Best Practices: Stronger Practices Needed to Improve DOD
Technology Transition Processes (14-SEP-06, GAO-06-883).
The Department of Defense (DOD) relies on its science and
technology community to develop innovative technologies for
weapon systems, spending $13 billion on basic, applied, and
advanced technology research. Several GAO reports have addressed
problems in transitioning technologies to the acquisition
community. This report, which was prepared under the Comptroller
General's authority to conduct evaluations, compares DOD's
technology transition processes with commercial best practices.
Specifically, GAO identifies technology transition techniques
used by leading companies and assesses the extent to which DOD
uses the techniques
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-883
ACCNO: A60909
TITLE: Best Practices: Stronger Practices Needed to Improve DOD
Technology Transition Processes
DATE: 09/14/2006
SUBJECT: Best practices
Comparative analysis
Cost analysis
Cost overruns
Defense cost control
Defense procurement
Evaluation criteria
Military research and development
Military technology
Program evaluation
Risk assessment
Risk management
Schedule slippages
Strategic planning
Technology transfer
Weapons research and development
Weapons systems
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GAO-06-883
* Results in Brief
* Background
* Leading Companies Rely on Strategic Planning, a Gated Proces
* Strategic Planning Is a Critical Precursor to Successful Tra
* Leading Companies Use Gated Reviews to Validate Readiness fo
* Technology Transition Is Bolstered by Formal Agreements, Rel
* Technology Transition Agreements
* Relationship Managers
* Metrics
* DOD Lacks Breadth and Depth of Techniques That Leading Compa
* Strategic Planning Affects DOD's Ability to Meet Warfighters
* DOD Does Not Use a Disciplined, Gated Process to Test for Re
* DOD Is Adopting Transition Tools, but Use Is Not Widespread
* Technology Transition Agreements
* Relationship Managers
* DOD Programs to Aid Transition
* Metrics
* Differences in Environment and Incentives Contribute to Diff
* Conclusions
* Recommendations for Executive Action
* Agency Comments and Our Evaluation
* Boeing
* 3M
* IBM
* Motorola
* GAO's Mission
* Obtaining Copies of GAO Reports and Testimony
* Order by Mail or Phone
* To Report Fraud, Waste, and Abuse in Federal Programs
* Congressional Relations
* Public Affairs
Report to Congressional Committees
United States Government Accountability Office
GAO
September 2006
BEST PRACTICES
Stronger Practices Needed to Improve DOD Technology Transition Processes
GAO-06-883
Contents
Letter 1
Results in Brief 3
Background 5
Leading Companies Rely on Strategic Planning, a Gated Process, and Tools
to Transition Needed Technologies 9
DOD Lacks Breadth and Depth of Techniques That Leading Companies Use to
Effectively Transition Technologies 22
Differences in Environment and Incentives Contribute to Different
Practices and Outcomes 36
Conclusions 39
Recommendations for Executive Action 40
Agency Comments and Our Evaluation 41
Appendix I Objectives, Scope, and Methodology 46
Appendix II Comments from the Department of Defense 50
Appendix III DOD Research, Development, Technology, and Engineering Budget
54
Appendix IV DOD Technology Readiness Levels 56
Related GAO Products 57
Tables
Table 1: DOD's Two Development Phases with Technology-Related Activities 6
Table 2: Metrics Used by Leading Companies to Assess Lab Projects and
Processes 20
Figures
Figure 1: Fiscal Year 2006 Categories for DOD Research, Development, Test,
and Evaluation Budget (dollars in billions) 7
Figure 2: Average Program Research, Development, Test, and Evaluation Cost
Growth from First Full Estimate (sample of 52 DOD weapon programs) 8
Figure 3: General Flow of Process Leading Up to Technology Transition 10
Figure 4: Generalized Depiction of Deliverables and Funding under Gated
Process 12
Figure 5: Linkage between Technology Development and Product Development
14
Figure 6: Notional Boeing Technology Maturity Scorecard for a Hypothetical
Technology 16
Figure 7: Questions That Should Be Answered in Technology Transition
Agreements 17
Figure 8: Communication Flow for Motorola's Three Levels of Relationship
Managers 18
Figure 9: Path that DOD Routinely Follows for Technology Development and
Product Development 23
Figure 10: Criteria for DOD Technology Development Phase 26
Figure 11: Accountability for Management and Funding of Technology 29
Figure 12: Excerpts from a Defense Science Board Task Force Report on the
Manufacturing Technology Program 31
Figure 13: DARPA, a Success Story 33
Abbreviations
DARPA Defense Advanced Research Projects Agency DDRE Director, Defense
Research and Engineering DOD Department of Defense RDT&E research,
development, test, and evaluation S&T science and technology TRL
technology readiness level
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United States Government Accountability Office
Washington, DC 20548
September 14, 2006
The Honorable John W. Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services United States Senate
The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services House of Representatives
The Department of Defense (DOD) relies on the technological superiority of
its weapon systems and armed forces to protect U.S. interests at home and
abroad. The DOD science and technology (S&T) community is tasked with
ensuring that technologies are mature when DOD's acquisition community
takes over and integrates the technologies into weapon systems. In fiscal
year 2006, DOD plans to spend approximately $13 billion1 in its science
and technology efforts to develop technologies that are as innovative as
stealth and global positioning were when they were first developed. In
doing its work, the S&T community must strike a balance between meeting
the short-term needs of today's warfighters and the long-term needs of
future years' warfighters. Achieving this balance is made more challenging
because of the need to keep pace with or exceed the pace of innovation and
to counter technologies developed by potential U.S. adversaries.
Although the United States has produced the best weapons in the world, its
acquisition programs often incur cost overruns, schedule delays, and
performance shortfalls that undermine DOD's buying power. This dilemma is
due in part to DOD's difficulty transitioning technologies from a
technology development environment to an acquisition program. Because the
acquisition community frequently pulls technologies too early, it takes on
the additional task of maturing the technologies-an activity that is the
primary responsibility of technology developers-at the start of an
acquisition program.2 The start of a program ushers in a high-cost,
delivery-oriented phase in which the acquisition community is supposed to
be focused on integrating subsystems and working on system development and
demonstration. DOD has continued to allow the acquisition community to
take over this task before the S&T community considers the technologies
ready for transition. Numerous GAO reports have addressed the problems of
proceeding with immature technologies and have explained what leading
commercial companies do to ward off such problems.3
1This represents the amount of money Congress authorized DOD for basic
research, applied research, and advanced technology development.
This report examines DOD's technology transition processes through the
prism of best practices. Specifically, our objectives are to (1) identify
techniques that commercial companies use to transition mature technologies
before the start of product development and (2) assess the extent to which
DOD is using these techniques. We also describe how the environments at
private companies and DOD differ with regard to technology development.
The overall effort to hand off and integrate mature technologies is
referred to in this report as technology transition. Also in this report,
the private sector acquisition community is generally referred to as a
product line or business unit. GAO has prepared this report under the
Comptroller General's authority to conduct evaluations on his own
initiative as part of a continued effort to assist Congress in overseeing
DOD's technology and acquisition investments.
In conducting our work, we interviewed lab and product line managers at
four leading commercial companies-Boeing, IBM, Motorola, and 3M-to
identify processes for successfully transitioning mature technologies.
These companies develop a variety of products such as the 787 airplane,
network servers, integrated radio communications and information
solutions, and fuel cell technology for cars, buses, trains, homes, and
businesses. We also conducted interviews and collected pertinent documents
from each of DOD's military services and the Defense Advanced Research
Projects Agency (DARPA), which is the central science and technology
organization for DOD. We compared commercial and DOD practices to identify
potential areas for improvement. Appendix I includes additional details
about how we performed our review, which was conducted from June 2005 to
July 2006 in accordance with generally accepted government auditing
standards.
2GAO, Defense Acquisitions: Assessments of Selected Major Weapon Programs.
GAO-06-391 (Washington, D.C.: March 31, 2006).
3GAO, Best Practices: Better Management of Technology Development Can
Improve Weapon System Outcomes. GAO/NSIAD-99-162 (Washington, D.C.: July
30, 1999) and Best Practices: Better Matching of Needs and Resources Will
Lead to Better Weapon System Outcomes GAO-01-288 ( Washington, D.C.: March
8, 2001). Other best practices reports are listed in the Related GAO
Products section at the back of this report.
Results in Brief
Successful transition in leading companies starts with strong strategic
planning followed by a structured technology development process led by
research labs and supported by tools that pave the way for a smooth
handoff to the product line. Strategic planning is considered a precursor
to transition and allows managers to identify market needs so the company
can quickly adapt its technology portfolios to meet those needs. A gated
technology development process continually tests for relevancy and
feasibility of technologies and gauges the commitment of product line
managers to accept them. Once a technology is ready to transition,
management and funding responsibilities gradually shift from the lab to
the product line. By the end of transition, but before product development
starts, the technology is validated as mature enough for use in the
intended product. Companies highlighted three tools to facilitate
transition: technology transition agreements, relationship managers, and
metrics. The agreements put in writing the technology and business-related
expectations, such as specific cost, schedule, and performance
characteristics that labs must demonstrate. The agreements also may
require documenting manufacturing costs or specifying whether certain lab
scientists will be loaned to the product line to provide continuity in
technical knowledge. Relationship managers communicate across the labs and
product lines to address transition issues. Last, metrics gauge the
effectiveness of the technologies and the process itself. These tools
require the active involvement of the labs and product lines to ensure
successful transition of technologies to new products.
Over the past several years, DOD has taken steps to improve its transition
processes, but it lacks many of the techniques that are hallmarks of
leading companies' ability to transition technology smoothly onto new
products. From a strategic perspective, the department lacks strong
influence at the corporate level to guide the department's technology
investments. In addition, DOD does not use a gated process with criteria
that would allow lab and program managers to know when a technology is
ready to transition. Consequently, technologies are often not ready when
needed and acquisition programs pull the technologies into their programs
too early, leading to inefficiency during product development and cost and
schedule increases. We found that DOD has taken some positive steps to aid
technology transition. They hold promise, but must be accepted, improved,
and replicated significantly more than currently to have a positive
impact. For example, each of the military services has established boards
to select and oversee some of their technology projects and has elevated
the importance of meaningful metrics. They are also using technology
transition agreements. However, use of these agreements thus far has been
low. With regard to improving communication, DARPA is using relationship
managers to address transition issues. And the Office of the Secretary of
Defense has initiated a number of new programs, including the Joint
Capability Technology Demonstration program, which requires the S&T and
acquisition communities to work more collaboratively earlier in the
acquisition process.
The environment and incentives of private world-class companies differ
dramatically from DOD's. Despite these differences, the practices used by
commercial companies can help DOD make better progress in transitioning
technologies to weapon programs. Private companies operate in a
competitive environment that demands speedy delivery of innovative,
high-quality products to satisfy market needs or the company will go out
of business. DOD has a variety of "customers" and complex relationships
that often hinder the chief technology officer at the corporate level from
providing the type of strategic leadership found at successful companies.
DOD puts pressure on itself to develop many new technologies. And because
competition for funding is fierce, the technologies described with many
superlatives for speed and lethality tend to get more attention than
others do. We previously reported that to secure funding, DOD program
managers frequently make overly optimistic promises to the warfighter
about technologies' cost, feasibility, risk, and delivery schedule.4 The
challenge for DOD and congressional decision makers lies not only in the
"how to" aspects of technology transition but also in creating stronger
and more uniform incentives that encourage the S&T and acquisition
communities to work together to deliver mature technologies to programs.
We are making recommendations that DOD strengthen its technology
development and transition processes by developing a gated process that
includes a transition phase and identifies criteria that can be used to
support funding decisions. In addition, we are recommending that DOD
expand the use of transition agreements, relationship managers, and
metrics. We also recommend that DOD set aside a portion of research and
development (advanced component development and prototypes) funds for the
S&T community to manage the transition of technologies to acquisition
programs.
