to IPTs

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 44 GAO- 01- 510 Best Practices

In the programs we reviewed, DOD's environment was not conducive to IPTs.
DOD has not backed up its commitment to the IPT approach with investments
and other actions to ensure success at the program execution level. Teams
typically were not involved in the goal- setting process and could not
really be held accountable for goals that were unrealistic. Moreover, the
pressures on launching and funding new programs created incentives that
posed obstacles for IPTs. Shared responsibility between program offices and
contractors further complicated the environment for IPTs.

After DOD formally adopted the IPT approach in 1995, it mandated the use of
the IPTs on all weapon programs to the extent possible and made a
significant amount of IPT information, instructions, directives, and manuals
available. However, some of the information is too vague and is not
practical for implementation at the program execution level. Moreover, the
policy is not coupled with top- level action- instead, implementation falls
on the shoulders of the program offices. For example, the 1995 policy
memorandum directing program offices to implement IPTs does not include the
factors essential for an effective IPT. Other IPT policies designate as IPTs
teams that have a legitimate purpose but cannot practically operate as
effective IPTs. For example, the Overarching and Working- Level IPTs are
oversight in nature and cannot be expected to execute the day- to- day
responsibilities of an IPT. Also, the policies specify that some IPTs be
comprised of a single functional discipline or profession, such as test and
evaluation and cost, that by definition do not possess the mix of expertise
to make the cross- functional decisions expected of an IPT. It is not that
these teams should not exist, but that assigning the designation of
“IPT” to teams for which it should not apply dilutes the
designation. It contributes to the view that IPTs are nothing new. On that
point, over half of the team members we interviewed stated that DOD's
adoption of IPTs resulted in little change at the program execution level;
most saw IPTs as simply a new name for an old approach.

No DOD organization ensures or monitors implementation of IPTs, leaving
implementation dependent on the circumstances of the individual program and
the capability of the government and contractor managers. According to a
representative from the DOD organization that writes IPT guidance, the
organization's role is not to ensure or monitor the program offices'
implementation of the guidance. An IPT point of contact for one of the
services informed us that his office makes IPT information available but
that implementation is left up to the programs. While a reasonable amount of
latitude for IPTs is good, DOD has not provided top- level attention, as DOD
Environment

Not As Conducive to IPTs

DOD- Level Support for IPTs Does Not Extend Much Beyond Policy

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 45 GAO- 01- 510 Best Practices

leading commercial firms have, to ensure that the guidance is followed at
the program execution level. At the program or program execution level,
resources provided to IPTs varied and were not part of a systematic approach
to ensure IPT effectiveness. For example, 71 percent of the team members we
interviewed said that if program offices provided support, it was usually in
response to a team request.

While commercial firms went through an organizational transformation to
support IPTs, in many respects DOD maintained the status quo after it
adopted the IPT policy. Organizations set up years ago around functional
disciplines, such as engineering and financial management, continue to write
guidelines for their functions, and to hire, train, and manage the career
progression of the acquisition workforce. Thus, they still wield
considerable control over members of program teams. When a program office is
set up to develop and produce a new weapon system, the staff is drawn from
these organizations but maintains their professional ties to them. Program
offices and their IPTs are in essence superimposed over the standing
functional organizations. Performance appraisals for staff working on the
weapons we reviewed are still largely controlled by the functional
organizations, not the program teams. Nearly 80 percent of the team members
we interviewed said that they continue to be evaluated by superiors in their
parent functional organization, not the IPT leader. Furthermore, most team
members were not aware whether their performance appraisers received input
from the IPT supervisors.

In the programs experiencing developmental problems, DOD did not
systematically involve IPTs in setting product development goals. Often,
these goals were not realistic and resulted from overselling a new program
in its early stages. This made it unlikely for any team, regardless of
capability, to meet the goals and difficult to hold team members accountable
for results. According to most IPT members we interviewed, key product
goals, such as system cost, delivery schedule, and performance requirements
were often fixed and outside of the team's control. Their responses are
captured in figure 14. Teams Did Not Have

Control Over Goals

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 46 GAO- 01- 510 Best Practices

Figure 14: Percentage of DOD IPT Members That Perceived Key Product Elements
As Outside the Team's Control

Over half of the team members believe the key product elements- cost,
schedule, requirements are outside of the team's control.

