1. Draft - January 23 2012
Program Cancellation Failure
Modes & Lessons Learned
J. Steven Newman D.Sc.
NASA Human Exploration & Operations
Risk & Knowledge Management Support Team
ARES Corporation
David Lengyel
Manager – NASA Human Exploration & Operations
Risk & Knowledge Management
PM Challenge 2012 – Orlando Fl. – February 22-23, 2012
1
2. Outline
• Part I: Introduction – The Need for Program
Cancellation Reviews (PCRs)
• Part II: Program Cancellation Overview
• Part III: Program Cancellation Factors/Model
• Part IV: Program Cancellation Scenarios &
Examples
• Part V: Proposed PCR Process
2
3. Part I – Background / Call for Action
• Catastrophic operational failures are documented and analyzed in-detail
identifying their proximate and contributing or underlying causes
• $2 Million trigger for Class A mishap formal reviews
• Formal mishap review boards established in accordance with NASA Procedural
Requirements document NPR 8621, Mishap and Close Call Reporting,
Investigating, and Recordkeeping
• No comparable process for program cancellation
• Program termination announcements invariably cite cost overruns and schedule
slippage as causal factors with little investigation / documentation of root causes
• No formal process parallel to NPR 8621 to address program/project cancellations.
Note: the term “program” is used throughout this presentation to discuss any
cancelled activity – program, project, technology demonstrator
• Program cancellations far exceed a mere $2 million “trigger value” by one ($20
million), two ($200 million), or even three ($2 billion) orders of magnitude
• Action: Establish a formal Program Cancellation Review (PCR) process
3
4. Part I - The Need & Benefits of Program
Cancellation Reviews (PCRs)
• Preparation for External Scrutiny / Reviews
• Government Accountability Office (GAO), Office of Management & Budget
(OMB), Inspector General (IG), Aerospace Safety Review Panel (ASAP)
• Avoid Repeating Past Mistakes
• Knowledge Capture and Transfer
• Documenting and transferring Lessons Learned
• Promote Increased Risk / Vulnerability Awareness within NASA PM community
• Promote Greater Cultural Willingness to Look in the Mirror
• Get beyond embedded NASA “Stopping Rules”
• More Effective PM Training
• Incorporated within APPEL curriculum
• See Future Cancellations Coming In Time to Remedy
• More Effective Reviews and Internal Controls
• Program Management Council (PMC), Directorate Program Management
Council (DPMC), Baseline Performance Review (BPR), Standing Review
Board (SRB) 4
5. Part I: Goals
• Understand the roles of Agency
leadership, Congress, and the White House
in the cancellation process
• Identify key factors in cancellation decisions
– Analyze selected NASA and DoD Program
Cancellations
• Develop a model to assess cancellation
vulnerability
• Propose a cancellation review process
5
6. Part I: Program Analysis Data-Set
NASA DoD
• X-33 • F-35
• X-34 • A-12
• X-37 • Crusader
• X-38 Crew Rescue Vehicle • Comanche
(CRV) • FCS
• James Webb Space Telescope • F-22
(JWST) • Sea Wolf
• Constellation (CxP)
This data-set is considered sufficient to
• Space Station Freedom (SSF) begin the process of identifying trends
related to program cancellation. It is
• International Space Station anticipated that future efforts will
(ISS) expand the data set and analysis.
6
8. Program Cancellation: Overview
Cancellation or Not – They Decide
US House and Senate White House / OSTP / Agency
Leadership
Program Cancellation Vulnerability Domains
8
9. Congressional Leadership
Considerations
• Budget / budget deficit / tradeoffs
• Alignment with space policy objectives
• National importance or need
• Affordability
• Jobs in home district or home Center
• Industry views
9
10. Agency Leadership Considerations
• Alignment with White House Space Policy Agenda
• Alignment with Agency Strategic Plan
• Does program addresses primary agency objectives?
• Is program/project on critical path to other programs?
• Does the program fulfill unique functional
requirements?
• Is the mission operational scenario consistent with
Agency risk posture?
• Are there overriding Agency-level or Program-level
budget constraints?
• Are there external events & constraints to consider?