4GAO, Best Practices: Better Support of Weapon System Program Managers
Needed to Improve Outcomes. GAO-06-110 (Washington, D.C.: Nov. 1, 2005).
DOD concurred with our recommendations to develop a gated process for
developing and transitioning technology and to expand the use of
technology transition agreements, although we do not see its plans as
fully responsive. DOD partially concurred with the recommendation to
include additional metrics in technology transition agreements, stating
that it recently developed metrics to gauge manufacturing readiness and
that other metrics should be applied on a project-by-project basis. DOD
also partially concurred with expanding the use of relationship managers,
stating it already uses written documents to facilitate communication.
However, DOD agreed that more time should be devoted by staff at the
execution level on transition activities. We continue to believe that
additional person-to-person communication needs to take place at all
levels within the S&T and acquisition communities to supplement the
written agreements. DOD did not concur with our recommendation to adopt
more process oriented metrics because it believes that other processes it
plans to mature over the next 4-5 years will capture these metrics. We
believe the metrics DOD wants to use will not allow the department to
analyze its investment portfolio and make adjustments appropriately.
Finally, DOD did not agree with our recommendation to set aside a portion
of its 6.4 budget activity funding, known as advanced component
development and prototypes funds, for the S&T community to manage for the
transition of technology. DOD does not believe the S&T community should
have additional resources to mature technologies to the point of
successful transition to programs. We found otherwise in the commercial
world and believe DOD's approach to funding technology development and
transition is flawed.
Background
Mature technologies are pivotal in developing new products. Without mature
technologies at the outset, a product development program will almost
certainly incur cost and schedule problems. Effectively managing
technology as a separate process from product development can improve the
potential for on-time product delivery at reduced cost. Leading companies
know this and have established disciplined processes to prioritize their
technology investments based on market needs, eliminate technologies that
are not relevant or feasible, balance technology push and customer pull,
and then transition technologies to product development efficiently.
Overall, effective management of technology facilitates the delivery of
new, innovative products to the user in less time. While DOD is very aware
of the need for new advanced technology in its weapon systems, it has not
always been effective in transitioning mature and relevant technologies to
product development.
Development of DOD's new weapon systems depends on two distinct phases:
technology development and product development. DOD relies on its S&T
community to identify, pursue, and develop new technologies that improve
and enhance military operations and ensure technological superiority over
adversaries. This includes the development of technologies for new weapons
programs as well as those that will be inserted into existing systems. The
acquisition community takes these new technologies, develops weapon system
programs, and delivers the products-that is, the weapon systems-to the
warfighter. Table 1 shows technology-related activities that take place
during technology development and product development, who performs the
work, fiscal year 2006 funding, and overall goals.
Table 1: DOD's Two Development Phases with Technology-Related Activities
Technology development phase Product development phase
Activities: identify, fund, Activities: integrate, demonstrate,
develop, and manage new technology support, and upgrade technologies on
projects that warfighter needs weapon systems
Who does the work: government, Who does the work: prime developer,
industry, and academic industry supplier, and acquisition
technologists community's development lab engineers
2006 funding: about $13 billion 2006 funding: about $58 billion
Goal: demonstrate a technology or Goal: develop and deliver weapon
subsystem in a relevant environment systems to the warfighter
Source: DOD (data); GAO (presentation and analysis).
Note: Activities listed under the product development phase focus solely
on technology maturation and do not include other activities that the
acquisition community is responsible for, such as overall design and
manufacturing.
DOD uses research, development, test, and evaluation appropriations to
fund its technology activities. The budget is divided into categories that
generally follow a sequential path for developing technologies. Figure 1
shows the amount of money DOD spends in each category. (App. III contains
additional details about the budget.)
Figure 1: Fiscal Year 2006 Categories for DOD Research, Development, Test,
and Evaluation Budget (dollars in billions)
The S&T community controls the budget for basic research, applied
research, and advanced technology development. The budget category of
advanced component development and prototypes involves testing and
evaluating prototypes of systems or subsystems in a high-fidelity or
realistic environment before product development starts. DOD officials say
it is assumed that either the S&T community or the acquisition community
could carry out this work, but traditionally the acquisition side
prevails. After this point, additional technology-related activities are
completed as part of product development under the authority of the
acquisition community, namely, the program manager for a weapon system.
Prior GAO reports have said that DOD launches new weapon programs with
immature technology. We found this inability to mature the technology
before the start of product development to be a major contributor to
weapon system cost and schedule growth. In our March 2006 review of 52
major DOD weapon programs, we found that 90 percent of the programs
started with immature technologies5. More than half of the programs were
working with immature technologies at design review, when DOD acquisition
policy expects the design to be stable. And by the time production began,
one-third of programs still did not have mature technologies.
Not surprisingly, we found that DOD research, development, test, and
evaluation cost estimates increased dramatically for programs having
immature technologies at program start. Figure 2 shows the average cost
growth of DOD programs we reviewed when technologies were mature and
immature at program start.
Figure 2: Average Program Research, Development, Test, and Evaluation Cost
Growth from First Full Estimate (sample of 52 DOD weapon programs)
Programs that started with mature technologies have averaged a modest 4.8
percent cost growth above the first full estimate, whereas programs that
started with immature technologies have averaged about 35 percent cost
growth. Some programs experienced significantly greater cost growth. A
consequence of this cost growth is that the services typically deliver
weapon systems late, have to reduce quantities to stay within cost
estimates, shift funds away from other projects to make up for added
costs, or some combination of the three. For example, the Air Force has
incurred a 189 percent growth in the cost per aircraft for its F/A-22
tactical aircraft program, in large part because of technology maturation
issues. In response, the Air Force has reduced the quantity of F/A-22
aircraft it plans to procure by 72 percent from 648 to 183 to offset
escalating costs. In the case of the Space-Based Infrared System High
satellite, technology and design components matured late in development,
contributing to research, development, test, and evaluation cost growth
and four Nunn-McCurdy unit cost breaches6. Instead of purchasing five
satellites, the Air Force now plans to buy three at a program acquisition
unit cost of about $3.4 billion, a 315 percent increase.
5 GAO-06-391
Leading Companies Rely on Strategic Planning, a Gated Process, and Tools to
Transition Needed Technologies
To successfully develop and transition technologies from their labs to
their product lines, leading commercial companies depend on three key
techniques:
o strategic planning at the corporate level;
o a gated management review process that ensures a technology's
relevancy, feasibility, and transition readiness; and
o effective tools to solidify commitment, address transition
issues, and gauge project progress and process effectiveness.
Overall, corporations are incentivized to follow these critical
techniques because the opportunity cost of not meeting customer
demand is late delivery and lost revenues and market share for the
company. Through rigorous adherence to these practices, leading
companies increase chances of eventual success because the
strategy for developing the technology fits the company's
objectives, commitment is strong for incorporating the technology,
and only after the technology is considered mature enough for use
in a certain product does product development begin. Because the
cost of developing new and breakthrough technologies can be high,
funding typically comes from the corporate level rather than from
a single product line unit, enabling the company's product lines
to manage only product development risk, not technology risk as
well.
The central focus of this report is on how the lab and the product
line communities work together to solidify the final steps of
technology transition. Figure 3 depicts the general flow of
technology development and where technology transition resides in
the process.
610 U.S.C S: 2433 establishes the requirement for unit cost reports if
certain thresholds for program costs are exceeded (known as unit cost or
Nunn-McCurdy breaches). DOD is required to report to Congress and, if
applicable, certify the program to Congress.
Figure 3: General Flow of Process Leading Up to Technology Transition
This report touches briefly on strategic planning, which precedes
technology development. As the lab community identifies and develops
high-priority technologies during the technology development phase,
product line managers develop the business case for a new product by
identifying the market potential of the new product and using systems
engineering to set product requirements. This report does not focus on
these product line activities or on product development.7
Strategic Planning Is a Critical Precursor to Successful Transition
Strategic planning-the effort to identify desirable technologies and
prioritize resources-is an important early step in a company's ability to
eventually deliver the highest-priority technologies to various product
lines. Leading companies organize their research and development
activities into technological "thrusts", or competencies that represent
the core markets of their businesses. 3M and the other companies we
visited undergo strategic planning at least annually, and this process
enables corporate management to conduct portfolio analysis, identify
long-term market needs, and match the projects in each thrust area to
market needs. Eventually, managers determine which projects appear to be
relevant and feasible, which ones are applicable for which products,
whether the right projects are getting the right resources, whether the
company wants to be first to market, and whether the final products should
be released to the marketplace as soon as possible or several years down
the road. Managers may decide to establish new thrust areas as new ideas
come to light, rely on outside suppliers for some technology, or hire new
people to fill technology voids. Projects that no longer are relevant or
feasible are eventually terminated. This type of strategic planning is
critical to ensuring that the right technologies ultimately transition to
the right product line in an economical and timely way.
7Numerous GAO reports address issues surrounding product development. See
Related GAO Products at the end of this report.
Each company we visited funds technology differently, however, all ensure
that funding for early technology projects is protected at the corporate
level and not immediately beholden to product lines. 3M, for example, has
17 technological thrust areas, and the projects are directly funded with
seed money from the corporate level. IBM receives the majority of its
funding from the corporate level. IBM labs also receive and manage funding
from product lines for specific projects. Both Motorola and Boeing require
business units to fund a portion of lab costs each year based on their
historical usage of lab resources, but the labs have freedom to use those
funds in line with corporate strategy. Decisions are made at least
annually on the composition of projects in the portfolio so it includes
the most relevant and feasible projects.
Leading Companies Use Gated Reviews to Validate Readiness for Technology
Transition
After technology projects are selected for funding, they enter the
development "pipeline" where a gated process is used to manage and oversee
technology exploration, development, and transition. At each gated review,
lab managers assess technology progress and ensure that certain criteria
are met before technologies can enter the next stage of development. The
final phase is dedicated to technology transition activities. The number
and names of the gates vary by company, but the type of information
collected and knowledge obtained are similar. For example, 3M uses a
three-gate process, Boeing has a four-gate process, and Motorola has a
five-gate process. Regardless of where the funds came from-a corporate or
a product line unit-labs are responsible for managing, overseeing, and
using the money to fund technology projects until the projects have
transitioned to a product line. Figure 4 generally depicts the technology
development gates that companies use, lists types of deliverables expected
during each gate, and shows who provides funding.
Figure 4: Generalized Depiction of Deliverables and Funding under Gated
Process
Explore gate: Lab technologists turn technology proposals into viable,
executable projects that ideally will meet future market needs, while lab
managers determine the amount of resources they need to invest in the
projects. Funding goes to projects that are deemed relevant. Prior to the
gated review, technologists deliver to lab managers a preliminary
assessment of the competitiveness of the technology and a road map for
completion. Technologists must address key deliverables related to such
areas as manufacturing, intellectual property, marketing, life cycle
management, and plans for the next gate.
Develop gate: Technologists develop prototypes of the project and measure
performance for relevancy and feasibility on an eventual product.
Technologists deepen their understanding of the technology, refine the
technology solution, identify the most attractive market segments for
introducing the technology, and select a product line that will
incorporate the technology into a new product. 3M and Motorola require
product line commitment to transition a technology before the gated review
draws near. This prevents labs from wasting valuable time and resources
developing technologies that product lines do not want. Projects that do
not gain product line commitment will either be terminated or go through a
different process to demonstrate their relevancy and feasibility. Motorola
leadership, for example, has a special program called an early stage
accelerator under which selected projects can obtain funds to build
additional prototypes to demonstrate the value of technology to product
line managers or potential customers. Senior lab managers carefully
monitor these projects through quarterly reviews to determine how they are
progressing. If the project is not making sufficient progress, the project
is quickly terminated so resources can be spent on other projects.
