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1 I. Program Overview Organization Name/Program Lockheed Martin Aeronautics Name: C-130 Program, Special Mission Program Team Program Leader Name/ Peter T. London Position/Contact information Director, C-130 Special Mission Programs , Phone Program Category o System Level Production Program Background: What The Lockheed Martin/U.S. Air Force HC/MC-130J is this program all about? (No Recapitalization Program has distinguished itself over the more than one page). past three years by rapidly fielding 31 aircraft in three Describe: The overarching need for production configurations while seamlessly performing this program Developmental Testing and Operational Testing. Initial History of the program Operational Capability (IOC) was achieved on Dec. 7, The product that is created 2012, for Air Force Special Operations Command by this program (AFSOC) and on April 25, 2013, for Air Combat Scope of work original & updated Command (ACC). The IOC announcement led to the Expected deliverables HC/MC-130J Recapitalization Program achieving full-rate Current status of the production approval on Oct. 7, 2013, to include an program Acquisition Decision Memorandum (ADM) to expand the program from 122 aircraft to 131 aircraft. In 2013 the USAF HC/MC-130J Program Team was awarded the prestigious David Packard Excellence in Acquisition Award. The HC/MC-130J program was born out of a requirement to recapitalize the aging fleet of special operations C-130s that form the backbone of the U.S. Air Force s personnel recovery and special operations missions. The legacy HC/MC-130 fleet had numerous aircraft approaching 50 years of age, multiple avionics configurations and logistical challenges. Requirements Authorities from ACC and AFSOC joined forces to specify a common aircraft that would suit the unique missions of both commands. It was necessary to incrementally develop these aircraft in a series of sequential releases to rapidly field capability. Based on the program requirements, Lockheed Martin took advantage of existing aircraft production processes to support variations of the C-130J Super Hercules that rolled-off the assembly line while also introducing new capabilities. II. VALUE CREATION = 20 POINTS Value: What is the value, competitive positioning, advantage, and return created by this program For six decades, the C-130 has demonstrated proven and unparalleled mission capabilities in support of military and humanitarian operations. Its ability to operate in austere operating environments and from unimproved 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 1

2 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? airfields make it ideally suited to bring aid to areas ravaged by natural disasters or civil unrest. The HC/MC- 130J proves its value by demonstrating dramatic new transformational capabilities to provide warfighters with the ability to carry larger loads, increased payload weights as well as increased range, speed and survivability which are all found in the C-130 s exceedingly flexible airframe. HC/MC-130Js offer dramatically improved performance to move heavier payloads further and faster with fewer aircraft, less fuel and reduced numbers of aircrews and support personnel, all while operating from locations inaccessible from other platforms. Changing geo-political realities increase the demand for special operations aircraft. Reduced access to foreign bases and increasing operations in regions of the world with poor or unusable infrastructure drives an increase in the use of special operation forces. U.S. Special Operations Forces (SOF) have leveraged the HC/MC-130J fleet s expanded reach to bridge gaps in allied force airfields with its increased range/payload capabilities and greatly improved performance in the high/hot conditions where global unrest has been centralized for the past two decade and is likely to continue in the foreseeable future. The HC/MC- 130J program has enjoyed tremendous success in rapidly fielding a new aircraft and capabilities due to the collaborative approach defining requirements and incremental development based on unprecedented levels of trust and commitment between the program stakeholders. III. ORGANIZATIONAL PROCESSES/BEST PRACTICES: (HOW DO YOU DO THINGS) = 30 POINTS Strategic: Affordability Management Describe how your program has addressed affordability from a solution, operational, business process, sustainment, strategic or other perspective. Lockheed Martin supports an internal effort called Aeronautics Quality Transformation (AQT), which is resulting in a steady reduction of scrap, repair and re-work (SRR). Cost savings resulting from progressive decrease in hours-per-unit is passed directly to the customer. Process improvements, measurement of all elements of waste and re-competing work from underperforming suppliers to proactive suppliers who are willing to continuously improve quality and affordability have been key drivers. The entire program is seeing benefits of nearly 15 percent year-over-year reduction in SRR. Similar benefits are seen in the reduction of findings during critical Product Audit Assembly and End Item (PAA/PAE) inspections by Lockheed Martin s customers AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 2

