Program Leader Name/ Position/Contact information , Phone

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1 I. Program Overview Organization Name/Program Name: Program Leader Name/ Position/Contact information , Phone Program Category Program Background: What is this program all about? (No more than one page). Describe: The overarching need for this program History of the program The product that is created by this program Scope of work original & updated Expected deliverables Current status of the program Organization: Lockheed Martin Name of Program: Aegis Sites and Operation and Maintenance contract (O&M) Joan McCullough, Program Manager Postage Address: Lockheed Martin 199 Borton Landing Rd Moorestown, NJ Phone Number: System-level Sustainment Overarching need for this program: The Aegis Weapon System (AWS) is the backbone of the U.S. Navy s Surface Combatant Fleet and a growing number of allied navy fleets. It is a complete sensors and weapons package that is seamlessly integrated with powerful command and control software. Aegis is capable of simultaneously defending against 21st-century air, ballistic missile, surface, and underwater threats. To date the system has been installed on 101 ships in six countries, with more ships planned. Today s AEGIS is a ninth-generation system that benefits from decades of continued hardware and software upgrades since its first delivery. History of the program: O&M performs a large function at the heart of the U.S. Navy s AWS program. Decades of Aegis evolution and lessons-learned are brought to bear to manage product baselines through various development phases, pace emergent threats, modernize legacy equipment, and ensure interoperability among allies across platforms. Today s customer environment requires smart, agile program execution approach focused on delivering value affordably and efficiently. To be successful, the decades-old O&M contract continues to improve, transform and innovate just like the Aegis system itself. Product created, scope of work and expected deliverables: At the heart of the Aegis development cycle is a set of Navy and Lockheed Martin facilities and activities that develop and integrate new equipment and software. Aegis O&M is comprised of four major Work Breakdown structures: Combat Systems Engineering Development Sites (CSEDS), Naval Systems Computing Center (NSCC) Development Sites, Common Sites and Baseline Support, and Program Management Office. The chief deliverable is 24 x 7 operations at the sites to allow for development and continual enhancement of the AWS. System development testing starts with computer 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 1

2 I. VALUE CREATION = 20 POINTS Value: What is the value, competitive positioning, advantage, and return created by this program to your: Customers National interests, war fighter Company Strength, bottom line, and shareholders Scientific/technical value (particularly for R&D programs) Excellence and Uniqueness: What makes this program unique? Why should this program be awarded the Program Excellence Award? program tests and runs through single element testing and system-to-system interoperability testing. The result of the work done on O&M is a system ready for Navy certification and delivery to the surface fleet. Status of the program: From January 2012 through May 2012, the O&M contract has provided over 50,000 test hours at both the CSEDS and NSCC sites with an availability rate of over 99%. The program is Green in all key metrics. CPARS have been exceptional for the past five years in a row, with each of the program s six rating categories receiving a Dark Blue score. Value to customers: The AWS represents the core of the U.S. Navy s Surface Combatant Fleet. In addition to its role protecting friendly naval, air and land assets, it is the sea-based component of the United States Ballistic Missile Defense System. In this capacity it performs national security missions of the highest importance. The O&M contract is what enables the disciplined incremental capability growth that keeps Aegis state-of-the-art and ready to respond to emergent threats. Based upon the motto of the Father of Aegis, Admiral Wayne E. Meyer, CSEDS allows the team to Build a Little, Test a Little, Learn a Lot. The O&M team ensures this objective is met 24 hours a day, seven days a week with greater than 99% availability of resources. In doing so, the team ultimately delivers a system to the Navy known for its superior reliability and capability. Further, in the current economic climate requiring persistent attention to affordability, the O&M team continually identifies and conducts efficiency initiatives that saves money and allow for execution of additional contract scope without additional funding (please see Section III for detail). Value to Lockheed Martin: The O&M contract provides Value Added base to Lockheed Martin. Having the O&M work in Moorestown NJ locates Aegis development testing effort near to the system s primary design, production, and sustainment communities. This allows engineers, technicians and Program personnel across Aegis to seamlessly reach back to specific types of expertise. These synergistic relationships greatly enhance the value Lockheed Martin can provide to customers, and benefits its ability to perform on multiple contracts. Since Aegis is a large program for the company, continuing to perform well on the O&M contract drives significant shareholder value AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 2