Transition gate: Technologists demonstrate a prototype in an operational
environment. The product line maintains a "customer" role until managers
are confident that the technology will work in the intended product. Then
gradually, the responsibility for funding and further developing the
technology shifts from the lab to the product line. This shift in
responsibility requires up-front and continuous planning by both the lab
and product line communities to ensure a smooth transition. As shown in
figure 5, companies we visited plan for technology transition to occur
prior to program start. This provides product line managers sufficient
time to gain additional knowledge about a technology's attributes as they
are maturing it to its final form, fit, and function. Product line
managers, who concurrently have been working on the business case for the
product, are able to validate that the technology can be integrated into
the preliminary product design. In addition, they can develop more
reliable product development cost and revenue estimates before they are
locked into needing this technology as a product feature.
Figure 5: Linkage between Technology Development and Product Development
During the transition phase, labs and product lines must complete a number
of activities for transition to go smoothly. For example, labs must
demonstrate that the technology meets product line cost, schedule, and
performance requirements. In addition, production costs must be identified
and acceptable to the product line. According to 3M officials, past
experience has shown that costly manufacturing is a major reason for
product line managers deciding not to transition a technology. Labs must
also address intellectual property concerns, a step that is crucial to the
company's ability to be a market leader. Product lines must address any
people or organizational issues, such as the transition of jobs and
training requirements that may result from using the new technology. They
must also work out any agreements with the labs for on-going support. At
the end of the phase, technical documentation related to the technology is
transitioned from the labs to the product line.
Boeing Commercial Airplanes8 assesses the extent to which these
activities, as well as others, have been completed to determine whether a
particular technology is ready to transition. The information is then
summarized on a scorecard that lab and product line managers can use to
quickly identify areas that need additional attention. The scorecard is
updated continually and measures a technology's readiness from a business
and production standpoint as well as its technological readiness. Boeing's
labs have three phases for technology development, which they call
discovery, feasibility, and practicality, plus a technology transition
phase. Each technology is evaluated in 10 readiness categories, and bars
are plotted horizontally across the scorecard to indicate how much
objective evidence exists for technology readiness. Once a technology has
demonstrated full readiness in all 10 categories, it is ready to be
transitioned. Figure 6 shows a notional picture of a technology's
readiness at one point in time. Because the hypothetical technology has
reached full readiness in only five categories and is halfway through
transition in one category, the technology is not ready for transition.
The lab and product line would have to address issues involving readiness
categories 3, 4, 6 and 9 before transition can begin or the technology is
in jeopardy of not being applied to a product.
8Boeing has two primary businesses: Boeing Commercial Airplanes and Boeing
Integrated Defense systems. Both businesses are supported by the same
science and technology lab. However, the two businesses have different
tools for transitioning technology.
Figure 6: Notional Boeing Technology Maturity Scorecard for a Hypothetical
Technology
Technology Transition Is Bolstered by Formal Agreements, Relationship Managers,
and Metrics
Companies we visited use three tools to aid transition, including
technology transition agreements, relationship managers, and metrics.
Technology transition agreements are formal documents that detail the
specific cost, schedule, and performance attributes of the technology that
labs must demonstrate before transition can occur. Relationship managers
address the details and issues surrounding transition, and metrics allow
managers to identify the effectiveness of their technology development and
transition processes and make adjustments when necessary. These tools
require the active involvement of the labs and product lines to ensure
successful transition of technologies to new products.
Technology Transition Agreements
Labs and product lines use technology transition agreements to facilitate
each technology's transition to product development. What the agreements
specify varies by company but typically consists of specific technology
and business readiness metrics, such as cost, schedule, and performance
characteristics that labs must demonstrate for product line managers to
agree to accept the technology. As figure 7 shows, the agreements should
answer some basic questions.
Figure 7: Questions That Should Be Answered in Technology Transition
Agreements
Is it real?
Is it relevant?
Is it marketable?
Where will it transition?
Do we have product line support?
Source: GAO.
These formal agreements may also include identification of product line
resources needed to transition the technology, such as nonrecurring costs
to further mature the technology, as well as consideration of recurring
manufacturing costs associated with integrating the new technology on the
product. Metrics collected in the agreements are used by product line
managers to manage technology risk. For example, if the labs cannot
develop needed technology within cost and schedule parameters or with
specified performance characteristics, the product lines can terminate the
agreement and go with an alternative technology.
At Motorola, agreements enable technology project leaders to customize
their work for a particular product line's needs. Product lines may
request that the labs identify alternative technologies for a particular
product, produce a detailed report about a specific technology, or conduct
various tests to demonstrate the relevancy or feasibility of a technology.
Each of these items becomes a "deliverable" in the agreement. 3M uses
transition agreements only for technologies that are expected to go into a
product. 3M's agreements incorporate many of the same metrics used by
Motorola, including feasibility, relevancy, and application of the
technology. In addition, agreements include an assessment of the product
line's ability and commitment to transition technology. For example, they
evaluate a product line's resource constraints that could inhibit a
technology from transitioning, such as asking if the technology is too
expensive or if manufacturing it would be too costly. 3M officials told us
that some agreements include loaning key lab technologists to the product
line for a period of time so product line teams can maintain momentum
after the lab has signed off and moved on to developing technology for
other parts of the company.
Relationship Managers
3M, IBM, and Motorola use lab and product line relationship managers to
smooth transition. Relationship managers foster effective transition
practices by preventing the labs from pushing technologies that product
line managers do not want and by preventing product line managers from
pulling immature technologies from the labs. A Motorola official referred
to relationship managers as the most important communication tool because
communication occurs more frequently, thus allowing problems to be
identified and addressed more quickly.
Motorola designates key people at three different levels in both the labs
and the product line to serve as relationship managers. As a technology is
matured and demonstrated, communication intensifies and additional levels
of relationship managers become involved. Figure 8 depicts how Motorola's
relationship managers communicate with each other within the lab or
product line and with their designated counterparts in the other
community.
Figure 8: Communication Flow for Motorola's Three Levels of Relationship
Managers
Executive managers in Motorola's labs and product lines are responsible
for interfacing with each other on a periodic basis. Altogether, Motorola
has eight executive managers-four in the labs and four on the product line
side. Motorola officials told us that this number provides a one-to-one
match between the labs and the product lines. Lab executive managers are
responsible for ensuring product line needs are identified and new
technology projects are started or existing projects are reprioritized to
meet those needs. Their counterparts have the final word on what priority
each technology project has with respect to the needs of the product line.
Lab and product line executive managers are required to sign off on key
technology projects and milestones for the current year. In addition, they
try to remove any roadblocks within their own units and work with their
counterparts to address any roadblocks between the two communities.
Motorola considers liaisons the most critical in the process. Again, there
are four liaisons in the labs and four on the product line side. They are
the primary interface for coordination, collaboration, and communication
during technology development and transition. Liaisons in the lab have
broad oversight of technologies being developed and share information
about technology breakthroughs with their counterparts on the product line
side, and remove roadblocks for lab technologists. These lab liaisons work
intimately with their product line counterparts to approve technology
transition agreements and assess technology readiness. The lab liaisons
oversee 40 to 60 technology transition agreements at any one time.
Liaisons on the product line side are responsible for providing
information about the changing needs of the product lines on a more
real-time basis. They determine product line needs and priorities during
the annual planning process and remove roadblocks for technologists on the
product line side. Lab and product line liaisons are incentivized through
their annual performance assessments and pay increases to work together to
ensure the successful transition of technologies.
The most direct and constant communication is between the lab's
technologist, who developed the technology, and the product line's
technologist, who is responsible for maturing the technology for inclusion
into the product. These two technologists stay in continuous contact
because they are the ones who have the most working knowledge about the
technology. The lab technologist is expected to spend as much time as
needed to make sure that transition happens as smoothly as possible. While
the lab technologist does not become an official asset of a product line,
he or she might have to spend a period of time working in the product
line's development lab.
Metrics
Leading companies use product metrics-such as weight, power, and
reliability measurements-to assess the readiness of transitioning
technologies and process metrics-such as profit growth and cycle time-to
gauge the impact of their technology development processes and identify
areas for improvement. The companies analyze data gained from the use of
these metrics to evaluate how well they deliver on what is promised,
better understand the value of their respective science and technology
activities, and identify cases of inefficient investment in technologies
or underutilization of lab technologies. Table 2 provides a composite
example of metrics used at the companies we visited and the value of the
metrics to management.
Table 2: Metrics Used by Leading Companies to Assess Lab Projects and
Processes
Categories of metrics Examples of metrics Use of the metrics
Project
Technology-specific Nonrecurring development Allows lab and product
costs Scheduled delivery line managers to assess
Recurring manufacturing the status of technology
costs Performance development and whether
characteristics the technology meets the
needs of the product. If
o Size technologies do not meet
o Weight agreed-upon goals, the
o Power technology project may
o Reliability be terminated or the
product line manager may
Head count decide to include it on
a future product.
Process
Status Number of ongoing projects Provides lab managers
Number of projects with a information on how many
technology transition technology projects
agreement Number of transitioned, were
projects completed by labs terminated, and are
Number of technologies still ongoing. Companies
transitioned Number of expect that almost all
projects terminated technologies that make
it to the final stages
of technology
development will
transition. If they
experience a lower
transition rate than
expected, officials will
examine their processes
to determine what
changes are necessary to
improve transition or
determine why the
project was not
terminated earlier.
Timeliness Development cycle time Measures the amount of
Percentage of tasks on time time it takes labs to
Task slippage Time to develop technologies.
market The metrics allow lab
managers to identify and
focus on projects that
are moving slower than
expected. A lab project
may be terminated or
additional resources may
be allocated to speed up
development. Use of the
metrics allows product
line managers to decide
whether a technology
will be ready in time to
include on a given
product.
Impact Number of technologies Provides lab and
commercialized Number of corporate managers
multiple transitions Return feedback on the market
on investment Profit growth impact of their
Market share growth Orders technology investments
captured Cost reduction in terms of revenue and
Number of market share. The
patents/influential papers metrics also provide
Customer satisfaction information on product
People rotation line satisfaction of lab
performance.
Satisfaction survey
results are a useful
tool for identifying
development and
transition problem areas
that need management
attention.
Source: Interviews with leading companies (data); GAO (presentation and
analysis).
Motorola's labs use a suite of metrics, many of which are shown above, to
monitor technology projects and lab performance. For example, the company
tracks the estimated and actual development time and costs for each
project to determine estimation accuracy. In addition, it identifies and
tracks the number of lab and product line people (headcount) needed for
development and transition. These metrics are not treated with the same
rigor as metrics that are used after product development begins. Corporate
managers understand that technology development must be managed with more
latitude to accommodate calculated risk taking. In addition, Motorola asks
each product line to fill out satisfaction surveys twice a year to assess
lab performance. Because relationships are at the heart of the process,
the product line's perceptions are of paramount importance, making
internal customer satisfaction a key metric. A Motorola official indicated
that satisfaction surveys are a ubiquitous part of the Motorola culture.
Not only do they help the labs improve, but they help the company improve
overall, the official said. The surveys also provide compelling anecdotal
information about performance problems that need to be addressed by
certain labs.
In addition to technology-specific metrics, Boeing tracks the number of
technologies that were actually integrated into products. While the intent
is that all completed technologies will make it into a product, this does
not always happen because of changes in market requirements, timing, or
funding constraints. Boeing also has metrics that assess the technology's
impact on orders for new airplanes and on its ability to reduce
manufacturing costs. The labs, for example, have a responsibility for
improving the way Boeing designs and builds its products. As such, they
have goals for reducing recurring and nonrecurring costs and cycle time.