Source: GAO analysis.

In some cases, the key product goals were established during the initial
concept stage- years before IPTs were set up. We have previously reported
that such goals are often set optimistically, reducing the probability that
they can be achieved despite best efforts. One program manager told us that
overselling at the concept stage locked the program and its IPTs into
unachievable goals. Of the IPT members interviewed, 45 percent stated that
the fixed elements hampered their decision- making ability. For example, an
IPT leader told us that during the concept stage, a requirement was set that
the program would use commercial off- the- shelf technology. When a key
piece of commercial software unexpectedly became unavailable and there were
uncertainties regarding the reliability of other commercial products, the
IPT could not change the requirement.

No Elements are Fixed

14% Two Elements Fixed

18% Three Elements

Fixed* 51%

One Element Fixed 17%

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 47 GAO- 01- 510 Best Practices

It was the team leader's opinion that the requirement led to problems that
contributed to significant delays in the delivery schedule.

DOD teams were not routinely held accountable for product outcomes. Two
program managers informed us that instead their teams were held accountable
for how well they managed aspects of the acquisition process, such as test
and evaluation. A program manager with cost and schedule overruns was
hesitant to hold the teams accountable because the original goals were never
achievable. Similarly, a team leader unable to maintain the program schedule
stated that his team was not a failure because the schedule goal was
unrealistic and out of the team's control. Another team member noted that
IPTs can influence key program elements but that the teams are not penalized
when their actions lead to cost and schedule overruns.

DOD's incentives for managing weapon systems do not put IPTs in as good a
position to succeed as their commercial counterparts. Programs are started
with a legitimate desire for an improved combat capability. However, the
intense competition for funds needed to launch a new weapon system program
encourages the conceptualization of a new weapon that offers significantly
greater- even unique- performance relative to its predecessor. As a result,
new programs are often started with immature technologies, that deny
managers and teams the high levels of product knowledge that are important
to realism. Moreover, new programs must fit into forecasts of available
funding; as a result, incentives are strong to make optimistic estimates of
cost and cycle time. Because actual cycle times can be very long, lasting 10
to 15 years, the more tangible goals for teams become securing the next
increment of funding and getting approval for moving into the next stage of
development- process, versus product, goals. Weapon system programs are
developed in a more critical environment in which evidence of problems, such
as an unreachable performance goal, can invite criticism and a potential
loss of funding and other support. Thus, the candor needed to identify and
resolve trade- offs, for which IPTs are ideally suited, is implicitly
discouraged.

Accountability for meeting weapon system goals is difficult to establish.
Unlike the commercial environment, in DOD the customer is very involved
throughout the development cycle and becomes increasingly vested in a
particular weapon. The DOD customer is thus not likely to walk away from a
weapon even if it took longer, cost more, and performed less than
anticipated. Long cycle times, coupled with DOD's policy for rotating
Incentives in DOD

Environment Create Obstacles for IPTs

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 48 GAO- 01- 510 Best Practices

military personnel, also impair accountability. Military personnel,
including most program managers, stay with a program for a limited amount of
time and then are rotated to new assignments. A DOD analysis shows that a
program with an 11- year development cycle will have, on the average, four
program managers. Most of the military personnel we interviewed did not
expect to participate on a team throughout the program's development. Other
team members believed that, as a result, military personnel may have less
accountability or commitment to the team.

DOD's employment of defense contractors to design and build its weapon
systems is an additional complication for IPTs that commercial firms do not
face. With the exception of two programs, the DOD and contractor personnel
worked on separate teams, usually in different geographic areas. Team
leaders and members informed us that a lack of trust between the DOD program
office and the contractor might inhibit effective teaming. Team members also
perceive that the DOD program office teams and the contractor might have
conflicting incentives or competing interests. For example, a team leader
noted that contractors are paid to participate in IPT activities. As a
result, the leader believed the contractor had an incentive to generate
meaningless IPT documents to receive credit for the activities. According to
a member of another team, the contractor was not interested in a proposal
made by the DOD team that could reduce the program schedule because it would
have reduced the contractor's payment. On the other hand, a contractor
representative cited the contractor's inability to convince DOD team members
that increasing the test schedule would unnecessarily extend the program
schedule.