3 Scientific/technical value: The O&M contract manages resources that are used to develop and field cutting-edge technologies to support critical defense needs. The team supports a total of 27 programs, most of which are Aegis baselines in various stages of development. Because Aegis systems are employed as a first option in numerous crisis situations from Ballistic Missile Defense to land attack to forward-deployed friendly asset protection the O&M team must have the expertise and agility to ready all equipment needed to optimize short-fused development (see Section IV for an example). Excellence and Uniqueness: The O&M team is deserving of the Program Excellence Award because it continues to exhibit exemplary performance in a demanding technical, schedule and budget environment while serving as a key enabler for one of the DoD s primary warfare systems. This past year, O&M received the Lockheed Martin MS2 Program Performance Excellence Award (PPEA) for three (3) quarters in a row. The PPEA recognizes programs that deliver superior return to our shareholders as well as outstanding customer satisfaction. One purpose of this award is to help drive our culture and teams to deliver early and under cost. III. ORGANIZATIONAL PROCESSES/BEST PRACTICES: (HOW DO YOU DO THINGS) = 30 POINTS Strategic: Opportunity Management - Describe how your program has identified its operational and business opportunity, and manages this opportunity throughout the program s life cycle. The O&M contract team employs an opportunity management process that continually identifies savings. Those savings are often reinvested to provide our customer with additional capability without additional funding from the US Navy. The following cost savings initiatives have been realized in 2012: Return of excess cables to U.S. Navy supply system CSEDS lighting efficiency projects Process Improvements in Computer Program Quality Reviews Automation of Fair Share process Automation of Justification form for Vendor Service Agreements (VSA) As a result of the above projects, the following upgrades are in process without the need for added funding: Completion of AC units for Network and Server Rooms for increased efficiency CSEDS Cooling Tower upgrade and Cooling Tower pump upgrades to increase HVAC efficiency CSEDS New First Deck UPS and Battery Cabinets Fire suppression system replacement and standpipe installation 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 3

4 Strategic: Strategic Supply Chain Integration and Cost Effectiveness Management: - Describe how your program is integrating its supply chain to assure visibility and adapting longterm cost effectiveness up and down the supply chain. Strategic: Operational Integration and Systems Engineering Describe the challenges faced by your program in terms of integrating the system into its operational environment and its impact on systems engineering planning and management. Operational: Planning, Monitoring, and Controlling - Describe your planning and resource allocation processes. How do you monitor and review your program s progress and make corrections to keep the program on track? More efficient CSEDS gate operations Bundling of Vendor Service Agreements We internally perform make-buy analyses on a continuous basis and always seek to provide best value to the customer. In 2011, we approached our major subcontractors and discussed alternate ways of providing the same level of support to O&M via modified work share arrangements. The purpose of this activity was to identify potential cost savings to the point where Lockheed Martin was willing to cede scope to more cost-effective sources. While no alternate sources were identified through this particular activity, the result of the effort was a self-imposed reduction of Lockheed Martin cost by combining work packages and removing non value added tasks without a negative impact on performance. O&M oversees the tactical integration of over 15 complex Aegis programs/baselines at multiple locations, as well as the integration of all these programs into the complex O&M software development environment. Additionally O&M designs and integrates each of the interfaces from these various programs with dozens of shared combat system interfaces and sensors at the sites, which is an incredibly complex integration effort. Daily oversight and coordination is required to ensure the tens of thousands of test hours that are required by the numerous programs are achieved. Since the most capable test suites rarely have capacity, even assuming 24x7 utilization, to support 100% of the aggregate required test hours across all programs, O&M ensures less complex testing is driven to the test suites able to