Finally, Boeing uses a metric that encourages the transfer of people,
along with the technologies, to the product line side. The company tracks
the rotation of people from its labs to its product lines specifically to
improve its transition processes and to refresh staff with "program
people." As a result, company officials believe they can better align
their labs to their product lines strategies.
Company officials also told us that, similar to DOD, they have struggled
to assess return on investment for technologies they develop. This is
because technology can undergo a metamorphosis after it leaves the labs
and can be applied to multiple products or altered before going into the
intended product. Company officials said they are actively trying to track
technology utilization and the impact their technology investments have
had on company revenues. 3M has a technology database it uses to track
each project it funds. The database contains cost, schedule, and
performance data and summarizes other information, such as how long a
project took to complete and lab and product line funding used to mature
the technology. 3M then compares the cost information with worldwide
sales, tracked through bar codes, to determine its return on investment
for a particular technology. Company officials indicated that there are
still problems with this methodology for estimating return on investment
and that they are continuing to refine their approach.
DOD Lacks Breadth and Depth of Techniques That Leading Companies Use to
Effectively Transition Technologies
DOD has taken some steps over the past few years to improve its technology
transition processes, but the practice of accepting high levels of
technology risk at the start of major weapon system acquisition programs
continues to be the norm. This shortcoming is a major contributor to DOD's
poor cost and schedule outcomes. Many of DOD's problems can be attributed
to deficiencies in strategic planning for critical technologies, processes
for technology development and transition, and tools that support
transition. A recent Defense Science Board report states that DOD is not
as well positioned as it should be from a strategic standpoint to meet the
challenges and exploit the opportunities offered by technology. The report
identified several opportunities for improvement at the Director, Defense
Research and Engineering level (DDRE)9 to help the department jointly
identify, prioritize, develop, and deliver the technologies most relevant
and critical to meeting weapon system requirements in a timely manner.
DOD's technology development process is undisciplined and lacks criteria
for maintaining a close connection between fledgling technologies and the
products that will need them to meet the warfighter's future needs. As a
result, technologies are often not ready when they are needed, and
acquisition programs pull the technologies into their programs too early,
leading to inefficiency during product development and cost and schedule
increases. DOD's process for transitioning technologies to product
development is funded and managed by its acquisition community, the
opposite approach to that taken by the companies we visited.
We identified some initiatives within DOD's S&T community that emulate
some of the tools we found in the commercial world. They hold promise, but
must be accepted, improved, and replicated significantly more than
currently to have a positive impact. For example, the military services
are using technology transition agreements and have established boards to
select and oversee some of its technology portfolio. Also, DARPA uses
relationship managers to expedite the efficient transition of technologies
to products and DOD has established other programs that institutionalize
some best practices. The collection and use of meaningful metrics,
however, remain a problem.
9DDRE is the principal staff adviser to the Under Secretary of Defense for
Acquisition, Technology, and Logistics and the Secretary and Deputy
Secretary of Defense for research and engineering matters. DDRE serves as
the chief technology officer for the department.
On the basis of our previous review of 52 major weapons programs, we found
that DOD's typical path involves starting programs with immature
technologies and concurrently working on technology development and
product development. Figure 9 is a depiction of this path.
Figure 9: Path that DOD Routinely Follows for Technology Development and
Product Development
Strategic Planning Affects DOD's Ability to Meet Warfighters' Needs
DOD has an annual strategic planning process that involves the development
of several plans at the corporate level and within the services and
defense agencies for determining how to invest its S&T funding, which
amounted to about $13 billion in fiscal year 2006. Despite these efforts,
a recent Defense Science Board report10 stated that DOD is not as well
positioned as it should be at the DDRE level (the corporate level) to meet
the challenges and exploit the opportunities offered by technology. The
report identified several opportunities for improvement. Until
improvements are made, it is likely that the there will be strategic gaps
and overlaps in technology coverage as the services and agencies develop
their own approaches to meet critical warfighter needs.
10DOD. Defense Science Board Task Force on The Roles and Authorities of
the Director of Defense Research and Engineering, (Washington, D.C.: Oct.
28, 2005).
Similar to private industry, the department goes through an annual
strategic planning process led by its corporate level. As part of its
responsibilities, DDRE develops the Defense Science and Technology
Strategy, which serves as the foundation for DOD's science and technology
strategic planning process. The strategy identifies five generic
technology thrust areas-information assurance, battlespace awareness,
force protection, reduced cost of ownership, and maintaining basic
research-that have high priority in the department, and is supported by
four other documents, including the
o Basic Research Plan, which presents the DOD objectives and
investment strategy for DOD-sponsored basic research performed by
universities, industry, and service laboratories;
o Defense Technology Area Plan, which presents the DOD objectives
and the strategies for applied research and advanced technology
development investments;
o Joint Warfighting Science and Technology Plan, which takes a
joint perspective across the applied research and advanced
technology development plans to ensure that the science and
technology program supports priority future joint warfighting
capabilities; and
o Defense Technology Objectives, which identify specific
technology advancements that will be developed or demonstrated,
the anticipated date of availability, and specific expected
benefits.
Together, these documents, as well as the supporting S&T plans of
the military services and defense agencies, are supposed to
provide the framework for decisionmaking throughout the science
and technology community.
However, a recent Defense Science Board report states over time
there has been a relative decline in the influence of DDRE at the
corporate level on strategic matters. In the 1960s and 1970s, the
corporate level was more proactive and provided high-level
direction that drove several decisive technological developments,
including stealth; standoff precision strike; and tactical
intelligence, surveillance, and reconnaissance systems that have
transformed U.S. military capabilities. Since the 1980's DDRE has
used a decentralized management approach, relying on the services
and agencies to determine and prioritize the most needed
technology projects. The report states that as a result, the
department is not wellpositioned to implement new operational
capabilities needed for future warfighters, including
o identifying and tracking terrorists,
o addressing commercialization and globalization issues,
o rapidly evolving technologies such as bio- and
nanotechnologies, and
o identifying the proper mix of short- and long-term projects to
work on.
One of the recommendations included in the report is for the
Undersecretary of Defense (Acquisition, Technology, and Logistics)
to develop a strategic technology plan and that DDRE be tasked
with assuring that all research and development organizations are
implementing DDRE's strategic technology guidance. The board also
believes DDRE needs to be more involved in strategic challenges
related to (1) gathering and nurturing technology from a variety
of sources, (2) developing and exploiting technology to enable new
disruptive capabilities; (3) identifying and countering disruptive
capabilities developed by adversaries using readily available or
advanced technology, and (4) ensuring an adequate level of
long-term research for DOD needs. Without effective corporate
level leadership, warfighter needs are addressed in a
decentralized, uncoordinated manner, thereby increasing the risk
that the department will not fulfill these needs.
DOD Does Not Use a Disciplined, Gated Process to Test for Relevancy,
Feasibility, and Transition Readiness
DOD's 5000 series acquisition policy specifies that technology
development should be separated from product development and that
a project shall not exit the technology development phase until
the technology has been demonstrated in a relevant environment.
This is in line with the practices we found at leading companies,
with the exception that the companies require technologies to be
demonstrated in an operational environment before program start,
which is a higher degree of readiness. However, the department
lacks a structured, gated process for managing technology
development and transition, as well as criteria that would allow
decision makers to know when technology is ready to progress from
the technology development environment into an acquisition program
to begin product development. As a result, the services continue
to launch new programs with immature technologies, and acquisition
programs take on technology development responsibilities, an
activity that is considered too risky for commercial companies we
visited. The following figure shows where the technology
development phase occurs in DOD's acquisition process and the
entrance and exit criteria for that phase.
DOD Does Not Use a Disciplined, Gated Process to Test for Relevancy,
Feasibility, and Transition Readiness
Figure 10: Criteria for DOD Technology Development Phase
As shown in the figure above, DOD has two phases prior to program start
(also referred to in DOD nomenclature as milestone B). The first is the
concept refinement phase, when acquisition programs refine the initial
concept and develop a technology development strategy that is supposed to
guide activities during the technology development phase. According to the
acquisition policy, the strategy should include
o a discussion of the planned acquisition approach, including a
summary of the considerations and rationale concerning the
approach;
o a discussion of the planned strategy to manage research and
development;
o a complete description of the first technology demonstration;
and
o a test plan.
The policy, however, does not address the role of the S&T
community in designing or supporting a technology development
strategy. And according to S&T officials, their role in this phase
is minimal. We recently reported that DOD skipped a formal
milestone meeting that should take place at the end of the concept
refinement phase, referred to as milestone A, for 80 percent of
the programs we reviewed.11 This inhibits the S&T and acquisition
communities' ability to create a realistic plan for developing and
maturing needed technologies prior to program start and executing
a plan once the program begins.
During the technology development phase, the acquisition policy
calls for DOD to focus on the development, maturation, and
demonstration of the technologies needed for the capability under
consideration. To exit this phase, technologies should be
demonstrated to be sufficiently mature. DOD defines this as
demonstrating technologies in a relevant environment. (See app. IV
for definitions of technology readiness.)
When comparing the DOD process with that used by commercial
companies we visited, we identified two major differences. First,
although DOD policy states that the S&T community "shall enable
rapid, successful transition ... to useful military products,"
there is no defined transition phase with criteria to facilitate
assessment of a technology's readiness to transition. Instead, the
services have senior-level boards that review projects on an
annual basis to determine if they are on track relative to cost,
schedule, and performance goals set out for the program and rely
on a technology readiness tool to gauge development progress. The
reviews do not include a formal assessment of many of the
technical and business criteria contained in the Boeing scorecard,
such as determining if the costs, benefits, and risk are well
understood and technology is affordable. As a result, program
managers often pull a technology from technology developers before
the program manager has the opportunity to validate that the
technology can be integrated into the preliminary product design
and to develop good product development estimates prior to the
start of system development. As stated earlier, commercial
companies we visited had a dedicated phase at the end of the
technology development process for shifting technology
responsibilities to their product lines. We recently reported that
almost three-fourths of the programs started since the acquisition
policy was revised in 2000 began with critical technologies that
were not ready for product development.12 Seven of the nine
programs we reviewed more indepth, about 80 percent, were approved
to begin development even though program officials reported that
technologies were below readiness levels required for entering
product development. This included programs like the Future Combat
System and the Joint Strike Fighter.
We found DOD generally views immature critical technologies at the
beginning of development as an acceptable risk as long as there is
a plan to mature the technologies by the time the program reaches
its design readiness review. In effect, the department views risk
management plans as an acceptable substitute for demonstrated
knowledge. For example, the Navy's Multi-Mission Maritime Aircraft
program had none of its critical technologies mature at program
initiation. Instead of holding the program to the acquisition
policy criteria for entering development, the decision maker
simply directed the Navy to work with the Office of the Secretary
of Defense to implement risk mitigation and technology maturation
plans during the integration phase of system development.
Second, under DOD's current funding structure, the transition of
technology-which should occur prior to the beginning of product
development and milestone B-is funded and managed by acquisition
programs. This contrasts with the approach used by commercial
companies, where the lab manages and funds these activities.
Commercial firms find that holding their labs accountable for the
management and funding of technology as it transitions to a new
product forces them to deliver more quickly and efficiently and
allows the product lines to focus on product development and the
risks associated with it. Figure 11 illustrates the difference in
responsibility.
11GAO, Defense Acquisitions: Major Weapon Systems Continue to Experience
Cost and Schedule Problems under DOD's Revised Policy. GAO-06-368
(Washington, D.C.: April 13, 2006).