In other cases, DOD team members believed the contractors resisted trade-
offs and other changes that could have prevented problems because the
contractor would be paid more money to correct rather than to prevent
problems. Consistent with the competitive pressures at the start of a
program, one team co- leader stated that the contract proposal process may
encourage contractors to underestimate cost and schedule estimates and
overestimate performance expectations to win the contract. Those estimates
then contribute to unrealistic program baselines. The point is not so much
that the team members' statements are accurate, but that their perceptions
pose obstacles to effective IPTs and further blur accountability for
successfully delivering the product.

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 49 GAO- 01- 510 Best Practices

The Advanced Amphibious Assault Vehicle program has many of the teaming
characteristics of leading commercial firms. This accomplishment was made
possible by the unique environment- or culture- that the program's initial
manager created to center around the IPT approach. The IPTs were responsible
for delivering components of the vehicle and had the knowledge and authority
to make trade- offs, such as reducing the calibration requirement for the
30- mm gun 3 . Unlike the other DOD cases, Advanced Amphibious Assault
Vehicle IPTs were not made to fit among standing organizations and
procedures. Clearly, the program manager's vision and entrepreneurship were
the driving forces behind the program's success with IPTs- traits that one
cannot reasonably expect to find across the board. However, his recognition
of the need to create a culture for such teams, the steps he took to create
that culture, and the other conditions that helped make IPTs successful on
this program are both observable and replicable.

The original program manager saw IPTs as the key to the new vehicle's
success and collocation as the only way to break down the barriers between
DOD program offices and contractors. By making collocation a requirement in
the request for contract proposals, he forced the contractor and DOD program
office staff to work in the same facility- the first DOD weapon system
program office to do so. Moreover, he created one set of teams- comprised of
both Marine Corps and contractor staff. Officials and team members from both
the Marine Corps and the contractor were adamant that the IPT structure,
bolstered by collocation, created a positive working relationship by helping
to break down barriers to trust, improving communication, and creating
common goals between the Marine Corps and the program office for developing
the vehicle.

The program manager actively sought to create a shared understanding of the
customer's needs among Marine Corps and contractor staff. He provided
opportunities for the contractor's engineers to learn first hand the user's
conditions and needs. For example, he had the contractor's staff spend a
night aboard an amphibious ship and stay in the troop compartment.
Contractor staff drove the existing amphibious assault

3 Another example of trade- offs made by amphibious vehicle IPTs includes
that between the baseline transmission and the six- speed transmission.
Although the six- speed transmission required a greater investment during
the development phase of the program, it is expected to result in a 21 to 1
rate of return during the life- cycle of the vehicle. Additional benefits of
the six- speed transmission are a 5 percent decrease in fuel consumption and
a 40 percent increase in the interval before maintenance is required.
Amphibious Vehicle

Program Found Ways to Provide a More Supportive IPT Environment

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 50 GAO- 01- 510 Best Practices

vehicle to understand the environment that Marines were operating in and the
limitations of the current vehicle. Contractors also took Marine Corps
leadership training classes, where they heard the experiences of a Marine
Corps corporal who almost drowned in the current vehicle. Moreover, because
the prototypes for the new vehicle are being built in the facility where the
IPTs work, the teams can see and experience first hand the results of their
design efforts. This provides immediate feedback to the team members and
fosters a sense of ownership.

