By Andrea Shalal-Esa
WASHINGTON, March 22 (Reuters) - Top Pentagon officials on Monday rapped the defense industry for inadequate quality control on missile defense programs and said they planned to use more fixed-price contracts as part of an overall drive to better manage the Missile Defense Agency's annual budget.
Army Lieutenant General Patrick O'Reilly, director of the agency, said the missile defense sector was facing two 'real challenges,' including poor quality on some weapons programs.
Speaking at an annual missile defense conference, O'Reilly declined to identify the other problem, saying he would address that in testimony before Congress on April 13.
He said he had made a personal commitment to shoring up cost, performance and schedule on missile defense programs, and planned to give lawmakers a detailed baseline this summer to allow better tracking of contractor performance.
He said he remained troubled by quality control issues and was withholding funding for some current programs.
He did not specify which contracts, but said defense companies needed to make personnel changes and fire people when problems arose. 'I don't see the level of scrutiny ... for the precision work that's required,' O'Reilly said. 'Our quality is just not where it needs to be.'
But he said government shared in some of the blame as well, and efforts were underway to ensure that requirements were held steady once programs got underway.
He said quality issues often centered on interfaces such as connectors and cables, which pointed to the need to revamp designs and move toward a more modular approach.
He said Lockheed Martin Corp had done a 'fantastic job' on one key program, the Terminal High Altitude Area Defense (THAAD) missile, partly through using a better design.
But he said the program's success came only after seven failures, pointing to the need to adjust the tolerances on programs to allow the learning that followed test failures.
O'Reilly also cited the failed Jan. 31 attempt to shoot down a missile mimicking an attack from Iran after a malfunction in a radar built by Raytheon Co, and said it had resulted in a 'tremendous amount' of useful data.
Deputy Defense Secretary William Lynn and Pentagon acquisition chief Ashton Carter both mentioned the drive toward more fixed-price contracts in their remarks at the conference. but acknowledged that development programs were probably not well suited given their cutting-edge nature.
Carter said the Pentagon was trying to improve management of overall missile defense programs, including broader portfolio oversight, better discipline, using performance awards, and ending programs that were no longer needed.
Defense companies are generally hesitant about fixed-price contracts on development projects because they could face a higher burden if contracts run over projected costs.
Michael Trotsky, vice president of air and missile defense systems for Lockheed, said Lockheed already had fixed price contracts for production on several programs, including the popular Aegis missile defense system. But using such contracts on weapons still in development was risky and could 'put people out of business,' especially in the supplier sector.
General James Cartwright, vice chairman of the Joint Chiefs of Staff, told the conference that the Pentagon was also increasing its efforts to collaborate on missile defense with U.S. allies such as Israel and Japan.
That would help make programs more affordable, and enhance the deterrent effect, he said, adding, 'One thing that I am sure of is that defense budgets are not going to be going up for the next couple of years.'
Pentagon officials said they were exploring cooperative agreements with many countries, including South Korea and various countries in the Middle East, including the United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain.
Cooperation could begin with shared missile warning, but could also include joint development and manufacturing of weapons and use of technologies developed by U.S. partners.
To ensure that any new capabilities could be integrated on a 'plug and play' basis, it was critical to move toward an open architecture, Cartwright said.
'If we don't do that, we'll shut this thing off, we'll make it more expensive and it will be less effective as a deterrent,' he said.
(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn, Bernard Orr) Keywords: ARMS MISSILE/ (Reuters Messaging: andrea.shalal-esa@reuters.com@reuters.net, email: andrea.shalal-esa@reuters.com; +1 202 354 5807) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, March 22 (Reuters) - Top Pentagon officials on Monday rapped the defense industry for inadequate quality control on missile defense programs and said they planned to use more fixed-price contracts as part of an overall drive to better manage the Missile Defense Agency's annual budget.
Army Lieutenant General Patrick O'Reilly, director of the agency, said the missile defense sector was facing two 'real challenges,' including poor quality on some weapons programs.
Speaking at an annual missile defense conference, O'Reilly declined to identify the other problem, saying he would address that in testimony before Congress on April 13.
He said he had made a personal commitment to shoring up cost, performance and schedule on missile defense programs, and planned to give lawmakers a detailed baseline this summer to allow better tracking of contractor performance.
He said he remained troubled by quality control issues and was withholding funding for some current programs.
He did not specify which contracts, but said defense companies needed to make personnel changes and fire people when problems arose. 'I don't see the level of scrutiny ... for the precision work that's required,' O'Reilly said. 'Our quality is just not where it needs to be.'
But he said government shared in some of the blame as well, and efforts were underway to ensure that requirements were held steady once programs got underway.
He said quality issues often centered on interfaces such as connectors and cables, which pointed to the need to revamp designs and move toward a more modular approach.
He said Lockheed Martin Corp had done a 'fantastic job' on one key program, the Terminal High Altitude Area Defense (THAAD) missile, partly through using a better design.
But he said the program's success came only after seven failures, pointing to the need to adjust the tolerances on programs to allow the learning that followed test failures.
O'Reilly also cited the failed Jan. 31 attempt to shoot down a missile mimicking an attack from Iran after a malfunction in a radar built by Raytheon Co, and said it had resulted in a 'tremendous amount' of useful data.
Deputy Defense Secretary William Lynn and Pentagon acquisition chief Ashton Carter both mentioned the drive toward more fixed-price contracts in their remarks at the conference. but acknowledged that development programs were probably not well suited given their cutting-edge nature.
Carter said the Pentagon was trying to improve management of overall missile defense programs, including broader portfolio oversight, better discipline, using performance awards, and ending programs that were no longer needed.
Defense companies are generally hesitant about fixed-price contracts on development projects because they could face a higher burden if contracts run over projected costs.
Michael Trotsky, vice president of air and missile defense systems for Lockheed, said Lockheed already had fixed price contracts for production on several programs, including the popular Aegis missile defense system. But using such contracts on weapons still in development was risky and could 'put people out of business,' especially in the supplier sector.
General James Cartwright, vice chairman of the Joint Chiefs of Staff, told the conference that the Pentagon was also increasing its efforts to collaborate on missile defense with U.S. allies such as Israel and Japan.
That would help make programs more affordable, and enhance the deterrent effect, he said, adding, 'One thing that I am sure of is that defense budgets are not going to be going up for the next couple of years.'
Pentagon officials said they were exploring cooperative agreements with many countries, including South Korea and various countries in the Middle East, including the United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain.
Cooperation could begin with shared missile warning, but could also include joint development and manufacturing of weapons and use of technologies developed by U.S. partners.
To ensure that any new capabilities could be integrated on a 'plug and play' basis, it was critical to move toward an open architecture, Cartwright said.
'If we don't do that, we'll shut this thing off, we'll make it more expensive and it will be less effective as a deterrent,' he said.
(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn, Bernard Orr) Keywords: ARMS MISSILE/ (Reuters Messaging: andrea.shalal-esa@reuters.com@reuters.net, email: andrea.shalal-esa@reuters.com; +1 202 354 5807) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.