10
11. Program In Trouble
LTA Req
Management LTA Cost
Estimation
Cost Overrun
LTA Pgm Schedule
Planning
LTA Funding / Cancellation
Unknown Phasing
Technology
Challenges
… or not
LTA = Less Than Adequate
11
12. Program in Trouble
• A program “… in trouble” has started down the path toward cancellation
– In Trouble usually means
• Failure to deliver functional capability (and/or)
• Cost Overruns
– Cost Overrun is tightly coupled to Schedule Slippage
– Schedule Slippage is driven by many factors, Leading drivers include:
» Requirements Creep
» Technology Challenges
» Inadequate funding or phasing
– A program “in trouble” may also have been “helped” get in trouble by external
factors altering the baseline in such a way that the program may not be
executable
• Altered funding profile
• Altered phasing of resources
• Addition of requirements without allocation of funding or schedule adjustments
– Mitigating factors may forestall cancellation or even prevent cancellation
– One way or the other, a program in-trouble will be “in the conversation” (…
on the chopping block)
12
13. Program Out-of-Step
New
Administration
Game
New
Changing
Administrator
Event(s)
Shift in Senate Economic
or House Imperatives
13
14. Program Out-of-Step
• A program “out-of-step” is no longer aligned with
Agency priorities or Agency risk posture
• Loss of alignment can result from:
– Change in Agency leadership
– Change in National Space Policy
– Change in Congressional support
– Public Pressure (e.g., potential adverse environmental
impact)
– External Factors (e.g., end of Cold War, Financial Crisis)
• A private sector metaphor: The business case is no
longer viable
14
16. Cancellation Vulnerability Scorecard (CVS)
• The CVS is proposed as a notional framework
to assist in the discussion and analysis of
program cancellations
– Derived from preliminary analysis of data set on
previous slide
– Mini-case studies evaluating individual programs
are provide in Appendices A and B
16
17. Cancellation Vulnerability Scorecard
Factor High Relative Strength / Weakness Low
Project Health
Tech Performance G (+20) -------------------------------------(-20) R
Cost/Schedule G (+20) -------------------------------------(-20) R
Agency Alignment A (+15) -------------------------------------(-25) a
Policy Alignment
Senate
S (+10) -------------------------------------(-10) s
Support/Opposition
House
H (+10) -------------------------------------(-10) h
Support/Opposition
External Factor(s) G (+20) -------------------------------------(-20) R
Note: The case of Agency (OSTP/White House) misalignment with Congress would be represented by High scores for
17
Agency alignment and low scores for Senate and/or House alignment – guaranteed churn and flail
18. Cancellation Vulnerability Scorecard
• CVS can give a general / relative sense of vulnerability
• Attributes or Factors are key
• Scoring values represent relative weights and are tailorable
to an organization or program management environment
– Technical Performance and cost given greatest weight (+/- 20)
– Agency Alignment given asymmetric weighting where out of alignment
can be very bad (-25) while fully aligned is +15 an expectation
– Senate and House weights are bounded by +/- 10 reflecting the diffuse
nature of Congressional influence
– External factors (Wild Card) +/- 20 reflects potential powerful
influence by an individual (e.g., support from a Congressional
Committee Chairman) or an event (e.g., cancellation of a parent
program)
• Individual cases will play out uniquely
• Cancellation outcomes also differ as discussed on next chart
18
19. Cancellation “Outcomes”
• A range of outcomes Options Examples
from cold shutdown to
X-38, X-33,
delay, de-scoping, Cold
storage, or transfer Done Comanche, A-12,
Shutdown
may allow a Crusader
“cancelled” program to Future Combat
re-emerge down- De-Scope
System
stream or continue
under a different set of Delay SSF, ISS, F-35
expectations and
constraints Lives Partial Buy Sea Wolf, F-22
On
• Knowledge Capture / Storage X-34 (USAF/EAFB)
Technology Capture is Transfer X-37 to DARPA
critical – NASA and DoD
both have program Re-Frame/
CxP Orion / Ares
termination record Re-Name
retention processes On In Trouble
Bubble
JWST
Hill Concern 19
21. Scenario
Program In Trouble – Cancelled
• Fails To Overcome
Technical, Schedule,
Budget Challenges –
Cannot Deliver
• Alternatives: re-
base-lining, re-
scoping not viable
options
• Weak Political
Support
• Not Agency Critical 21
22. Scenario
Program In Trouble – Lives-On
• “Fixes” identified and
implemented
• De-scoped / Re-planned
• Overcomes technical
challenges
• Strong political support
• Agency-critical
“Zombie Danger
Paradigm”
Mega-overrun
Programs
Can “Eat”
other
Program/
Project
Budgets
22
23. Scenario
Program “On-the-Bubble”
• Ongoing schedule /
budget challenges
• Discover of costly “known
unknowns” (technical )
problems
• One or more re-plan / re-
baseline
• Agency Critical
• Mixed Political Support
23
25. Scenario
Program Out-of-Step / Lives On
Survival Scenarios
• Misaligned With
Agency Direction / Re-
direction But Enjoying
Strong Political
Support
• Realignment
• Re-definition Of
Goals & Objectives
• Metamorphous
• Rename
• Storage
• Transfer To
Another Agency
25
26. Examples – Cancellation Causation
Summary Matrix
• Mini Case Studies (see
adjacent X-33
example)are presented
in Appendix A and B.