3 Strategic: Opportunity Management - Describe how your program has identified its operational and business opportunity, and manages this opportunity throughout the program s life cycle. 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. Lockheed Martin teams identified that many of the oldest aircraft in the U.S. SOF fleet were also the most indemand assets, even more so following the terrorist attacks on Sept. 11, 2001, and developed a plan to adapt SOF capability into the existing C-130J product baseline to create a new, more capable baseline for ACC and AFSOC. C-130J in-theater performance first by international, allied operators and then the U.S. Air Force and U.S. Marine Corps following their respective declarations of IOC. This also validated the HC/MC-130J projected increases in mission capability, efficiency, effectiveness and reliability. The increased performance further solidified ACC and AFSOC commander support for a sole-source solution for their fleet recapitalization needs. Key SOF capabilities normally included costly and time consuming post-production modification programs were adopted as in-line features of the new HC/MC-130J baseline. Although Lockheed Martin team members ultimately knew those changes would not create the necessary value proposition to drive a customer buy decision, these changes provide substantial savings in both acquisition cost and schedule which would be critical to the recapitalization program business case. Lockheed Martin made assessments on which capabilities could be added to drive a buy decision. Once selected, engineering design efforts began on incorporating those capabilities into a production configuration. One major design challenge was integration of the Universal Aerial Refueling Receptacle Slipway Interface (UARRSI). UARRSI had been a significant post-production modification on prior production C-130s and AFSOC s EC-130J Commando Solo aircraft. Moving UARRSI to an in-line production installation as part of the HC/MC-130J baseline configuration saved an estimated 8,000 hours of touch labor cost and eliminated eight months of down time. Approximately 51 percent of the C-130J program is subcontracted, with over 550 suppliers across 44 states. The C-130J program manages its subcontractors as defined in the C-130J Subcontract Management Plan (SMP) based upon corporate policies for subcontract and program management. The SMP provides methods and guidance for the selection and management of subcontractors using proven processes, tools and methods to assure successful program execution. This activity begins at the pre-proposal stage and continues through 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 3

4 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? How have you worked with your customer to assure quality and communication without creating non-value reviews post-delivery support and sustainment, with an ultimate goal to deliver best value to the customer. The subcontract management process ensures that subcontractors deliver quality products, on schedule, and within budget to support the program objectives. Application of Lockheed Martin s Supplier Performance Measurement Model is a strategic element of the C-130 program s supply chain management process. Application assures continual assessment and feedback to the supply base to specific quality, delivery, affordability, and management criteria. A Lockheed Martin-developed Webbased reporting tool facilitates long term relationships and two way communication of supplier s performance to C- 130 program requirements. Supplier performance ratings are regularly reviewed by procurement and program management to recognize or reward performance or to prompt improvement efforts. The HC/MC-130J team progressively added more capability into a moving production line through the introduction of three configurations. The core configuration was based on the U.S. Marine Corps KC- 130J configuration with added capability borrowed from other current C-130J, EC-130J, India C-130J-30 and LM s own investments. The Increment 1 configuration added enhancements from the U.S. Coast Guard HC-130J Long Range Surveillance variant and other unique capabilities, followed by the Increment 2 configuration which added SOF-specific capabilities not found on existing C-130Js. Essential to all three configurations is a requirements stability that allows for concurrent planning of the configurations with spiraled introduction plans based on scope of change and supplier lead times contributing to the overall program success. The core program held an Integrated Baseline Review that aligned schedule activity with budget. Each work package owner briefed there area to show they had proper alignment of resources to schedule to ensure successful execution. Earned Value was used throughout the effort with excellent CPI (0.971) and SPI (0.997) scores. Operating Excellence (OE) objectives for the C-130 Program are to: Create an environment where continuous improvement is part of the program s day-to-day activities and a driving force towards program performance and affordability. An OE team within the C-130 Program supports these objectives and is comprised of subject matter experts (SMEs) from the C-130 Program s 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 4

