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The evolution of COTS in the defence industry

The evolution of COTS in the defence industry

In 1991 the United States DoD's Strategic Acquisition Initiative (SAI) brought COTS (Commercial off-the-shelf) utilisation to a full mandate. The mandate stipulated that U.S. Defense contractors must look at COTS as the first consideration in their programme development for new technology and upgrades.

Over the last five years, the amount that defence contractors have spent on outsourcing component and subsystem requirements has increased substantially. Five years ago, defence contractors spent 11% of their budget in this way. Today, the outsourcing percentage has risen to 70%, and the success of many COTS suppliers is due wholly or at least in part to this paradigm change within the defence/military community.

Although COTS is not mandatory outside of the US, several western European countries and Australia have adopted similar concepts, and are using COTS in both the development and deployment phases of their programmes. Even the highly industrialised countries of Asia that have historically taken a cautious approach to the adoption of COTS, have recently begun to demand the COTS initiative.

Problems encountered

The emergence of COTS brought promises for cost reduction, performance improvement, and accelerated development cycles. Such pledges have to some extent been realised; however, the application of COTS has created as much complexity as it has simplified particularly in large-scale weapon and electronic system development.

Technology advances at a far greater speed than it did 30 years ago. This has particularly been the case in the IT field. Over the course of a single defence and military programme the COTS microprocessors chosen five years ago have advanced multiple generations and their speed has increased tenfold. A balance between program life cycles with COTS product life cycles, technology insertion, and obsolescence management must be achieved before the COTS initiative can be seen as a significant benefit to the industry.

Beyond technology, other issues need to be addressed. The number of organisations involved in each procurement is not ideal. Each programme involves the procuring government agency, the selected defence contractor, and numerous commercial suppliers. These organisations employ discordant product life cycles and business models, thereby creating life-cycle management complexities that, if left unmanaged, endanger the initial cost privileges of COTS.

In short, it is essential that the cost and development promises of COTS be realised throughout the entire life of the programme.

The continuity requirement:

The typical COTS suppliers' product life-cycle is two to three years. The typical defence contractors' programme life-cycle is 7-15 years. The typical government programme life-cycle and sustainable platform life is 25-40 years.
The disparity in the length of the product life-cycle between the government, the defence contractors, and the COTS suppliers is a major hurdle in the ratification of COTS.

The US DoD has realised that the programme cycle (which can have a platform life of 40+ years) needs to look toward shorter design/insertion cycles. Successive refinements, rather than a series of point-designs, is the approach that best fits the COTS model. Low start-up costs and the need for continuity between generations of a product design were historically the reasons for the success of COTS programs. The rapid prototyping and accelerated implementation capabilities that COTS brings to the defence contractors' programmes are now regarded as the real benefits of COTS.

Choosing a COTS supplier

Both the government agencies and the defence contractors participate in the selection of the COTS supplier for any given project or program. The Government considers some of the following costing factors in the selection of COTS suppliers. Factors for which, at the current time, the majority of COTS suppliers are unable to provide full and complete statistics on:

• Initial Product Price
  
• Maintenance Costs
  
• Operational Costs
  
• Training Costs
  
• Disposal
  
• Installation Costs
  
• Software Change/Upgrade Costs
  
• Software Tools (System Design and Models) Costs
  
• Technology Costs
  
• Software Integration Costs
  
• Fault Isolation/Redundancy Costs
  
• Support (Integrated Logistics Support, Sparing, Test & Repair, and Documentation) Costs
  
• Planned Product Improvement and Life-cycle Installation Costs
  
• Interchangeability of Hardware/Software Architecture, form fit, function- Replacement and expandability capabilities
  
• Supplier Longevity and Financial Stability
  
• Risk Mitigation
  
• Past Performance

The guideline sets out a more realistic life-cycle cost model which provides the government and military with genuine insights into projected costs and behaviour.
From the perspective of the defence contractor, the basic cost considerations are similar to those of the Government. At this level however, profit motive and competitive pressures arise, presenting complexities that determine which COTS suppliers are considered. Consequently, it is the long-range upgrade plan, software development, and maintenance costs which have the most impact on potential profit.
To keep overall life-cycle costs in check, the management of upgrade costs, proven software portability and reuse have now become the key elements in COTS supplier selection. Software development can represent a $15-20 million, multigenerational investment, with maintenance adding $2-3 million over and above that. Defence contractors therefore need to obtain realistic predictions of cost performance from their COTS suppliers, both for initial deployment and over the programme life-cycle.