12 GAO-06-368 .
Figure 11: Accountability for Management and Funding of Technology
As shown above, in the commercial companies we visited, product developers
are allowed to act like customers for emerging technologies; they are not
required to accept, manage, and fund technology risk. This significantly
improves the chances of their products reaching the market quickly, at
predictable cost, and with high quality. In DOD, major weapon system
acquisition programs pull technologies that are not yet ready for a
product in order to meet that product's requirements. The S&T community,
although still called upon to review technology readiness, has no funds at
stake and is no longer responsible for the risk from technology at that
point. This is a major contributor to the significant cost overruns and
late deliveries of major weapon systems to the warfighter in recent years.
DOD Is Adopting Transition Tools, but Use Is Not Widespread
DOD is using several tools we found were also being used by commercial
companies to facilitate the transition of technology to weapons programs.
For example, the services are using technology transition agreements for
some of their technology projects, DARPA is using relationship managers to
address transition issues, the services have established boards to oversee
and manage a portion of their technology portfolios, and DOD has several
new programs, including the Joint Capability Technology Demonstration
program to speed a technology's transition to a weapon system. However,
because of the newness or small amount of funding associated with these
tools, widespread use has yet to occur. We also found that DOD is using
technology-specific and status metrics, but does not have sufficient
measures in place to assess the impact of their technology investments or
technology transition processes.
Technology Transition Agreements
The services have recently begun using technology transition agreements to
formalize technical expectations labs must demonstrate in order for
acquisition programs to transition technologies into their programs. DOD
science and technology officials believe the agreements are a useful way
to hold the technology developers accountable and gauge lab progress
toward meeting technology specifications. We are encouraged by their use
of agreements, particularly in the Navy. Agreements we reviewed, however,
did not contain some of the information or metrics commercial companies
believe is valuable to track, and use thus far has been limited.
The agreements we reviewed contained some of the same elements included in
agreements used by leading companies we visited, such as a description of
the technology project, key technology developer and weapon system
personnel associated with the project, and specific performance
characteristics that the lab must meet for transition to occur. In
addition, they identify the amount of funding acquisition programs will
have for transition and when that funding will be available. Unlike the
leading companies we visited, however, these agreements did not typically
require the technology developer to demonstrate cost metrics for the
technology to be included in a weapons program. Commercial companies, for
example, include an assessment of manufacturing costs that could be
expected if a technology were to be included on a new product and they
usually demand prototypes of the technology as demonstration of readiness
to transition. A recent Defense Science Board Report highlighted the
importance of addressing manufacturing concerns during technology
development. Excerpts are shown in figure 12.
Figure 12: Excerpts from a Defense Science Board Task Force Report on the
Manufacturing Technology Program
"Immature technologies and manufacturing challenges have a significant
impact on DOD's ability to rapidly and affordably transition technology to
the war fighter."
"S&T program managers often believe that affordability and manufacturing
issues are not relevant concerns in 6.3 programs, focusing instead on
fabrication of test and evaluation and prototype articles. But this line
of thinking leads to higher costs later in a program, when manufacturing
concerns are addressed after technical designs are considered `ready.' "
"In order to achieve the objective of lower cost equipment, manufacturing
concerns must be addressed earlier in the program life cycle. Production
and support costs need to become a component of key technical design
requirements, before the final stages of development when technologies are
released for prototyping."
Source: Defense Science Board study (data); GAO (presentation and
analysis).
We also found that the services' use of technology transition agreements
has been very limited. For example, we found that the services have a
combined total of 224 applied and advanced technology projects that they
have identified as candidates for transition, of which 146-or about 65
percent-have technology transition agreements. The Navy accounted for the
greatest percentage, with 90 of its 115 projects having an agreement,
almost 80 percent. However, there are hundreds of other military services
applied and advanced technology research projects that were not selected
as candidates where agreements may also be useful. As stated earlier,
commercial companies we visited had agreements for nearly all technology
projects. The agreements were updated at least annually or sooner if
particular tasks were completed. Lab officials use metrics included in the
agreements, as well as other criteria, to determine if the project should
be continued.
It should also be pointed out that while technology transition agreements
are useful tools for firming weapons program commitment to transition,
they do not guarantee transition success. For example, a Navy official
told us that about one-third of the projects that had been expected to
transition in fiscal year 2005 did not transition for the following
reasons:
o The technology did not meet the cost parameters required for
transition to occur.
o Weapon system requirements changed, forcing changes to the
original agreement.
o Program offices did not identify dollars in its budget to
transition the technology.
o A program office decided the technology was too risky compared
with current hardware in production.
Air Force and Army officials told us they do not track information
on why their technologies do not transition. However, they have
experienced similar problems as the Navy. They also stated that
some lab technologies do not transition because prime contractors
decide to use technologies developed in-house, even though DOD
technology developers met the metrics included in the transition
agreements. Because agreements are usually established between the
technology developers and program offices prior to the selection
of prime contractors, there is no assurance that the technologies
will transition. Even in cases where a prime contractor is known,
such as for ongoing development programs, the prime contractor is
not a party in the agreement.
Relationship Managers
With the exception of DARPA, DOD does not use relationship
managers in the same manner as leading private companies.
According to an Air Force lab official, relationship managers
market technologies being developed by the labs or gather data
about ongoing projects for senior lab management. Most
communication about technology transition in DOD takes place
through integrated product teams or during annual reviews of
technology projects by the senior-level oversight boards for each
of the services. Use of relationship managers for these purposes
are helpful, but the managers do not necessarily serve as points
of contact within the labs and acquisition communities, do not
devote time toward efficiently transitioning technologies to
multiple weapon system programs, and do not help identify and
address systemic transition problems.
Within DARPA, senior officers, called operational liaisons, focus
on marketing and transitioning DARPA-sponsored technologies.
According to the DARPA director, the liaisons have been very
helpful with transitioning technologies because they are well
practiced at using the command chain of their respective services
and finding the right service contact at the right time. The
liaisons
o provide operational advice for planning and strategy
development;
o provide an understanding of service perspectives, issues and
needs so that potential customers can be identified and effective
agreements can be written;
o draft and coordinate agreements between DARPA and the services;
and
o direct technology insertion in the services.
Figure 13 describes the impact that operational liaisons have had
on transitioning a DARPA-sponsored program called Boomerang. We
believe that DARPA's approach could serve as a model for how the
military services might establish more formal roles for
communication between the S&T and acquisition communities.
Figure 13: DARPA, a Success Story
The DARPA director credits operational liaisons for the quick transition
of the Boomerang, an acoustic shot-detection system, from the lab to
troops in Iraq. DARPA developed the system in response to feedback from
Iraq that convoys were being engaged by snipers yet remained unaware of
sniper attacks until a windshield was broken, a soldier was hit, or a
vehicle was visibly damaged upon inspection at the end of the convoy
mission.
Within 60 days of an urgent Army request, DARPA fielded the first
Boomerang system. But DARPA's director said the system did not hold up
well in the extreme weather conditions and under wartime conditions. As
Boomerang II was being prepared for fielding, the director said the
operational liaisons helped craft a more realistic concept of operations,
training package, and logistical support package to ensure that Boomerang
II not only was technologically ready for combat but was properly
supported with spare parts, maintenance facilities, maintenance personnel,
training, and lessons-learned feedback to DARPA and the Army. The liaisons
also ensured that the Army acquisition community was alerted to Boomerang
II's deployment so product developers would be ready to evaluate the final
product for movement into the more traditional acquisition process.
Source: DARPA (data); GAO (presentation and analysis).
DOD Programs to Aid Transition
The military services and the Office of the Secretary of Defense
have a variety of programs to help transition technologies to
weapons systems or directly to the warfighter. These programs,
some of which are relatively new and others that have been around
for several years, have met with some success. However, these
programs represent a small portion of $13 billion DOD spends on
science and technology development. As such, they cannot
single-handedly overcome transition problems, but rather
demonstrate various ways to ease transition.
In recent years, each of the military services has established
senior-level boards to oversee technology programs that include
advanced and in some cases applied research projects. This
includes the Air Force's Advanced Technology Demonstration
program, the Army Technology Objectives program, and the Navy's
Future Naval Capabilities program. The boards, which are comprised
of representatives from the lab, acquisition, and warfighter
communities, are responsible for selecting projects to be
developed, allocating funding to those projects, and reviewing the
projects' progress on an annual basis. The boards emphasize
transition planning and can address obstacles to successful
transition. According to officials, these programs represent about
$1.3 billion of DOD's S&T budget.
The Advanced Concept Technology Demonstration program and the
newly established Joint Capability Technology Demonstration
program were initiated by DOD as a way to get technologies that
meet critical military needs into the hands of users faster and at
less cost than by the traditional acquisition process. Under these
programs, military operators test prototypes that have already
been developed and matured in realistic settings. If they find the
items to have military utility, DOD may choose to buy additional
quantities or just use the items remaining after the
demonstration. Fiscal year 2006 was the first year of a 3- to
5-year period where the current Advanced Concept Technology
Demonstration program will be phased out in favor of the new Joint
Capability Technology Demonstration program. Department officials
believe the new joint program offers improvements over the earlier
program in that capabilities will be demonstrated 1-2 years
earlier, there is a greater focus on combatant command needs
during the selection process, and the Office of the Secretary of
Defense provides significantly more funding during the first 2
years of the demonstration project.
A big difference between the two programs is that the new joint
program is expected to provide a better path for the transition of
technologies because it includes funding for both advanced
technology development and advanced component development and
prototypes. The Advanced Concept Technology Demonstration program
only includes funding for advanced technology development. It must
rely on the acquisition community to identify advanced component
development and prototype funding for transitioning the
technologies. An additional benefit is that the Office of the
Secretary of Defense is partnering with the Naval Postgraduate
School to conduct business case analysis for completed
demonstration projects. This type of analysis is expected to aid
decision makers in evaluating alternative approaches to the
allocation of scarce resources competing for transition funds.
The Manufacturing Technology Program is aimed at quickly
identifying and solving production problems associated with
technology transition. It focuses on the needs of weapon system
programs for affordable, low-risk development and production. For
example, one project, which was given $730,000, was geared toward
improving the reliability and strength of large-diameter fasteners
used to attach various components on the Seawolf and Virginia
Class submarines. Corrosion concerns required that the existing
fasteners be replaced at periodic intervals to preclude
catastrophic failure. Navy and commercial companies evaluated a
wide variety of materials for strength and corrosion resistance to
determine the best candidate material and then adjusted the
material manufacturing process to obtain the required strength and
toughness levels to ensure the fasteners could be produced without
extraordinary measures or a deterioration of the material
properties. Among other things, program officials expect the
project to result in cost avoidance of $1.1 million per fielded
submarine per year and improved reliability.
There are other, smaller programs that also focus on transition.
Two of these are the Foreign Comparative Testing Program, which
focuses on identifying, evaluating, and procuring technologies
that have already been developed and tested in other countries,
and the Technology Transition Initiative, which focuses on
speeding the transition of technologies developed by DOD's S&T
programs into acquisition programs. These programs received about
$37 million and $29 million in fiscal 2006, respectively. The
Foreign Comparative Testing Program, for example, successfully
evaluated a South African mine-protected clearance vehicle that
will protect soldiers from the effects of landmine explosions
during route clearance operations. As of June 2006, 61 of these
vehicles have been delivered to the Army, Navy, and Marine Corps.
Metrics
For the most part, the military services track and use only a few
of the metrics we found at commercial companies. As stated
earlier, they have some technology-specific metrics in their
technology transition agreements. In addition, they have status
metrics to track some of the on-going, completed, and transitioned
projects that are funded by the Air Force, Army, and Navy S&T
communities as well as the number of projects with technology
transition agreements. However, the services have few metrics that
would enable them to gauge the impact of their investments and the
effectiveness of their processes for developing and transitioning
technology.