Other features of the program were conducive to effective IPTs. Because the
program was the most important acquisition for the Marine Corps, it had full
and stable funding, and the program manager had the full backing of the
Marine Corps hierarchy. This enabled the program to provide financial
incentives, including bonuses to the contractor personnel, when key
performance requirements were exceeded and to make significant investments
in training and information systems. We have previously reported that the
program emulated the best practices of leading commercial firms in targeting
hands- on training to staff on key initiatives, including IPTs. 4 The
program also developed a paperless communication system; a virtual product
model of the amphibious vehicle; and an on- line, real- time shared data
source that enabled teams to operate from the same set of records. Moreover,
the program is one of the few we have found that matured key technologies,
most notably the propulsion system, before the program was started. 5
Finally, the program has had very low turnover in key personnel; the
original program manager stayed with the program for 10 years. Both he and
the deputy program manager worked on the enabling technologies in a science
and technology effort before the program began.

4 Best Practices: DOD Training Can Do More to Help Weapon System Programs
Implement Best Practices (GAO/ NSIAD- 99- 206, Aug. 16, 1999). 5 Best
Practices: Better Management of Technology Development Can Improve Weapon
System Outcomes (GAO/ NSIAD- 99- 162, July 30, 1999).

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 51 GAO- 01- 510 Best Practices

The effect the environment has on the success of IPTs is consistent with
what we have observed on other best practices. In previous reports on how
best practices can improve the weapon acquisition process, we have
consistently pointed out that practices are adopted because they help a
program- commercial or defense- succeed in its environment (see Related GAO
Products). Thus, to identify specific best practices from commercial firms
and simply recommend that DOD adopt them will not produce the desired
improvement. Rather, one must first address how to change the factors that
reinforce the prevailing- and suboptimal- practices. In our reports, we have
identified a number of actions DOD needs to take to make the weapon system
acquisition environment more conducive to adopting best practices. DOD has
agreed with these reports and with the need to make changes in its
environment. Perhaps the most significant action DOD has taken to date has
been to revamp its policies that guide weapon acquisitions to emulate some
of the conditions that encourage best practices. DOD's success in
implementing these policies on individual weapon system programs will affect
several conditions important to creating effective IPTs.

Actions we have previously recommended or suggested DOD take that we believe
can help IPTs operate successfully are summarized in the points that follow:

? Mature key technologies and match available resources with weapon system
requirements before launching a development program.

? Develop an initial version of a weapon system that provides a worthwhile
capability and introduce more advanced capabilities in later versions as the
enabling technologies mature.

? Make the acquisition process knowledge- based by focusing on attaining key
aspects of product knowledge- technology maturity, design maturity, and
production process maturity- at the right times.

? Keep weapon system development cycle times to 5 years or less and tie a
program manager's tenure to the full cycle.

? Target training on key improvements to acquisition management to program
offices and ensure that it is delivered to the program office work site.

? Involve key suppliers- that is, those firms that make key components and
subsystems for prime contractors- early in the design and development
process.

? Send the right signals on individual weapon system decisions- that is,
decisions that reinforce the above principles rather than make exceptions to
them. Previous GAO

Recommendations and DOD Actions Are Aimed at Making the Weapon System
Environment More Conducive to Best Practices

Chapter 4: Differences in DOD and Commercial Teaming Approach Reflect
Different Environments

Page 52 GAO- 01- 510 Best Practices

These actions, collectively, can (1) lower the pressures to oversell weapon
system performance and underestimate costs and schedules at program launch,
(2) infuse more knowledge of a new weapon system earlier and throughout the
development process, (3) make people more capable of delivering the weapon
system as promised, and (4) hold people more accountable for delivering the
weapon system.

DOD has made important changes to its policies that guide how weapon systems
are acquired and managed, commonly referred to as the “5000

series.” Among these changes are (1) changing the launch point for new
weapon system programs and calling for technologies to be mature before
including them on a program and (2) adopting an evolutionary approach to
developing new weapons, allowing for better versions with more advanced
technologies to be fielded when they are ready. In other statements and
memoranda, DOD has called for limiting cycle time to 5 to 7 years, agreed to
take steps to better match technology and other resources with requirements
before launching new programs, and revamped its professional education for
the acquisition workforce to be more responsive to managers' needs and more
capable of providing needed help to the workplace.