support such an effort as each program performs their various levels of testing complexity. For example if a given test effort can be accommodated by a PC-based desktop testing or mini suite with minor simulation, then O&M would ensure that effort does not get scheduled on a full-up tactical suite connected to live radars and sensors, to better align test complexity to equipment capabilities. O&M organizes efforts by Integrated Product Teams (IPTs). Lower level work is outlined in the program s Work Breakdown Structure (WBS). We plan resources against each task using a Workforce Planning Tool to ensure the right person is available at the right place during the right time. The program has established a robust set of regular meetings, referred to as our business rhythm. The business rhythm establishes recurring meetings to review program progress and key metrics. Each week the team meets to discuss accomplishments, issues and concerns. Each month we review financial data to ensure we are on or below budgets AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 4

5 Operational: Supply Chain and Logistics Management -- What processes, tools and relationship-building methods have you used to develop, refine and improve supply chain and stakeholder integration? Please indicate also methods used to analyze/fact-find regarding supplier proposals. This is one of the most imperative needs of our industry please provide specific details and data that assisted you in gauging the effectiveness. Operational: System Integration, Testing & Reviews - Describe the activities and processes used to succeed in your system integration, and testing. How did you conduct system design and technical reviews? Operational: Risk / Opportunity Management Describe the processes used to identify both risks and opportunity and to assure potential for both is addressed effectively Please indicate any forwardleaning processes to support. Team Leadership: Team Culture and Motivation Describe how you created We use a variety of processes, tools and methods to optimize our supply chain. In addition to the make-buy analyses discussed in detail above, we leverage corporate bulk purchasing agreements, lessons-learned across multiple programs, and constant interface with suppliers at the sourcing, technical and program management levels. We conduct a monthly Material Review Board at which we review vendor quotes for maintenance agreements. We ensure that the justification for such agreements is sound to confirm (and re-confirm) that we have the right agreement for the right price for the right duration. When possible, we bundle service agreements with suppliers to achieve economies of scale and pass the savings back to the customer. The biggest lesson learned through O&M s supply chain optimization efforts is that constant attention to this area drives lasting behavioral changes through the organization that result in real cost avoidance. O&M uses an incremental (as opposed to single step) integration and test approach to reduce risk. It first assembles the infrastructure and communication pathways of the larger system, which are tested and refined using dummy components to simulate subsystems. The team progressively adds components and functions, getting each new piece working prior to inserting the next. Once a system is assembled and integrated, the team assures that requirements have been met (verification) and that the system performs as the customer expects (validation). Again demonstrating the build a little, test a little, learn a lot approach. Our Risk Process includes Risk Mitigation Step-Down Plans and factors in the probability of occurrence and the most likely cost impact and that we use Net Factored Risks as part of our Program Headlight Metrics. We use Program Excellence Plans (PEPs) from our Lean-Six Sigma program to identify the Opportunities. The O&M team conducts weekly Integrated Product Team meetings to ensure that personnel are lock-step and tuned into real-time program execution priorities and developments. It also conducts monthly Risk Management meetings, which alternate concentration on Risks and Opportunities to ensure a closed-loop cycle by which the program is able to realize concrete results and savings for the customer. Finally, quarterly Risk and Opportunity Management Review Boards with stakeholders are held to ensure that all company functions are aligned. The entire O&M program understands the need for our service and its importance to the success of Aegis. Many of our team members served our country or have family members in service on Aegis Ships. Our team is motivated knowing that our support 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 5