DOD officials told us that establishing good, quantifiable metrics
to measure transition success is difficult to do. Some of the
challenges they face include determining
o how long to track a technology after it has transitioned,
o how to track and distinguish transition success when the same
technology is used on multiple weapons programs, and
o how much credit to take when only portions of a technology
transition to a weapon program.
Further, DOD S&T officials do not believe that they have enough
resources to track technology once technology developers finish
working on a project. They say that it would be very
labor-intensive to track long-term measures, such as the impact of
transitioned technology in terms of cost savings and improved
performance. Instead, the services rely heavily on projected cost,
schedule, and performance improvements that are required by S&T
program management as part of the project selection process.
Although progress in meeting technology expectations is monitored
throughout technology development, once technology developers are
finished working on a technology, little is done to determine if
it actually went onto a weapon system and if it is being used in
the field.
Last year, we reported that the Office of the Secretary of Defense
had difficulty tracking the impact of three small technology
transition programs it oversees-the Technology Transition
Initiative, the Defense Acquisition Challenge Program, and the
Quick Reaction Fund.13 Nevertheless, we pointed out that there may
already be readily available starting points within the department
to capture more information regarding return on investments. For
example, we pointed out that the DOD Foreign Comparative Testing
Program has established metrics to measure the health, success,
and cost-effectiveness of the program and has a database to
facilitate return on investment analyses. Further, a study by the
Naval Postgraduate School to identify metrics for the Advanced
Concept Technology Demonstration program may also be useful to the
military services for assessing transition success and impact.
Differences in Environment and Incentives Contribute to Different
Practices and Outcomes
There are critical differences between the environments and
cultures of private world-class companies and DOD that must be
recognized before tangible progress can be made in establishing
more efficient practices for transitioning technologies to major
weapon system acquisition programs. Examples from past initiatives
serve as reminders that just changing the mechanics of technology
transition processes, without changing the environment that
determines incentives, may not produce better outcomes. Private
companies operate in a competitive environment that demands speedy
delivery of innovative, high-quality technologies and products to
satisfy market needs. If the company cannot meet those criteria,
it will cease to exist in that environment. On the other hand, DOD
operates in an environment with a complex variety of "customers."
These complex relationships often hinder the ability of DDRE, its
"corporate" component, to provide strategic leadership similar to
that of the private company. Success in this environment is often
based on a single service's ability to launch a program to address
critical needs and to secure annual funding for the program. The
challenge for DOD and congressional decision makers may not lie so
much in the "how to" aspects of technology transition as in
creating stronger and more uniform incentives that encourage the
S&T and acquisition communities to work together to deliver mature
technologies to programs.
Private firms must continually deliver innovative, reliable
products to market very quickly to prosper. The delivery-oriented
environment that private firms live in creates a need for
strategic simplicity and directness from leadership and forces
product lines and labs to measure success in terms of lower costs
and increased revenue and market share. The ability to deliver
new, innovative, reliable products of high quality to market as
soon as possible drives revenue and market share. This environment
creates incentives to maintain an efficient technology base that
is focused on market needs and can efficiently transition feasible
technologies into new products, keeping costs down while achieving
greater revenues. Because commercial firms understand that they do
not succeed until a new, innovative product is delivered to the
customer, they view successful transition of technologies to
products as a critical part of their value chain. The corporation,
therefore, insists on accountability from and supports its
technology developers with a strong strategic process for ensuring
that its product portfolio is balanced. It does not want too many
programs vying for scarce investment dollars.
For example, IBM officials stated that poor strategic planning was
one of the problems the company had to address after it incurred
an $8 billion loss in 1992-1993. According to company officials,
technologies no longer could be developed for the sake of
development; they had to be aligned with a product line and have
market potential to be funded. IBM labs now conduct a situation
analysis that takes an internal and external look at technologies
being developed and a gap analysis to determine where IBM might be
behind in technology development.
At 3M, meeting market imperatives is critical and senior
leadership has set a goal to increase sales 5 to 8 percent
annually through new products. In this environment, the company
has established a companywide initiative referred to as 2X/3X.
Generally, the goal is to double the number of new ideas going
into the product development pipeline and to triple the market
success of the products coming out of the pipeline. Lab and
product line managers are evaluated and held accountable for the
success of the initiative based upon their ability to meet sales
goals and properly resource their projects. According to 3M's 2004
annual report, the initiative is producing strong results. 3M
officials believe their culture is well aligned with this
competitive environment. For example, technologists participate in
companywide technology forums to discuss problems and share
information. A technology council, comprised of about 80 lab and
technical directors, meets monthly to share ideas, experiences,
and best practices among the labs.
At Motorola, the corporate vision is known as "seamless mobility."
Senior leaders have aligned the company's global
resources-including its $3.1 billion annual research and
development budget and a worldwide research network-to help
achieve this goal. According to Motorola officials, the seamless
mobility vision has been instrumental in uniting Motorola labs and
product lines over the past 3 years toward a common goal.
On the other hand, DOD operates in an environment that often
hinders the ability of its corporate component-DDRE-to provide
strategic leadership similar to the private company. Not only must
the department worry about national security imperatives, it must
also answer to Congress and its oversight agencies; manage a
stove-piped, parochial culture; ensure the public's trust that tax
dollars are wisely and fairly spent; and incentivize an industrial
base to deliver cutting-edge, often very risky technologies and
products. This is a complex set of deliverables by any measure. It
creates an environment that makes it difficult for DDRE to lead
and has contributed to an undisciplined strategic planning
process. Success in this environment is often based on a service's
ability to launch a program to address critical needs and to
secure annual funding for the program. It is characterized by
fierce competition among the services to win scarce funding to
begin major weapon system acquisition programs, regardless of the
readiness of technologies to meet far-reaching requirements. As a
result, programs are pressured to distinguish themselves from
other programs previously developed by promising new, enhanced
features such as being faster and/or more lethal than anything
else. It is very common for these new programs to include
requirements for new technologies with overly optimistic
assessments of technological feasibility, risk, and delivery
schedules. This environment and these incentives breed uncertainty
and risk and, as a result, cost overruns and delivery delays.
Conclusions
In DOD, delivering mature technologies to weapon system
acquisition programs at the right time continues to be a
challenge. Rather than addressing technology issues in a science
and technology environment before product development starts,
acquisition programs carry significant technology risk into
product development. This brings with it a high risk that costs
will rise and deliveries to the warfighter will be delayed. In
fact, there is strong evidence that acquisition programs that
start with immature technologies encounter significantly poorer
acquisition outcomes than others. This approach is in sharp
contrast to the approach taken in the commercial world.
High-performing companies solve technology challenges in the S&T
environment. To do this, they have put in place processes and
adopted techniques that are pertinent to DOD. Strong strategic
planning defines critical investment priorities, and a structured
process defines the path towards a technology's transition to
product development. This transition is supported by technology
transition agreements that hold the research labs accountable for
what they must deliver. They also include clarification of the
responsibilities the product developer has in accepting new
technologies. Metrics are used to force demonstration of relevancy
and feasibility at key points in the process and gauge the success
of individual projects and the process itself. Funding for
technology development largely comes from the corporate level,
with the research labs having responsibility for technology
development until technology is matured and transitioned to the
product line. This is critical to success, because it allows
product developers to play a customer role. They are allowed to
say no to technologies that are not ready for their programs and
can focus on their job at hand-product integration, supplier
management, and quality.
DOD has adopted some of these practices. The department has begun
using technology transition agreements and relationship managers
and has initiated programs that place greater emphasis on
technology transition planning. However, the reach of these
initiatives is limited, and there is no unified, corporate
approach to using them at this point. We recognize that the
environment and incentives for DOD are very different than those
of commercial firms we visited. For commercial practices to work
on a broad scale, the DOD environment must be conducive for
applying such practices. DOD senior leadership is a critical
factor in providing this direction and vision as well as in
maintaining the culture of the organization. The department must
devote greater attention to strategic planning and technology
development processes so that resources are spent on technologies
that can and will be transformed into capabilities for the
warfighter. In addition, the S&T and acquisition communities must
work together to expand the use of technology transition
agreements and relationship managers. Finally, the department
should examine the way it currently funds technology transition.
It may benefit from an examination of commercial companies'
methods in this regard. They hold their technology developers
accountable for delivering relevant technologies that are ready to
be integrated into new products, but they empower them to succeed
by providing adequate funding to get the job done.
Recommendations for Executive Action
DOD should take steps to improve its transition of technologies to
more efficiently deliver capabilities to its warfighters. The
Defense Science Board has recommended strengthening of DOD's
strategic planning function, and we believe this would move the
department in the right direction. We believe a disciplined, gated
approach for technology development, supported by technical and
business criteria, would provide adequate knowledge to acquisition
program managers about the risk of including particular
technologies on specific weapons programs. It would also provide a
more systematic way for the S&T community to continually assess
the relevancy, feasibility, and potential transition commitment of
its technologies and make decisions about future investments.
DOD's current process lacks specific decision points with "go/no
go" decisions. As such, we recommend that the Secretary of Defense
take the following actions:
o develop a gated process for developing and transitioning
technologies that establishes a transition phase and defines
activities that should occur during this phase, and
o include specific criteria to support continued funding of
specific projects in that process.
We also believe greater use of tools, such as technology
transition agreements, relationship managers, and metrics, could
help the department improve its ability to deliver mature
technologies when needed, address transition issues more quickly,
and gauge the impact of their science and technology investments
and lab processes. Therefore, we recommend that the Secretary of
Defense:
o expand the use of technology transition agreements to applied
and advanced development projects;
o include additional metrics in technology transition agreements
to provide S&T and acquisition program managers demonstrated
knowledge about the manufacturing readiness, producibility, other
benefits, and risks of including the technology on a weapons
program;
o expand the use of relationship managers by designating people
at various levels in both the S&T and acquisition communities to
address systemic transition issues and those related to specific
weapon system programs. Also, define responsibilities for each
level of relationship manager;
o adopt additional process-oriented metrics, such as the
percentage of advanced technologies that-once past milestone A of
the acquisition process-transitioned into a weapons program or
were fielded and the cycle time from milestone A to milestone B as
a way to measure the effectiveness of S&T processes and the impact
of science and technology investments;
Commercial companies fund technology development and transition
activities in their labs and hold the labs accountable for
delivering mature technology to their product lines. As such, we
are recommending that the Secretary of Defense
o Set aside a portion of advanced component development and
prototype funds for the S&T community to manage the transition of
technologies to acquisition programs. For this funding to be used
effectively, it will require the discipline provided by corporate
leadership in defining priorities, processes, and metrics.
Agency Comments and Our Evaluation
DOD provided us with written comments on a draft of this report.
DOD generally concurred with the recommendations in our report to
improve its ability to transition technology to our warfighters.
In doing so, it emphasized that that commercial industry program
managers operate in an environment driven by profit and market
opportunities, while DOD is organized to support our warfighters.
We understand the basic differences in the environments, but
believe there are many lessons that can be gleaned from our
commercial visits. While it is true that private companies are
motivated by profit, they can not achieve a profit without being
focused on the timely delivery of products to the market. We note
in this and other best practices reports that commercial firms
have significant pressures on them to deliver cutting edge
technologies quickly. They often bet their very existence on
delivering new products and technologies before anyone else does
so. In some cases, such as medical systems, their customers have
urgent, life-or-death needs, similar to those of the warfighters,
that demand very complex technological solutions. The real
difference between these companies and the department is that they
understand the futility of promising more than can be delivered to
the market at any given point. They understand that, in the final
analysis, they only succeed-or survive-only by delivering needed
capability. On the other hand, the department's acquisition
programs consistently accept immature technologies into product
development that become a major cause of cost increases, schedule
delays, and ultimately very late delivery to the warfighter who
needs the equipment. The list of programs that have delivered late
is extensive.