Summary results are
provided in the matrix
on the following page.
26
27. C= cancelled Op=operating
RB=re-baselined
D= de-scoped
Key Factors
M=morphed
T = transferred
Comanche
Factor
Crusader
Seawolf
JWST
A-12
X-33
X-34
X-37
X-38
F-35
F-22
EFV
CxP
FCS
SSF
ISS
Tech
X X X X X X X X X X X X
Project
Heath
Performance
Cost/Schedule X X X X X X X X X X X X X X
Agency
Alignment
X X X X X X X X X X
Alignment
Policy
Senate
Support/Opp
X X X X
House
Support/Opp
X X X X
Wild External
Factor(s)
X X X X X X X X
Card
C/ C/ tb C C D/ D/
Disposition C
T T
C
d M M
Op RB c C C D
Op Op
C
27
29. PCR Process Outline
• Use NPR 8621.1B Mishap and Close Call
Reporting as a Guide:
– Selection of board members / advisors /
consultants
– Gather evidence and facts
– Review and analysis of data
– Generate recommendations
– Develop report
– Develop lessons learned
29
30. Typical Steps in a PCR
Prepare for the PCR
Gather Evidence and
Facts
Interview Program Interview External
Personnel Personnel
Review and Analyze Data
Draw Conclusions and
Document Findings
Generate Generate Lessons
Recommendations Learned
Develop PCR Report
30
31. Mishap Report and PCR Similarities and Differences
Elements Mishap Report PCR
HQ and Center Contingency YES NO
Plans
Determine Appointing Official YES YES
and Appoint Members
Secure the Site & Preserve YES Preserve NASA and Contractor
Evidence. Impound Data. Records and Databases
Witness Statements YES YES. Inside NASA, the
Contractor and Also External
Organizations
Contract Clause YES May Be Required
Gather Physical Evidence and YES YES
Facts
Review and analyze Data YES YES
Draw Conclusions and YES YES
Recommend Findings
Generate Recommendations YES YES
Develop Report and Lessons YES YES
Learned 31
32. Review & Analysis: Expanded
PCR Framework PCR- Areas of
Investigation
A1. Executability
Tech Performance Analysis
Elements
A2. U.S. Navy PoPS,
Probability of
Program Success
Cost/Schedule framework
B. Better Buying
Power Elements
C. Alignment
Agency Alignment
D. Circuit Breakers
Senate
Support/Opposition
House
Support/Opposition
External Factor(s)
32
33. Investigation Area A-1: Executability Analysis
Elements
• Executability analysis
– Acquisition strategy
– Planning and scheduling
– Requirements
– Software/hardware development,
integration, & test
– Risk management
– Metrics & performance
monitoring
– Integrated product team (IPT) (Bruckman 2012)
effectiveness
– Contractor integration &
management
33
34. Investigation Area A-2: U.S. Navy PoPS,
Probability of Program Success framework
Program Planning & Execution
• Acquisition Management
• Industry/Company Assessment
• Total Ownership Cost Estimating
• Test and Evaluation
• Technology Maturity
• Sustainment
• Software
• Contract Planning and
Execution
• Government Program Office
Performance
• Technology Protection
Program Requirements
Program Resources External Influencers
• Parameter Status
• Budget Planning • Fit in Vision
• Scope Evolution
• Program Advocacy.
