January 2020
A logical response to this problem would be for the Global Hawk program to make the ground station systems a separate subprogram. The difculty with this is that it would create the possibility of an N-M breach due to cost growth in a subprogram that accounts for only a small fraction of total programcost. Amore reasonable approachwould be for programs to be able to declare a single subprogram responsible for procurement of items other than end items. This subprogrammight only be liable for an N-M breach if its estimated total cost (RDT&E + Procurement) grew to exceed a threshold percentage of the estimated PAUC for the overall program, which would require new legislation from the Congress. Possible Methods for Handling Mixed Types As the examples discussed previously show, many solutions have been found to the mixed-type problem, but all of them have drawbacks. Subprograms. For some programs, subprograms have provided an elegant solution. For example, the Army’s original Multiple Launch Rocket System (MLRS) program distinguished two subprograms: the mobile rocket launcher and the tactical rocket it would fire. This allowed the program to accurately track unit cost growth for both of the fully config- ured end items being developed and produced. The launcher was produced within its original cost estimate; the rocket experienced a critical N-M breach. 9 Similarly, the Army’s PAC-3 suite of upgrades to the Patriot mis- sile system was (after several schedule breaches in the first few years of development) divided into subprograms for the Missile Segment and the Fire Unit. The fact that a unit cost breach in any subprogram triggers an N-Mbreach in the overall program under current law gives the Services an incentive to not declare subprograms at all, even when they would seem useful. A program without subprograms often gives planners and cost analysts more leeway in reporting data that will make the cost growth look smaller. For example, if the MLRS program planners and cost analysts had not defined subprograms, but had treated the rockets as the end-item units, they would have shown a lower percentage cost growth for the combined program than was seen for just the rocket subprogram. In addition, the PM could have decided to produce fewer launchers than originally planned, reducing both PAUC and APUC without changing the official number of units being produced. Doing so might have avoided the N-M breach, at the cost of greatly reduced transparency regarding cost growth and reduced capability.
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Defense ARJ, January 2020, Vol. 27No. 1 : 28-59
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