Rather than focus on the different environment in the commercial
world, DOD should focus on the practices used in the commercial
world that allow it to deliver mature technology to product
development (then, to the user) quickly and efficiently, an
outcome woefully lacking in the department.
Specially, of the six recommendations we made, DOD concurred with
two recommendations, partially concurred with two others, and did
not concur with the final two. DOD's comments appear in appendix
II.
DOD concurred with the recommendation that called for establishing
a gated process for developing and transitioning technologies. In
its response, the department stated that it has a gated process
for programs that have a formal milestone A decision point and
that technology maturity and technology readiness assessments are
used in this process. DOD explained that the technology maturity
assessments, in particular, often lead to risk mitigation plans,
which include explicit gates that immature technologies must pass
through to become qualified for adoption.
We are not confident that DOD's implementation plans are fully
responsive to this recommendation. First, the department does not
have a process similar to those that we found at commercial
companies to actively manage and make investment decisions across
all technologies and determine if an individual technology is
ready to transition. In its comments, DOD refers to a process for
programs beginning at milestone A. However, we have reported that
80 percent of the programs we reviewed that passed milestone B
since 2000 did not have a milestone A.
Second, we found that even when technology readiness assessments
indicated that technologies were not ready to be included in an
acquisition program, DOD often decided to use them anyway. Third,
risk mitigation plans used by DOD are subjective engineering
judgments and are of limited value when evaluating the transition
readiness of technologies.
The department also concurred with our recommendation that it
expand the use of technology transition agreements to applied and
advanced development projects. However, in its response, DOD did
not identify specific actions it plans to take to implement this
recommendation.
DOD partially concurred with the recommendation that it include
additional metrics in technology transition agreements. In its
response, the department indicated that it has taken steps to
incorporate manufacturing readiness assessments as a means to
improve technology readiness and that any additional metrics
should be project-specific and included as exit criteria as part
of the technology transition agreement. We are encouraged by DOD's
recent development of manufacturing readiness levels and believe
they should be a mandatory tool for the S&T and acquisition
program managers to use to assess the manufacturability of a new
technology. While we agree that the department should develop
additional metrics on a project-by-project basis, we also believe
that a more holistic approach, as depicted earlier in the report,
is needed to determine the transition readiness of a particular
technology. Transition readiness is not solely dependent upon the
technical maturity achieved by S&T, but is also dependent upon the
readiness of an acquisition program to accept the new technology
and therefore should include an assessment of other factors such
as cost, benefit, risk, scalability, and acquisition program
endorsement.
DOD also partially concurred with the recommendation to expand the
use of relationship managers to address systemic transition issues
and those related to specific weapon system programs. In its
response, DOD indicated that it relies on written documents-the
technology maturity assessments and technology transition
agreements-to facilitate communication between the S&T and
acquisition communities, particularly at the executive level. As
stated earlier, these documents do not address many of the factors
that could hinder transition. As DOD states in its comments,
technology transition is referred to as a "body-contact sport." We
agree, and this is why our recommendation is aimed at more direct
person-to-person communication. Leading companies believe
relationship managers play a key role in their ability to
successfully transition technology. While DOD did acknowledge that
its S&T investment would benefit from expanded emphasis by staff
at the execution levels on technology transition issues, it did
not directly address the need for midlevel relationship managers.
We continue to believe DOD would benefit from the use of midlevel
relationship managers. These managers provide the back and forth
communications between the S&T and acquisition communities that
help ensure that the right technology is being developed in the
time frame needed. These managers are also uniquely positioned to
ensure that technology is applied to multiple platforms when
applicable and can identify systemic transition problems that
should be addressed.
DOD did not concur with the recommendation that it should develop
additional process-oriented metrics, even though it stated that it
is installing a process to do this through the use of technology
maturity and technology readiness assessments. DOD stated that it
does not want to commit to overly burdensome metrics that may be
more oriented to measuring the process for the sake of
measurement. Like DOD, we do not believe the department should
develop metrics just for the sake of measurement. Rather, we
believe DOD should develop and use metrics that allow DOD,
Congress, and taxpayers to gauge the effectiveness of DOD S&T
investments, which are expected to reach about $13 billion this
year. The metrics that DOD references-those derived from
technology maturity and technology readiness assessments-are
project-level metrics rather than portfolio and process metrics
that would allow the department to analyze its investment and make
adjustments appropriately.
DOD also did not concur with the recommendation to set aside a
portion of advanced component development and prototype funds for
the S&T community to manage the transition of technologies to
acquisition programs. In its response, DOD stated that acquisition
programs are best suited for transitioning technology because they
have the training and discipline to field systems and have the
responsibility to ensure a stable design, identify a responsive
and responsible contractor, manage execution, and plan for life
cycle support of the system. While DOD discusses transition to the
warfighter, our recommendation is aimed at transitioning
technology from S&T to acquisition programs. We found that in the
commercial world, the training and discipline for transitioning
technologies to product development is managed by the technology
development community and is adequately funded. DOD believes its
current approach of setting aside a small portion of S&T funds for
transition through programs such as the Advanced Concept
Technology Demonstration program, Joint Capability Technology
Demonstration program, the Technology Transition Initiative,
Manufacturing Technology program, and the Foreign Comparative
Testing program is appropriate. We continue to believe DOD's
approach to funding transition is flawed and that small pots of
money for specific transition activities offer a piecemeal
solution to a more systemic problem. DOD currently uses some of
its advanced component development and prototype funds for S&T
activities, including transition. However, acquisition programs
typically carry out and fund these activities. We believe the S&T
community should be responsible for these activities and as such,
should be given the appropriate level of funding to carry them
out. We believe DOD would be better positioned to develop and
deliver weapon systems more quickly to its warfighters if the S&T
community was responsible for developing, maturing, and
transitioning mature technologies to the acquisition community and
if the acquisition community focused solely on product development
activities and delivering weapon systems to the warfighter That
being said, we recognize that the acquisition and warfighting
communities play critical roles in this process and therefore must
continue to work toward setting realistic program requirements and
establishing an evolutionary approach for developing new weapon
programs.
We are sending copies of this report to the Secretary of Defense,
the Director of the Office of Management and Budget, and
interested congressional committees. We will also make copies
available at no charge on the GAO Web site at http://www.gao.gov .
If you have any questions about this report or need additional
information, please contact me at (202) 512-4841 or
[email protected]. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Key contributors to this report were Karen Zuckerstein,
Assistant Director; Cheryl Andrew; Lily Chin; Sameena Ismailjee;
and Sean Merrill.
Michael Sullivan Director Acquisition and Sourcing Management
Appendix I: Objectives, Scope, and Methodology
This report examines the Department of Defense's (DOD) efforts to
improve its technology transition processes, with a focus on
identifying specific management, funding, and organizational
practices that could improve technology transition and weapon
system outcomes. Specifically, our objectives were to (1) identify
techniques that commercial companies use to transition mature
technologies before the start of product development and (2)
assess the extent to which DOD is using these techniques.
We used a case study approach to compare and contrast DOD and
leading commercial companies' practices. Companies were selected
on the basis of such factors as the amount of money spent on
research and development activities over the past several years
and the percentage of change in research and development spending.
For the most part, we selected Fortune 500 companies that were in
the top 100 for research and development spending and had not
experienced major cutbacks in this funding. We also took into
account the type of products each company develops and selected
companies representing several different business sectors. Below
are descriptions of the four companies featured in this report.
Boeing
Boeing is a leading aerospace company and the largest manufacturer
of commercial jetliners and military aircraft combined, with
capabilities in rotorcraft, electronic and defense systems,
missiles, satellites, launch vehicles, and advanced information
and communication systems. Boeing Phantom Works develops advanced
systems solutions, such as advanced homeland security and air
traffic management, as well as breakthrough technologies, such as
advanced avionics and composite materials that are intended to
significantly improve the performance, quality, and affordability
of aerospace products and services. We met with research
officials, as well as product line officials representing both its
commercial and defense sectors in Seattle, Washington.
3M
3M is a diversified technology company with a worldwide presence
in various markets, including consumer and office; display and
graphics; electronics and communications; health care; industrial;
safety, security, and protection services; and transportation.
With more than 55,000 products, 3M invests more than $1 billion
annually in research and development and related activities
associated with 30-plus core technologies. The company was awarded
nearly 500 U.S. patents in 2005. We met with research, business
unit, and government programs officials at 3M headquarters in St.
Paul, Minnesota.
IBM
IBM is one of the world's largest technological companies,
spending about $3 billion annually on research and development
activities. It is the largest supplier of hardware, software, and
information technology services and pioneered the development and
implementation of on-demand business. With 3,248 U.S. patents, IBM
earned more patents than any other company for the 12th
consecutive year in 2004. In the past 4 years, IBM inventors
received more than 13,000 patents-approximately 5,400 more than
any other patent recipient. We met with research and product
development officials at the Watson Research Center in Hawthorne,
New York.
Motorola
Motorola is a Fortune 500 global communications leader that
provides seamless mobility products and solutions across
broadband, embedded systems and wireless networks for products in
homes, automobiles, and workplaces. Motorola spent about $3.5
billion in 2005 on research and development activities.
Approximately 22,000 professional employees were engaged in
research activities during 2005. We met with research officials
and product development officials, as well as partnership
development managers at its offices in Schaumburg, Illinois.
For each of the companies, we interviewed senior management
officials knowledgeable about research and development activities
to gather consistent information about processes, practices, and
metrics the companies use to transition technology smoothly. In
particular, we discussed their (1) strategic planning process for
identifying and prioritizing customer needs, (2) technology
development process used to fund and mature technologies required
to meet customer needs, (3) tools used to facilitate communication
between labs and product lines to transition technology, and (4)
technology transition process, including when transition occurs,
the organizations involved, and how technology is funded
throughout the transition phase. We synthesized information from
GAO's past best practices work about technology and product
development.
To determine DOD's practices for transitioning technology, we met
with science and technology (S&T) and acquisition officials to
discuss the same categories of questions listed above that we
asked leading commercial companies. The following is a list of the
organizations we met with:
o Director, Defense Research and Engineering, Alexandria,
Virginia
o Director, Plans and Programs
o Deputy Under Secretary of Defense, Advanced
Systems and Concepts
o Director, Defense Advanced Research Projects
Agency
o Air Force
o Office of the Assistant Secretary of the Air Force
for Acquisition (Science, Technology, and
Engineering), Alexandria, Virginia
o Air Force Material Command, Wright Patterson Air
Force Base, Ohio
o Air Force Research Labs, Wright Patterson Air
Force Base, Ohio
o Joint Unmanned Combat Air Systems Program Office,
Wright Patterson Air Force Base, Ohio
o Army
o Assistant Secretary of the Army Acquisition,
Logistics and Technology, Alexandria, Virginia
o Deputy Assistant Secretary for Research and
Technology Chief Scientist, Alexandria, Virginia
o Joint Tactical Radio System Cluster 5 Program
Office, Alexandria, Virginia
o Navy
o Deputy Assistant Secretary of Navy for Research,
Development, Test and Evaluation, Alexandria,
Virginia
o Office of Naval Research, Alexandria, Virginia
o Naval Air Systems Command, Patuxent River Naval
Air Station, Maryland
o Naval Sea Systems Command, Washington Navy Yard,
D.C.
o CVN-21 Program Office, Washington Navy Yard, D.C.
o Multi-mission Maritime Aircraft Program Office,
Patuxent River Naval Air Station, Maryland
o Aircraft Launch and Recovery Equipment Program
Office, Patuxent River Naval Air Station, Maryland
At each of these locations, we collected appropriate documents
that describe the various programs, organizations,
responsibilities, and funding. We obtained examples of key
documents, such as technology transition agreements or memorandums
of agreement that are used to solidify agreements made between
labs and weapon programs. We reviewed DOD and military service
strategic plans and research, development, test, and evaluation
funding documents. In addition, we reviewed documents required as
part of the selection and oversight process for the Air Force
Advanced Technology Development program, the Army Technology
Objectives program, and the Future Naval Capabilities program. We
relied on previous GAO best practices and weapon system reports
that highlight cost and schedule impacts of launching new weapon
programs with immature technology. A list of these reports can be
found at the end of this report.