• CONOPS • Manning
• Interdependencies.
34
35. Investigation Area B: DoD Better
Buying Power Elements Related to
Requirements / Cost / Schedule
Were programs
wired for success
of failure? Did
cancelled program
conduct:
• Affordability
Analysis
• Will Cost /
Should Cost
Analysis
• Schedule Risk
Management
35
36. Investigation Area C: Alignment
• Lost Alignment
– Weak political support / why?
• Options / lessons learned / span of control / future
guidance
• Role of legislative affairs
• Role of external affairs
– Weak agency support / why?
• Options / lessons learned / span of control / future
guidance
• Changes in agency strategic plan?
• Changes in agency policies?
36
37. Investigation Area D: Circuit Breakers
• Role of “Circuit-breakers - Internal and
External Review Processes
– Internal
• Program Management Council (PMC), Directorate
Program Management Council (DPMC), Baseline
Performance Review (BPR), Standing Review Board
(SRB)
– External
• Government Accountability Office (GAO), Office of
Management & Budget (OMB), Inspector General (IG),
Aerospace Safety Review Panel (ASAP)
How Effective was Review? / Were we Listening?
37
38. Conclusion / Action
• Implement PCR Process - It will establish and enable “the
discussion” that will help avoid future cancellations
– Preparation for External Scrutiny / Reviews
• GAO, OMB, Inspector General
– Avoid repeating past mistakes
– Knowledge capture and transfer
• Documenting lessons learned
– Promote greater program manager (PM) self awareness
• More proactive pm’s
• See future cancellation coming in time to remedy
– Promote greater cultural willingness to look in the mirror
• Get beyond embedded NASA “stopping rules”
– More effective PM training
• APPEL training
– More effective reviews and internal controls
• DPMC, PMC, BPR, SRB
38
40. Mini-Case
X-33 Technology Demonstrator Test-bed
The 1999 test failure
X-33, SLI Program of the multi-lobed
composite LH2 tank
Start 1993 / Goldin doomed the program.
Two options one a
Cancelled March 2001 / Goldin redesign of the
composite structure inconsistent with test
Sunk Cost $940M introduced additional demonstration
weight and created cg objectives.
Phase at Manufacturing underway (Phase D) issues. The other
Cancellation alternative, an Al-Li
metal tank was
Prime Lockheed Martin Skunk Works considered to be
Contractor
Acq. Vehicle Cooperative Agreement
Official Cause technical
Underlying Composite, complex geometry LH2 fuel
Cause(s) tank problems
NASA S&MA Review of X-33, March 1998
http://www.nasaspaceflight.com/2006/01/x-33venturestar-what-really-happened/
http://forum.nasaspaceflight.com/forums/thread-view.asp?tid=347&start=1
http://en.wikipedia.org/wiki/Lockheed_Martin_X-33
40
41. Mini-Case
X-34 Technology Demonstrator Test-bed
X-34, SLI Program X-34 Cancellation: In 2001 “goal
posts moved” after consecutive
Start 1996 / Goldin Mars failures. Introduction of new
“safety requirements” (man-in-the-
Cancelled March 2001 / Goldin loop control) after the vehicle was
already in operational test created
Sunk Cost $378 M an untenable cost/schedule
scenario.
Phase at Integrated Test (Phase D), FASTRAC engine
X-34 Re-emergence?