A winning approach?

Every COTS supplier has a different approach to ruggedising its products. For example, vendors such as DY4 and Radstone develop products for extremely harsh environments. They employ specialised technologies which typically results in products that are expensive and often do not keep pace with Moore's Law - the industry standard price / performance ratio. In terms of performance per dollar, per watt, and per square inch, the design goals of these technologies are focused on different targets.

SKY Computers Inc. is one company that specialises in high performance embedded computing. It utilises third-party partners to provide several levels of rugged high performance computer systems to their customers. SKY has recently formed a partnership with an industry packaging expert who will take SKY's current generation of multiprocessor, the MPC7400-based Merlin and add the capabilities described previously as criteria #2 and #3. This partnership allows SKY to provide a family of products, as a one stop shopping source, to satisfy the full life-cycle solution.

Chelmsford, Massachusetts-based SKY has been supplying COTS products for 20 years. Its approach is to develop a long-term partnership with the customer, and to work together during development, deployment and well into the upgrade/retrofit phases. The foundation for SKY's business is always a COTS solution with full life-cycle support. SKY routinely makes adaptations to standard COTS products by reformatting, repackaging, or by delivering programme-specific enhancements. The company affirms that programmes whose needs are not fully met by COTS or hybrid COTS solutions can be addressed via technology licensing, strategic partnerships, or co-technology developments with SKY and its partners.
This approach, which keeps development costs at a minimum and creates a consistent flow of technology solutions, can often be the best for the defence contractor.

SKY may be a minnow in the COTS ocean compared to DY4 and Radstone, but it argues forcibly that recent programme wins have proven that biggest is not always best. Adaptability and the ability to provide the right solution is a more attractive selling tool than the square footage of a factory. SKY maintains that it's model works well for COTS and has found that the industry is starting to sit up and take notice.

INDUSTRY PEOPLE

BF Goodrich's Engineered Industrial Products segment has appointed William Walthall as Group Vice President - Engineered Products. Walthall, who reports to the segment's president and chief operating officer, Ernest Schaub, will be responsible for Delavan Spray Technologies Fairbanks Morse Engines, Quincy Compressor, Garlock Bearings, Haber Tool and Sterling Die divisions. Walthall has been with BF Goodrich for over twenty years, and was formerly president - Safety Systems at BF Goodrich Aerospace.

Smiths Industries Aerospace has announced two key appointments. In the first, Brian Knight (45) who has been director and group controller of Smiths' Industrial business for the past six years succeeds Ron Albrecht as director and group controller. Albrecht has recently moved to become president of SI's newly-acquired Invensys, Leland and Actuation Systems companies.

In the second Ed Skorupski (45) has been appointed director of sales and marketing for the company's (Bohemia NY) Aerospace Avionics business. Skorupski, with 12-years at Smiths Industries and a more recent appointment at the (Malvern Pa.) retrofit fuel business joins a company that has been in the Smiths' fold since late 1999 and has core capabilities in control and display, power, battery charging, lighting controllers, lighted switches, annunciators and sensing systems.

Rolls-Royce Marine has created a new sales and service centre in Rio de Janeiro which will provide support to customers using Rolls-Royce gas turbines, Bergen diesel engines, Ulstein Aquamaster equipment and Kamewa thrusters (Ulstein and Kamewa are recent R-R acquisitions). Paulo Lembruger will head the operation as president - Rolls-Royce Marine - Commercial, Brazil. Lembruger was formerly employed at Interocean. His new team includes Ronaldo Melendez (formerly of Gehr International) as commercial sales director. Further appointments are yet to be announced.

The opening of this new centre builds on the group's aero engines business success in Brazil. It rounds-out Rolls-Royce's commercial presence in Brazil, adding to its Military Aviation, Civil Aviation and Energy businesses.

VEGA group subsidiary Crew has recruited Brian Cummings, Richard Clayton and former BAE Systems systems engineer Simon Smith as part of its drive to strengthen the IT support operations that it provides for the UK and European defence communities. The Portsmouth (Hants)-based company has stated that it intends to increase its workforce by 25%.

Racal Instruments has appointed Doug McGinn as the new director of its defence business unit. McGinn joins Racal from Alenia Marconi Systems, where he held the post of engineering director - Dynamic Divisions and was prominent in the integration of AMD's UK and Italian divisions. McGinn's track record includes a string of directorships and management positions within a number of different Marconi defence business divisions, where he was instrumental in the successful progress of several major integrated defence system projects.

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