These are positive steps toward creating a better environment for best
practices. Clearly, more steps remain to be taken. Perhaps the most
important of these is implementation at the service and individual program
level. Thus far, the positive changes we have seen on specific programs,
including IPTs, have been the result of extraordinary effort on the part of
individual executives and managers. The systemic pressures and incentives
that reinforce the practices of the past have been slow to change.

Chapter 5: Conclusions and Recommendations Page 53 GAO- 01- 510 Best
Practices

When properly armed with knowledge and authority, IPTs improve decision-
making and help better products to be developed more quickly. They do this
by reducing rework in product planning, design, and manufacturing; reducing
cycle time and costs; and improving first- time product quality. At issue is
not so much whether to employ IPTs but rather how to employ them
effectively. Leading commercial firms have been successful with IPTs because
(1) they have given their teams the key elements of IPTs, (2) they have
taken action and made investments at the corporate level to ensure
implementation occurs at the program execution level, and (3) their
competitive environment creates incentives that align well with IPTs. In
addition, their IPTs have worked in conjunction with other good management
practices, such as maturing technologies before they are turned over to a
team responsible for delivering the final product.

DOD has rightly endorsed IPTs as a vehicle to improve management of the
development of weapon systems. On the programs that were experiencing
problems in meeting their objectives, IPTs were not effective because they
did not have the knowledge or authority to recognize problems early and
resolve them. The teams were at a disadvantage because they did not possess
the key elements of IPTs and in fact were IPTs in name only; DOD did not
back policies up with actions to ensure IPTs were implemented at the program
execution level; and the DOD environment for managing weapon systems created
obstacles, not incentives, for IPTs.

In leading commercial companies, the corporate environment has become
conducive to IPTs, so that the typical program manager can employ IPTs
effectively. In DOD, it takes a rare program manager to make IPTs work. Much
of the success of IPTs on the amphibious vehicle program, for example, can
be attributed to extraordinary individual efforts and unique circumstances,
rather than to a systematic DOD approach. The challenge for DOD is to create
the conditions under which the resources and tools typically provided to
most weapon system program managers will enable the effective use of IPTs.
We have previously reported on how DOD can create conditions more conducive
to adopting best practices and DOD has taken initial actions to do so. These
changes could make the DOD environment more conducive to IPTs. If DOD is
successful in implementing changes at the individual program execution
level, it will be more likely that the typical program manager will be able
to create effective IPTs. Still, DOD must take specific steps to put program
offices in a better position to create the elements of effective IPTs.
Chapter 5: Conclusions and

Recommendations Conclusions

Chapter 5: Conclusions and Recommendations Page 54 GAO- 01- 510 Best
Practices

We recommend that the Secretary of Defense designate as IPTs only those
teams that will have the day- to- day responsibility for developing and
delivering a product, such as a weapon system, and the cross- section of
expertise to do so. For those teams so designated, we recommend the
Secretary of Defense use the IPT practices and characteristics in this
report to develop and communicate to program offices standards for defining
what constitutes an effective IPT. Such standards could then be used to (1)
determine the extent that IPTs have been effectively implemented in weapon
system programs and (2) track progress in implementing IPTs.

We also recommend that the Secretary of Defense put program offices in a
better position to create and sustain effective IPTs by

? refining the IPT designation to be used exclusively for new product
development teams encompassing core components;

? ensuring IPTs have the sufficient knowledge and authority by (1) giving
them responsibility for a deliverable product, along with the authority to
make decisions on that product and (2) providing representation from each
functional area of expertise critical to product design, development, and
manufacture;

? enabling IPT leaders to participate in program goal setting and holding
the teams accountable for achieving those goals;

? encouraging and supporting program managers' efforts to collocate team
members, including contractor personnel;

? providing program managers and team leaders with greater authority and
control over selection of IPT members, rating authority, and rotation of
members; and

? establishing indicators to enable program and team management to evaluate
the performance of IPTs, such as the efficiency of the decisionmaking
process employed by a team.