Cancellation integrated , tow testing completed, captive November 2010: “The two X-34s were hauled to a
carry testing underway National Test Pilot School hangar at the Mojave
facility for inspections by Orbital Sciences personnel
Prime Contractor Orbital Sciences to determine their viability for potential future flight
programs. “
Acq. Vehicle Cooperative Agreement
Official Cause “technical and schedule” reasons / (mainly
involving GFE, FASTRAC engine)
Underlying Change in NASA senior management risk
Cause(s) posture after back-to-back Mars failures
NASA Office of Safety & Mission Assurance, S&MA Review of X-33, June, 1998
http://www.nasa.gov/centers/dryden/news/FactSheets/FS-060-DFRC_prt.htm
http://history.nasa.gov/monograph31.pdf
http://en.wikipedia.org/wiki/Orbital_Sciences_X-34
http://forum.nasaspaceflight.com/index.php?topic=5806.30
http://www.flightglobal.com/blogs/graham-warwick/2008/02/whatever-happened-tonasas-x34-1.html
http://www.wired.com/dangerroom/2010/11/grounded-nasa-space-plane-poised-for-comeback/
http://www.sciencedaily.com/releases/2000/08/000801075234.htm
http://nasawatch.com/archives/2010/11/x-34-to-fly.html 41
http://www.nasa.gov/centers/dryden/status_reports/X-34s_moved_11_17_10.html
42. Mini-Case
X-37 Technology Demonstrator Test-bed
The X-37 project
progressed in a
X-37 satisfactory manner,
overcoming a variety of
Start 1998 as Cooperative Agreement technical challenges.
Change in policy /
Cancelled 2003 priorities ended NASA
sponsorship in 2003. The X-37B was
Sunk Cost $173M cost sharing with Boeing The X-37 was launched into orbit in
transferred to DARPA April 2010 and made
in 2004 and continued an autonomous landing
Phase at Sub-scale X-40 flights completed. NASA development.
http://wl at VAFB in Dec. 2010.
Cancellation transferred X-37 to DARPA in 2003.
Prime Contractor Boeing
Official Cause(s) Change in Agency policy direction
Notes: X-37B emerging as Air Force Orbital Test
Vehicle OTV (AIAA 2011)
http://www.spacenews.com/launch/100423-af-launches-space-plane.html
http://www.spacenews.com/commentaries/100823-civilian-role-x37b.html
http://www.msfc.nasa.gov/news/x37news/index.html
http://www.nasa.gov/centers/marshall/news/news/releases/2003/03-126.html
http://www.msfc.nasa.gov/news/news/releases/1998/98-141.html
42
43. Mini-Case
X-38 Technology Demonstrator Test-bed
X-38, International Space Station The X-38 project
was developed to
Crew Return Vehicle (CRV) serve as a potential
ISS return vehicle.
Start 1994 / Goldin Overcoming a
variety of technical
Cancelled April 2002 /OKeefe issues X-38 was on
the path to succeed.
Sunk Cost $1.5 B Severe cost overruns primary factor in the X-38
within the ISS cancellation. Lack of mission
Phase at Three drop-test flight programs completed – program during the critical alignment was also a
2000/2001 time- factor in the decision.
Cancellation par foil descent to landing on skids frame were a
Prime Contractor In-House JSC / Scaled Composites (airframe)
Official Cause ISS budget problems eventually led to
cancellation
Underlying Linkage to ISS / New Administrator / no
Cause(s) policy driver for X-38
X-38/CRV All Hands, EA3/John F. Muratore, 3 Dec 2001
http://en.wikipedia.org/wiki/NASA_X-38
http://en.wikipedia.org/wiki/File:ISS_Crew_Return_Vehicle.jpg
http://www.fas.org/programs/ssp/man/uswpns/air/xplanes/x38.html
http://www.nasa.gov/centers/dryden/news/FactSheets/FS-038-DFRC.html 43
44. Mini-Case
Constellation Program
Constellation Program The Constellation program
cancellation involved cost
Start Feb 2004 / O’Keefe, Griffin overruns and schedule delays,
resulting in-part from: 1)
Cancelled Feb 2010 /Bolden underfunding and altered
phasing, 2) technical
Sunk Cost $9.5B + $2B cancellation challenges, and 3) program
management approach and
Phase at Ares/Orion pre-CDR. Ares I-X flight test constraints. The other and
Cancellation completed in October 2010 overarching reason for
cancellation was a shift in
Prime Ctrs & Orion / JSC, LM, in Administration and
Agency priorities and policy
Contractor(s) Ares / MSFC, ATK, Boeing the NASA leadership
that accompanied change team
Acq. Vehicle Multiple Competitive Contracts
Official “technical, cost, and schedule” reasons –
Cause(s) “lacked innovation”
Underlying Change in Space Policy
Cause(s)
http://news.bbc.co.uk/2/hi/science/nature/8489097.stm
http://www.spacenews.com/civil/110614-memo-marks-end-constellation.html
http://en.wikipedia.org/wiki/Constellation_program
http://www.nasa.gov/mission_pages/constellation/news/index.html
http://www.scientificamerican.com/article.cfm?id=nasa-budget-constellation-
cancel
44
45. James Webb Space Telescope Mini-Case
James Webb Space Telescope
Start Planning initiated in 1996
Cancelled On the Bubble
“On the Bubble” January 2012: JWST is the subject of
Sunk Cost $3B + (2011) heated debate within NASA House and Senate oversight
committees threatening to consider cancellation and
Phase at Passed CDR – summer 2010 / 2011, the cap future costs. The impact of JWST cost overruns on
Cancellation JWST program is in the final design and other programs and projects is a major concern.