Appendix II: Comments from the Department of Defense
Appendix III: DOD Research, Development, Technology, and Engineering
Budget
Dollars in billions
Which DOD Budget
community (fiscal
Budget controls year
Name activity Description spending 2006)
Basic research 1 Basic research is systematic S&T $1.5
study directed toward
greater knowledge or
understanding of the
fundamental aspects of
phenomena and of observable
facts without specific
applications towards
processes or products in
mind. It includes all
scientific study and
experimentation directed
towards increasing
fundamental knowledge and
understanding in those
fields of the physical,
engineering, environmental,
and life sciences related to
long-term national security
needs. It is farsighted
high-payoff research that
provides the basis for
technological progress.
Applied research 2 Applied research is systemic S&T $5.2
study to understand the
means to meet a recognized
and specific need. It is a
systematic expression and
application of knowledge to
develop useful materials,
devices, and systems or
methods. Applied research
may translate promising
basic research into
solutions for broadly
defined military needs,
short of system development.
Applied research precedes
system-specific technology
investigations or
development.
Advanced 3 Advanced technology S&T $6.6
technology development includes
development development of subsystems
and components and efforts
to integrate them into
system prototypes for field
experiments and/or tests in
a simulated environment. The
results of this type of
effort are proof of
technological feasibility
and assessment of subsystem
and component operability
and producibility rather
than the development of
hardware for service use.
Projects in this category
have a direct relevance to
identified military needs.
Program elements in this
category involve
pre-acquisition efforts,
such as system concept
demonstration, joint and
service-specific
experiments, or technology
demonstrations, and
generally have technology
readiness levels (TRLs) of
4, 5, or 6. Projects in this
category do not necessarily
lead to subsequent
development or procurement
phases, but should have the
goal of moving out of
science and technology and
into the acquisition process
within years defense
program. Upon successful
completion of projects that
have military utility, the
technology should be
available for transition.
Advanced 4 Advanced component Acquisition $13.9
component development and prototypes
development and consists of efforts
prototypes necessary to evaluate
integrated technologies or
prototype systems in a high
fidelity and realistic
operating environment. These
activities include
system-specific efforts that
help expedite technology
transition from the
laboratory to operational
use. Emphasis is on proving
component and subsystem
maturity prior to
integration in major and
complex system sand may
involve risk reduction
initiatives. Advanced
component development and
prototypes efforts are to
occur before an acquisition
program starts product
System 5 System development and Acquisition $19.3
development and demonstration consists of
demonstration newly initiated acquisition
programs and includes
engineering and
manufacturing development
tasks aimed at meeting
validated requirements prior
to full-rate production.
Characteristics of this
activity involve mature
system development,
integration, and
demonstration to support a
production decision.
Research, 6 RDT&E management support Acquisition $4.0
development, includes efforts to sustain
test and and/or modernize the
evaluation installations or operations
management required for general RDT&E.
support Such efforts may related to
test ranges, military
construction, maintenance
support of laboratories,
operation and maintenance of
test aircraft and ships, and
studies and analyses I
support of the RDT&E
program.
Operational 7 Operational system Acquisition $20.6
system development includes
development development efforts to
upgrade systems that have
been fielded or have
received approval for
full-rate production and
anticipate production
funding in the current or
subsequent fiscal year.
Source: DOD (data); GAO (presentation and analysis).
Appendix IV: DOD Technology Readiness Levels
Technology readiness level Description
1. Basic principles observed Lowest level of technology readiness.
and reported. Scientific research begins to be
translated into applied research and
development. Examples might include
paper studies of a technology's basic
properties.
2. Technology concept and/or Invention begins. Once basic principles
application formulated. are observed, practical applications can
be invented. Applications are
speculative and there may be no proof or
detailed analysis to support the
assumption. Examples are still limited
to analytic studies.
3. Analytical and experimental Active research and development is
critical function and/or initiated. This includes analytical
characteristic proof of studies and laboratory studies to
concept. physically validate analytical
predictions of separate elements of the
technology. Examples include components
that are not yet integrated or
representative.
4. Component and/or Basic technological components are
breadboard. Validation in integrated to establish that they will
laboratory environment. work together. This is relatively "low
fidelity" compared to the eventual
system. Examples include integration of
"ad hoc" hardware in a laboratory.
5. Component and/or breadboard Fidelity of breadboard technology
validation in a relevant increases significantly. The basic
environment. technological components are integrated
with reasonably realistic supporting
elements so it can be tested in a
simulated environment. Examples include
"high fidelity" laboratory integration
of components.
6. System/subsystem model or Representative model or prototype
prototype demonstration in a system, which is well beyond that of TRL
relevant environment. 5, is tested in a relevant environment.
Represents a major step up in a
technology's demonstrated readiness.
Examples include testing a prototype in
a high-fidelity laboratory environment
or in simulated operational environment.
7. System prototype Prototype near, or at, planned
demonstration in an operational system. Represents a major
operational environment. step up from TRL 6, requiring
demonstration of an actual system
prototype in an operational environment
such as in an aircraft, vehicle, or
space. Examples include testing the
prototype in a test bed aircraft.
8. Actual system completed and Technology has been proven to work in
qualified through test and its final form and under expected
demonstration. conditions. In almost all cases, this
TRL represents the end of true system
development. Examples include
developmental test and evaluation of the
system in its intended weapon system to
determine if it meets design
specifications.
9. Actual system proven Actual application of the technology in
through successful mission its final form and under mission
operations. conditions, such as those encountered in
operational test and evaluation.
Examples include using the system under
operational mission conditions.
Source: DOD (data); GAO (presentation and analysis).
Related GAO Products Related GAO Products
Defense Acquisitions: Assessments of Selected Major Weapon
Programs. GAO-06-391 . Washington, D.C.: March 31, 2006.
Best Practices: Better Support of Weapon System Program Managers
Needed to Improve Outcomes. GAO-06-110 . Washington, D.C.:
November 1, 2005.
DOD Acquisition Outcomes: A Case for Change. GAO-06-257T .
Washington, D.C.: November 15, 2005.
Defense Acquisitions: Stronger Management Practices Are Needed to
Improve DOD's Software-Intensive Weapon Acquisitions. GAO-04-393 .
Washington, D.C.: March 1, 2004.
Best Practices: Setting Requirements Differently Could Reduce
Weapon Systems' Total Ownership Costs. GAO-03-57 . Washington,
D.C.: February 11, 2003.
Defense Acquisitions: Factors Affecting Outcomes of Advanced
Concept Technology Demonstration. GAO-03-52 . Washington, D.C.:
December 2, 2002.
Best Practices: Capturing Design and Manufacturing Knowledge Early
Improves Acquisition Outcomes. GAO-02-701 . Washington, D.C.: July
15, 2002.
Defense Acquisitions: DOD Faces Challenges in Implementing Best
Practices. GAO-02-469T . Washington, D.C.: February 27, 2002.
Best Practices: Better Matching of Needs and Resources Will Lead
to Better Weapon System Outcomes. GAO-01-288 . Washington, D.C.:
March 8, 2001.
Best Practices: A More Constructive Test Approach Is Key to Better
Weapon System Outcomes. GAO/NSIAD-00-199 . Washington, D.C.: July
31, 2000.
Defense Acquisition: Employing Best Practices Can Shape Better
Weapon System Decisions. GAO/T-NSIAD-00-137 . Washington, D.C.:
April 26, 2000.
Best Practices: DOD Training Can Do More to Help Weapon System
Programs Implement Best Practices. GAO/NSIAD-99-206 . Washington,
D.C.: August16, 1999.
Best Practices: Better Management of Technology Development Can
Improve Weapon System Outcomes. GAO/NSIAD-99-162 . Washington,
D.C.: July 30, 1999.
Defense Acquisitions: Best Commercial Practices Can Improve
Program Outcomes. GAO/T-NSIAD-99-116 . Washington, D.C.: March 17,
1999.
Defense Acquisition: Improved Program Outcomes Are Possible.
GAO/T-NSIAD-98-123 . Washington, D.C.: March 17, 1998.
Best Practices: DOD Can Help Suppliers Contribute More to Weapon
System Programs. GAO/NSIAD-98-87 . Washington, D.C.: March 17,
1998.
Best Practices: Successful Application to Weapon Acquisition
Requires Changes in DOD's Environment. GAO/NSIAD-98-56 .
Washington, D.C.: February 24, 1998.
Best Practices: Commercial Quality Assurance Practices Offer
Improvements for DOD. GAO/NSIAD-96-162 . Washington, D.C.: August
26, 1996.
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13GAO, Defense Technology Development: Management Process Can Be
Strengthened for New Technology Transition Programs. GAO-05-480
(Washington, D.C.: June 17, 2005).
(120454)
www.gao.gov/cgi-bin/getrpt? GAO-06-883 .
To view the full product, including the scope
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Highlights of GAO-06-883 , a report to congressional committees
September 2006
BEST PRACTICES
Stronger Practices Needed to Improve DOD Technology Transition Processes
The Department of Defense (DOD) relies on its science and technology
community to develop innovative technologies for weapon systems, spending
$13 billion on basic, applied, and advanced technology research. Several
GAO reports have addressed problems in transitioning technologies to the
acquisition community. This report, which was prepared under the
Comptroller General's authority to conduct evaluations, compares DOD's
technology transition processes with commercial best practices.
Specifically, GAO identifies technology transition techniques used by
leading companies and assesses the extent to which DOD uses the
techniques.
What GAO Recommends
GAO recommends that DOD strengthen its technology transition processes by
developing a gated process with criteria to support funding decisions;
expanding the use of transition agreements, relationship managers, and
metrics; and setting aside funding for transition activities. DOD
generally agreed with GAO's recommendations with the exception of adopting
process-oriented metrics and setting aside funding for transition. It
cited ongoing initiatives it believes address several of the
recommendations. GAO believes DOD's actions to date are incomplete and all
recommendations warrant further attention.
Leading commercial companies use three key techniques for successfully
developing and transitioning technologies, with the basic premise being
that technologies must be mature before transitioning to the product line
side.
o Strategic planning at the corporate level: Strategic planning
precedes technology development so managers can gauge market
needs, identify the most desirable technologies, and prioritize
resources.
o Gated management reviews: A rigorous process is used to ensure
a technology's relevancy and feasibility and enlist product line
commitment to use the technologies once the labs are finished
maturing them.
o Corroborating tools: To secure commitment, technology
transition agreements solidify and document specific cost,
schedule, and performance metrics labs need to meet for transition
to occur. Relationship managers address transition issues within
the labs and product line teams and across both communities.
Meaningful metrics gauge project progress and process
effectiveness.
Not only does DOD lack the breadth and depth of these techniques, the
department routinely accepts high levels of technology risk at the start
of major weapon acquisition programs. The acquisition community works with
technologies before they are ready to be transitioned and takes on
responsibility for technology development and product development
concurrently, as shown in the following figure. A defined phase for
technology transition is not evident. These shortcomings contribute
significantly to DOD's poor cost and schedule outcomes.
Path That DOD Follows for Technology Development and Product Development
A stark contrast exists between DOD's and private industry's environments
for developing technology. The numerous examples of DOD programs that have
incurred cost overruns, schedule delays, and reduced performance serve as
reminders that inserting a few best practices and changing the mechanics
of technology transition processes without changing the environment that
determines incentives may not produce better outcomes.
*** End of document. ***