6 your team spirit and culture, and accomplished entire team integration and individual team member motivation. Team Leadership: Lessons Learned and Knowledge Management Describe how you collect lessons learned and best practices, and how they are shared with your team and company to improve performance. Also how are you capturing expertise and knowledge to assure availability over the life of the program? Team Leadership: Leadership Development How do you develop team s skills and build future leaders Best (& Next) Practices: Identify your program s specific Best Practices that you believe are unique, and could be shared with others and become industry s Next Practices. of Aegis Development protects our sailors (and country) from threats. Our program team also excels in enjoying our work. We enhance team spirit with regular team recognition and organized social events. The Program Manager will hold contests. For example, a contest to develop the most cost saving opportunities awards the winner state lottery tickets or a coffee shop gift card. Also, food is brought in by the team each month at finance reviews. These activities build the camaraderie that is a huge part of our success O&M conducts lessons learned Structured Improvement Activities (SIAs), which are Lean Manufacturing / Six Sigma Just Do It events that capture lessons learned and bring them into our processes. We also forward lessons learned applicable to other programs to the Lockheed Martin Process Asset Library (PAL), which provides process, procedures, guidelines, and checklists for all aspects of program execution. Program management works closely with functional management to ensure we fill leadership positions with the highest caliber staff. To develop future leaders, we use leadership development programs, mentoring and training. The O&M PM is from one such leadership development program, the Program Management Development Program. We combine these methods with stretch assignments to grow the skills of our future leaders. We also use succession planning to ensure appropriate training plans are established for future leaders and to facilitate smooth transitions within the program. O&M conducts annual Voice of the Customer events to ensure that the customer and company have a common set of goals. The events focus on an in-depth discussion and prioritization of contract requirements. The event is innovative because it mandates company agility and flexibility to reprioritize requirements as customer needs change without negatively impacting prior commitments and performance metrics. The O&M team has found these exercises to be immensely powerful in maintaining high program-customer alignment, a consistent open dialogue, and ultimately longstanding exceptional CPARS ratings. Below is a sample output from The left ranking column depicts Lockheed Martin s anticipation of customer desires; the right ranking column shows actual desires as vetted through the Voice of the Customer event. The four shaded cells in the right column show areas in which Lockheed Martin adjusted its focus to best align with actual customer preference AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 6

7 Complet ed FMEA it ems from 3/ 2/ 10 event Focus requirement s t o be sure t o complet e on 4/ 7/ 10 event Requirement s t o complet e on 4/ 7/ 10 event assuming t ime allows Voice of t he Cust omer IV. ADAPTING TO COMPLEXITY: (HOW DO YOU DEAL WITH YOUR PROGRAM S UNIQUE COMPLEXITIES) = 20 POINTS Identify the Program s Market Uncertainty level How new is your product to your market and users, based on the definitions below. Then describe how you deal and address this specific uncertainty: - Derivative an improvement of an existing product/system. - Platform a new generation in an existing product line. - New to the Market a product or system adopted from another market - New to the World - breakthrough product, never seen before Identify the Program s Import ance (1-5) TEAM RANKS Import ance (1-5) UPDATES FROM BOB LAPLUME Cust omer Requirement s Provide Safe Lab Envirorment 5 5 Meet all Navy Physical Securit y requirement s at CSEDS 5 4 Control Access to Classified Spaces 5 5 Sat isfy DOD Informat ion Assurance for CSEDS Provide Availabilit y for Major Test Event s/ Deliveries 5 5 Sat isfy DSS Informat ion Assurance for LM Perform Compliant Trusted Downloads 4 5 Manage Disast er Recovery of Development Infast ruct ure 4 4 Manage Fair Share Cost St ruct ure 4 4 Provide Comput ing and Net work Infast ruct ure 4 4 Meet 100% availabilit y at NSCC (95% t hreshold) 3 3 Meet 100% availabilit y at CSEDS (90% t hreshold) 3 3 Manage Sit e Ut ilizat ion efficient ly 3 3 Provide on schedule and on Cost Baseline Installation Support 3 3 Manage GFCP/ GFE/ CFE 3 3 Provide 100% defect free SW Deliveries (Sit es and Ships) Contain/ Reduce Cost Growth 2 2 Provide adequate work space for Development Testing 1 1 Derivative: The bulk of the development work that occurs on the O&M contract today is related to improving Aegis and related products the evolution of four decades of prior design, development and production. Ensuring that today s version of Aegis is just as relevant and cutting edge as it was when it was first delivered to the Navy is not an insignificant challenge. Our current Baseline 9 program, for example, is the largest baseline we have ever delivered. Thus while the program certainly benefits from the heritage and lessons-learned obtained through years of incremental development and testing, there is a need to constantly evolve