fabrication phase (Phase C). Multiple technology development issues as well as LTA
program management have been cited as cost and
Prime GSFC, Northrop Grumman, schedule drivers.
Contractor(s)
Notes: $1.6B initial/ then $5B, then $6.5B – now
$8.8 B (2018 launch/5 yr op)
Multiple re-baselines and re-planning
(major 2005)
Notes: 17 international partners
http://www.jwst.nasa.gov/
http://www.pcmag.com/article/print/266679
http://www.spacepolicyonline.com/news/hall-this-is-last-opportunity-for-jwst
http://www.spacenews.com/civil/100111-congress-criticizes-spending-webb-telescope.html
http://www.wired.com/wiredscience/2011/09/astronomers-plead/
http://news.yahoo.com/scientists-fight-controversial-james-webb-space-telescope-112402158.html
45
46. Mini-Case
Space Station Freedom
Space Station Freedom Space Station Freedom
(SSF) struggled with
Start 1984 - Early Development, 10 contracts multiple redesigns, re-
signed in Sept 1988 baselining, as well as
internal and external
Cancelled By June 1993 after seven redesigns SSF political conflict. SSF
was politically non-viable provided a foundation for the ultimate redesign
development and implementation of the International
Sunk Cost $11.4 B
Space Station
Phase at Design completed – some hardware in
Cancellation development
Prime Boeing, PWR, McDonnell-Douglas
Contractor(s)
Cause(s) Multiple redesigns and re-scoping
coupled with repeated underestimates of
cost coupled with uneven political
support
http://en.wikipedia.org/wiki/Space_Station_Freedom
http://www.russianspaceweb.com/iss_chronology.html
http://www.russianspaceweb.com/iss_us_roots.html
http://www.fas.org/spp/civil/crs/93-017.htm
46
47. Mini-Case
International Space Station
The International Space Station (ISS)
International Space Station (ISS) operating in orbit today survived a
serious re-evaluation in 2001.
Start 1993 – building on the SSF The Young report findings noted:
redesign efforts
“.. ISS Program’s technical “The existing deficiencies in
achievements to date, as represented management structure,
“In- IMCE (Young Report) – by on orbit capability, are institutional culture, cost
Trouble” November 2001 extraordinary.” estimating, and program control
must be acknowledged and
Notes International Space Station (ISS) “The existing ISS Program Plan for corrected for the Program to move
Management and Cost Evaluation (IMCE) executing the FY 02-06 budget is not forward in a credible fashion”
Task Force emphasized need to develop credible.”
better cost estimates and high fidelity
baseline for future budget planning
http://www.spacedaily.com/news/iss-01v.html 2001
http://history.nasa.gov/youngrep.pdf
http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/2002
0008687_2002004289.pdf
47
49. Mini-Case
F-35 Lightening II
F-35 Program
Start November 1996
Cancelled Not Cancelled
Development Projected to be $382B for 2,443 aircraft
Cost
Phase at N/A. Currently in Development Flight
Cancellation Test.