Finally, we recommend that the Secretary of Defense help program managers
and team leaders become catalysts for IPT implementation by

? devoting professional education to make existing and prospective program
managers and IPT leaders aware of and capable of creating the culture
necessary to foster IPTs in weapon system programs; Recommendations for

Executive Action

Chapter 5: Conclusions and Recommendations Page 55 GAO- 01- 510 Best
Practices

? drawing lessons from programs like the Advanced Amphibious Assault Vehicle
to (1) bridge barriers between program offices and contractors and (2) use
collocation to break down barriers and create trust; and

? supporting IPT s with the resources- such as information technology,
training, and expert help- needed to maximize their effectiveness.

DOD concurred with a draft of this report and most of its recommendations
and agreed to emphasize the practices and characteristics discussed in the
report concerning the operation of program offices' integrated product
teams. (See app. I.)

DOD partially concurred with the recommendation that only those teams with
day- to– day responsibility for a product and the necessary cross
section of expertise be designated as integrated product teams. It noted
that while such teams are unique and require certain conditions and
investments, the designation “integrated product team” has
spread throughout the workforce and has benefited other teams as well. DOD
did not want to lose those benefits by limiting the designation. DOD's
position reflects the practical reality that the designation of integrated
product teams is now difficult to restrict. Given the Department's
recognition that program office integrated product teams require certain
conditions and investments to succeed that other integrated product teams
may not need, we believe that if the Department takes the actions contained
in our other recommendations, the objective of the recommendation will be
achieved. Agency Comments

and Our Evaluation

Appendix I: Comments From the Department of Defense

Page 56 GAO- 01- 510 Best Practices

Appendix I: Comments From the Department of Defense

Appendix I: Comments From the Department of Defense

Page 57 GAO- 01- 510 Best Practices

Now on pp. 7 and 54. Now on pp. 7 and 54.

Appendix I: Comments From the Department of Defense

Page 58 GAO- 01- 510 Best Practices

Now on pp. 7, 54, and 55. Now on pp. 7 and 54.

Appendix II: GAO Contacts and Staff Acknowledgments

Page 59 GAO- 01- 510 Best Practices

Jack L. Brock (202) 512- 4841 Paul L. Francis (202) 512- 2811

In addition to those named above, Russ Allen, Kathleen Joyce, Gordon Lusby,
Marco Martinez, Elisabeth Ryan, and Yelena Thompson made key contributions
to this report. Appendix II: GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

Related GAO Products Page 60 GAO- 01- 510 Best Practices

Best Practices: Better Matching of Needs and Resources Will Lead to Better
Weapon System Outcomes (GAO- 01- 288 March 8, 2001).

Best Practices: A More Constructive Test Approach Is Key to Better Weapon
System Outcomes (GAO/ NSIAD- 00- 199 July 31, 2000).

Defense Acquisition: Employing Best Practices Can Shape Better Weapon System
Decisions (GAO/ T- NSIAD- 00- 137, Apr. 26, 2000).

Best Practices: DOD Training Can Do More to Help Weapon System Programs
Implement Best Practices (GAO/ NSIAD- 99- 206, Aug. 16, 1999).

Best Practices: Better Management of Technology Development Can Improve
Weapon System Outcomes (GAO/ NSIAD- 99- 162, July 30, 1999).

Defense Acquisitions: Best Commercial Practices Can Improve Program Outcomes
(GAO/ T- NSIAD- 99- 116, Mar. 17, 1999).

Defense Acquisition: Improved Program Outcomes Are Possible

(GAO/ T- NSIAD- 98- 123, Mar. 17, 1998).

Best Practices: DOD Can Help Suppliers Contribute More to Weapon System
Programs (GAO/ NSIAD- 98- 87, Mar. 17, 1998).

Best Practices: Successful Application to Weapon Acquisition Requires
Changes in DOD's Environment (GAO/ NSIAD- 98- 56, Feb. 24, 1998).

Major Acquisitions: Significant Changes Underway in DOD's Earned Value
Management Process (GAO/ NSIAD- 97- 108, May 5, 1997).

Best Practices: Commercial Quality Assurance Practices Offer Improvements
for DOD (GAO/ NSIAD- 96- 162, Aug. 26, 1996). Related GAO Products

(707465)

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