the processes, technologies and organization required to perform increasingly complex tasking efficiently and effectively. The market uncertainties faced by O&M are primarily related to the constant evolution of DoD requirements. This translates into a certain expectation of flux with respect to the various programs and baselines that need support. For example, in 2011 the team planned and scheduled to support five variants of a baseline. During this time, one of those variants was cancelled but three other baselines had increased requirements. Without impacting performance, the team had to simultaneously ramp down preparations to support the expected baselines and ramp up to meet new requirements. The fact that Aegis is still the system of choice to equip the world s most advanced surface combatants is a testament to the O&M team s ability to evolve well. The span of technology that the O&M team supports on a 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 7

8 Technological Uncertainty using the definitions below. Then describe how you deal and address this uncertainty: - Low-tech: application of mature, well-established technology - Medium Technology: existing technology modified to meet new design requirements - High-Technology: recently developed new technology - Super High-Technology: non-existing technology that needs to be developed during the program. Identify the level of your System Complexity using the definitions below. Then explain how you are dealing with this level of complexity: - An Assembly performing a single function. - A Sub-system fitting within a larger system. - A System a collection of subsystems performing multiple functions. - An Array a System of Systems ; a widely dispersed collection of systems serving a common mission. Identify the Pace and Urgency of your team s effort using the definitions below. Then describe how you deal with the program s pace requirements: - Regular timing no specific time pressures. Fast/Competitive time to market is important for daily basis is wide-ranging from legacy early Aegis MILSPEC equipment to the latest high-end, industry leading commercial off the shelf items. This requires an equally wide range of skills to be able to operate in distinctly different environments while maintaining high levels of efficiency across the board. As a result, the O&M team confronts both Low Technology Uncertainty (focused on reliability and maintainability of legacy equipment) and High Technology Uncertainty (focused on the risk of incorporating new technology into Aegis). The key is to be able to toggle between these two challenges in the diverse staff working the program. Some members have direct experience serving on ships with the legacy equipment, and know the detailed procedures for maintaining and operating it. Similarly, other staff are wellversed in the latest technology and are crucial to its successful integration and test. Array: The O&M contract spans all areas of testing starting with element-level testing and progressing to multi-element testing, system-level testing and system-of-systems testing. The CSEDS facility contains fully functional equipment configurations for each of the baselines that the program supports. These suites are often networked together to support warfighter requirements. The team optimizes the equipment to have maximum flexibility - part of the network is comprised of a highly complex switching system that allows test configurations to be altered within minutes. This means that common equipment sets can be shared assets among baselines. Some of the tests performed include Joint aviation missions that involve interoperability with other Navy platforms and systems. The team maintains close coordination with the Aegis Weapon System managers, Combat System Managers, U.S. Navy and foreign end users, and industry organizations. Detailed planning on the part of the O&M team ensures that these test events meet or exceed performance specifications. Time Critical / Blitz: The O&M team supports major development activities that ultimately impact the ability of multi-billion dollar warships to meet their critical delivery or upgrade milestones. Further, the team supports short-fused development needs due to the role that Aegis plays in maintaining national security. In early 2008, it was informed of an urgent requirement in which Aegis would be used to destroy a decaying-orbit satellite before its toxic chemicals could affect population centers. Our experienced, highly responsive team supported the design and execution of 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 8