“… In a nutshell, the F-35 program is five
Prime Lockheed-Martin (airframe), Pratt-
to six years behind schedule. The
Contractor(s) Whitney (engine)
estimated cost to taxpayers has nearly
Official Not cancelled. doubled”
Cause(s)
Underlying Three variants, concurrent engineering
Cause(s) and test, low-TRL helmet-mounted
display, complex integration and life-
cycle support (international partners)
requirements, $1T Life cycle support
costs across 49 bases.
http://www.star-telegram.com/2011/01/29/2806149/f-35-started-with-recipe-for-
trouble.html#storylink=cpy
http://en.wikipedia.org/wiki/Lockheed_Martin_F-35_Lightning_II
http://www.defense.gov/news/newsarticle.aspx?id=62829
http://www.lse.co.uk/FinanceNews.asp?ArticleCode=eonzqi07td0tkfi&ArticleHeadline=US
_Navy_Air_Force_may_field_F35s_later_than_2016
http://www.foxnews.com/politics/2012/01/27/struggling-in-us-f-35-fighter-pushes-sales- 49
abroad/
50. Mini-Case
A-12 Avenger II
A-12 Program
Start 1984 contract award
Cancelled January 1991
Sunk Cost $5B
Phase at Just passed CDR in October 1990
Cancellation … the A-12 Avenger II - had "failed to make
progress," were behind schedule and had
Prime McDonnell-Aircraft and General designed a plane that was too heavy.
Contractor(s) Dynamics Accordingly, the U.S. terminated the
Acq. Vehicle Firm-fixed price contractors for "default,"
Official Breach of contract
Cause(s)
Underlying Schedule delays and cost increases,
Cause(s) technical issues with stealth and radar
system, airframe overweight
http://en.wikipedia.org/wiki/McDonnell_Douglas_A-12_Avenger_II
http://news.google.com/newspapers?id=7FJSAAAAIBAJ&sjid=mzYNAAAAIBAJ&pg=3046,
1502437&dq=avenger+ii+cost&hl=en
http://www.defensenews.com/article/20110523/DEFSECT01/105230306/Supreme-
Court-Overturns-A-12-Ruling-Against-Contractors
http://www.defensenews.com/apps/pbcs.dll/article?AID=2011105300307
50
51. Mini-Case
XM2001 Crusader
Crusader Program
Start 1QFY95
Cancelled 2QFY02
Sunk Cost $2B of a planned $11B spent
Phase at Passed PDR in Nov 2001
Cancellation
“… In early May 2002, Secretary of Defense
Prime United Defense and General Dynamics
Donald Rumsfeld cancelled the $11 billion USD
Contractor(s)
program because he considered it neither mobile
Official Cost increased to $25M per unit nor precise enough…”
Cause(s)
Underlying SecDef “transformational” goals.
Cause(s) Crusader was designed for a “different
strategic context”. Advanced alternative
systems (upgraded Paladin) were
available.
http://en.wikipedia.org/wiki/XM2001_Crusader
51
52. Mini-Case
Comanche
Comanche Program
Start April 1991
Cancelled February 2004
“… the Comanche, conceived in 1983 during the Cold War,
Sunk Cost $6.9B of a projected $39 B program was a victim of changing needs as the military's focus has
shifted to the war on terrorism.”
Phase at DOT&E
“… keeping the Comanche "survivable" in the current
Cancellation threat environment would require design changes that
would cost "several billion dollars" and erode the
Prime Sikorsky, Boeing and Lockheed-Martin chopper's stealth capability, one of the primary reasons for
Contractor(s) developing the aircraft”
Official Schedule delays and cost overruns
Cause(s)
Underlying Poor management, different operational
Cause(s) environment--conceived during the cold
war, Iraq War lessons learned
http://articles.cnn.com/2004-02-23/us/helicopter.cancel_1_comanche-
sikorsky-aircraft-corporation-schoomaker?_s=PM:US
http://en.wikipedia.org/wiki/Boeing-Sikorsky_RAH-66_Comanche
http://www.aviationweek.com/aw/generic/story_generic.jsp?channel=
aerospacedaily&id=news/hel02244.xml
52
53. Mini-Case
Future Combat Systems (FCS)
FCS Program
Start October 1999
Cancelled June 2009
Sunk Cost $18B of originally estimated $92B
Phase at Systems of Systems Functional Review
"Since its inception, costs have gone up dramatically while
Cancellation promised capability has steadily diminished”. . . . “The
Government Accountability Office and the Congressional
Prime Boeing and SAIC (lead integrators)
Budget Office have questioned the cost and management of
Contractor(s) Future Combat Systems”
Official DoD shift toward spending more on
Cause(s) counter-terrorism and less to prepare for
conventional warfare against large states
like China and Russia
Underlying Affordability. Costs have gone up
Cause(s) dramatically (est $233B) while promised
capability has steadily diminished.