9 competitiveness. - Time Critical there is an absolute and critical-tosuccess deadline. - Blitz there is a crisis element driving the need for immediate response Other Complexities & Uncertainties - Describe other complexities and unknown factors faced by this program and how you addressed them. Operation Burnt Frost from challenge to execution in less than 45 days. With no ramp-up time, the close collaboration between the O&M team and engineering enabled 95% of the software changes to be locked down within the first 3 weeks of operation. With the world watching, the O&M team supported the U.S. Navy in the successful execution of this mission. During this particularly demanding time period, the O&M team continued to support its full complement of 27 programs without a negative performance impact. From a human perspective, O&M team members accept and thrive on the accelerated program pace, largely because many of them have served, continue to serve (Reserves), and/or have close family members who serve. From a structural perspective, the team has the right program controls in place, proven over many years, to handle the schedule fluctuations and perform with excellence. Infrastructure and Cutting Edge Technology The O&M contract deals with a unique mix of infrastructure challenges that require the team to be simultaneously prepared to address aging infrastructure issues and complexities associated with cutting edge technology. On one side, The CSEDS facility is a reutilization of an Air Force site that was planned and constructed over 50 yrs ago. Space, power and cooling were never designed for the current testing that the Aegis programs demand, and are running at maximum capacity. At the same time, the site must still achieve tens of thousands of testing hours every year. On the other end of the spectrum, the NSCC is continually upgraded with the latest processing technology to meet ever-increasing computing needs. Having the flexibility to face uncertainties on both ends of the technology spectrum requires an adaptable and diverse team. O&M personnel range from mechanics to facility engineers, electrical engineers and system engineers. V. METRICS (HOW DO YOU MEASURE PROGRAM S PERFORMANCE) = 30 POINTS (Note: We are not looking for $ results, but the relative percentage achieved. In particular indicate what specific metrics and data you are using that drive the program beyond standard measures of schedule, budget, and performance, and which have contributed to your program s focus and its success.) Customer - How do you measure the impact of your program on your customer and your customer s satisfaction? Include a description of your metrics, as well as The O&M program manages customer satisfaction through daily discussion with the Contracting Office Representative (COR) and quarterly reviews with the Government Program Manager. This regular communication ensures that we remain focused on what is important to our customer. The primary metric used to measure customer satisfaction is the CPAR process. The results of our latest (2011) US Government CPAR assessment are below. These are the 2012 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 9

10 numerical evidence. same results we have received since Performance - How do you measure your program s performance in traditional terms such as schedule, budget, requirements, and business results? Preparing the Future - How do you measure and assess the long-term contribution of your program to the corporation/organization? Team - How do you measure and assess the impact of your program on your team development and employee satisfaction? Unique Metrics - Describe any unique metrics you are using to measure your program s progress and how do you focus it for outstanding success. Area Rating Technical (Quality of Product) Dark Blue Schedule Dark Blue Cost Control Dark Blue Business Relations Dark Blue Management of Key Personnel Dark Blue Fleet Support Dark Blue O&M utilizes Earned Value Management (EVM) process to measure and manage our cost (CPI). O&M also uses a set of headlight metrics. These metrics include; Staffing, net factored risks and opportunities, and management reserve usage, We collect these metrics monthly and review them in our business rhythm meetings, taking action where our metrics indicate an issue may be looming. We also review trends as they can be early indicators of a potential future problem. LM brings in an independent and seasoned PM and functional team to review and make recommendations about program performance. This independent look can be very valuable and insightful to the PM. The Aegis O&M team received green and blue scores this Independent Program Assessment in both 2011 & The chair of the review and the PM partnered before the event to make sure the review was effective. At a corporate level, LM uses employee surveys to assess employee development and satisfaction. We use the results of these surveys to adapt business practices in an attempt to keep our high performing team challenged and satisfied. In addition to the availability metrics, computer program deliveries and network usage, the O&M contract is also responsible for managing trusted downloads. We are responsible for evaluating each download of classified Aegis data. The team has a complex multistep process to ensure only those with Need To Know are acquiring the data necessary for testing and development. Our customer trusts our team to ensure we carefully oversee this process and guarantee only the right information is provided to the appropriate person(s) AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 10