http://en.wikipedia.org/wiki/Future_Combat_Systems
http://www.washingtonpost.com/wp-
dyn/content/story/2007/12/06/ST2007120602927.html
http://www.aviationweek.com/aw/generic/story.jsp?id=news/GROUND050809.xml
&headline=U.S.%20Army%20Ground%20Vehicles%20Up%20and%20Down&channel
=defense 53
http://csis.org/files/media/csis/pubs/090205_fcsarmy.pdf
54. Mini-Case
F-22 Program
F-22 Program
Start April 1991 (ATF competition winner
announcement)
Production July 2009
Termination
“…The Cold War was over, it didn't make any sense to go forward
Sunk Cost $65B for 187 aircraft with the program," said Thomas Christie, a retired official who
worked 50 years at the Pentagon. "But the Air Force built up such a
large constituency up on the Hill that it couldn't be killed.“
Phase at Production
Cancellation … Two decades ago, the U.S. government planned to buy 648 of the
fighters for $139 million apiece; the cost has almost tripled since
Prime Lockheed-Martin then to $412 million, the Government Accountability Office said.
Contractor(s) Recently retired Defense Secretary Robert M. Gates ended the
purchase in 2009 at 188 planes ….
Official 5th generation fighters were required by
Cause(s) all three services which favored the F-35
Underlying End of the Cold War. Affordability of
Cause(s) continuing production.
http://articles.latimes.com/2011/aug/07/business/la-fi-fighter-jets-grounded-
20110807
http://en.wikipedia.org/wiki/Lockheed_Martin_F-22_Raptor
http://www.slate.com/articles/news_and_politics/war_stories/2009/07/they_sc
rapped_the_f22.html
http://www.defensereview.com/f-22-raptor-program-cancellation-
defensereview-weighs-in/
54
55. Seawolf Program Mini-Case
Seawolf Program
Start August 1992 Concept Exploration and
Definition
Cancelled 1995 (after U.S.S. Jimmy Carter
launched)
Sunk Cost $13B
Phase at Production. 3 or 29 planned submarines …. ordered at the end of the Cold War in 1989. At one
Cancellation were built and deployed time, an intended fleet of 29 submarines was to be built
over a ten-year period, later reduced to twelve
Prime Electric Boat Division of General submarines. The end of the Cold War and budget
Contractor(s) Dynamics constraints led to the cancellation in 1995 of any further
additions to the fleet, leaving the Seawolf class limited to
Official Changing requirements environment and just three boats
Cause(s) growing budget constraints, the superior
performance parameters of the Seawolf
class could not justify its cost
Underlying Faulty welding specs for HY-100 steel,
Cause(s) extensive rebuilding of the first hull of
with an estimated cost increase of
$68.6 million and a 1 yr schedule delay
http://www.gao.gov/assets/230/220367.pdf
http://www.globalsecurity.org/military/systems/ship/ssn-21.htm
http://www.gao.gov/archive/1995/ns95004.pdf
http://www.fas.org/programs/ssp/man/uswpns/navy/submarines/ssn21_seawolf
.html
http://www.cdi.org/issues/naval/seawolf.html
http://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG112 55
8.2.pdf
56. Mini-Case
Expeditionary Fighting Vehicle (EFV) Program
EFV Program
Start June 1996 Contract Award
Cancelled January 2011
Sunk Cost $3.3B
Phase at CDR in 2008, EFV was in System Design “…the program is simply not affordable given
Cancellation and Development likely Marine Corps procurement budgets,” said
the general. “The procurement and
Prime General Dynamics Land Systems operations/maintenance costs of this vehicle are
Contractor(s) onerous” – USMC Commandant Gen J. Amos
Type Contract Cost Plus
Official Not affordable or sustainable
Cause(s)
Underlying Poor management, required an
Cause(s) additional $12 billion to field the fleet of
about 550 EFVs, DoD budget cuts,
political pressure on DoD budget
http://www.efv.usmc.mil/
http://forums.military.com/eve/forums/a/tpc/f/8071946761/m/3520094181001
http://en.wikipedia.org/wiki/Expeditionary_Fighting_Vehicle
56