5 and audits that do not fit your program effort? 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 methods used to analyze/fact-find regarding supplier proposals. This is one of the most critical 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? What innovations in processes or tools were used to further evolve this capability? Functional Teams (PFTs), who ensure sustainable and coordinated efforts are used to meet schedule, increase quality and remove cost from deliverables to achieve a lower product life cycle cost for customers. The flexible nature of the OE team achieved by cross-utilizing PFT SMEs is a self-sustaining catalyst for change that can address continuous improvement for every aspect of the program and product. The C-130 Program hosts a series of Executive Program Management Reviews with all key suppliers throughout the year. The cadence of these reviews is dependent on supplier performance and closure of actions against improvement activities. Expectations are reinforced through data driven metrics. The Subcontract Management Team (SMT) measures, evaluates, and reports on supplier performance and supports the OE team s continuous improvement actions to ensure supplier products and services are meeting program commitments and customer requirements. Supplier ratings and Supplier Integrated Management (SIM) scorecards are key tools available to support supplier performance measurement. The C-130J Program has a well-established systems engineering process. The development and maintenance of the technical baselines for the C-130J Program is critical to managing system complexity since all current and proposed customer configurations are derived from these baselines. The process used to manage the technical baselines is designed to rapidly react to program generated changes as well as customer directed changes. This environment is structured around a Configuration Change Board (CCB), where all changes to the applicable baseline are coordinated, reviewed and dispositioned by the program manager, acting as the CCB chairman. System design reviews were conducted with full stakeholder participation. Actions were taken and all critical actions closed before proceeding to the next formal review. Program scope and testing were identified up-front during certification working groups, whereby the use of MIL- HDBK-516B Military Airworthiness Certification Criteria Expanded and comprehensive system safety processes were used to guide critical activities for capability closure 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 5

6 Operational: Risk/Issue/ Opportunity Management - Describe the processes used to identify both risks and opportunity and to assure potential for both is addressed effectively. Please indicate any forward-leaning processes to support. Team Leadership: Team Culture and Motivation - Describe how you created your team spirit and culture, and accomplished entire team integration and individual team member motivation. Given the economic environment and changes in the global marketplace, how did you assure your team changed swiftly and with agility? 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? and Military Flight Release (MFR). The HC/MC-130J Program took on a very intensive risk management process by holding weekly risk and opportunities reviews. This resulted in identified key areas of concerns where countermeasures were taken to avoid major delivery disruptions or OT&E concerns. Customer buy-in with two of the most prominent risks was key, and the customer agreed to fund additional tasking to mitigate these risks. When accomplished properly, the HC/MC- 130J team took proactive action to execute mitigation countermeasure. Both issues were effectively managed without production reduction and with a first-time pass IOT&E. Throughout Lockheed Martin s 60-years of manufacturing the C-130 Hercules airlifter, a strong constant has been employee commitment to producing aircraft that are world-class in quality, reliability and performance. All team members are well-aware of the high-mission value of every C-130J and its unique ability to perform a variety of missions that no other single aircraft can accomplish. C- 130 employees are aware that the HC/MC-130J aircraft are highly valued by the customer and used for veryfocused special missions. They view their work on these aircraft as their way of contributing to the success of each SOF mission by delivering aircraft of the highest quality to the customer. Program leadership sustains this commitment by identifying opportunities for employees of all levels to engage with the customer. Employees are invited to meet with HC/MC crews when they tour the C- 130 line and tell crews how the aircraft is built, while learning how the crews fly and use the aircraft. Lessons learned and knowledge transfer occurs across program and functional boundaries. Prior to program start an Independent Non-Advocate Review (INAR) takes place that evaluates the entire life cycle. Lesson learned are shared by subject matter experts and actions taken during the INAR ensure a successful transition from program capture to execution will be achieved. Those actions similar to risks and opportunities are incorporated in the baseline program plans before it can move forward. Once underway the program kept track of key activities that drove success and fed this information back to INAR process owners to ensure that process remains relevant a fresh with new ideas. This not only benefits the programs but also the customer as they are ensured programs will execute with fresh ideas and 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 6

7 Team Leadership: Leadership Development - How do you develop your team s skills and prepare/ develop 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. continuously improved thought processes. Lockheed Martin has a strong leadership development pipeline focused on talent planning and succession planning activities. High-potential employees can participate in formal leadership development programs that provide rotational development assignment opportunities throughout the corporation and business units. These are known as Leadership Development Programs and are available in many disciplines, from Production to Finance & Business Operations. Employees also can take classes and workshops at the Lockheed Martin Center for Leadership Excellence, a dedicated learning center available for all employees. Employees also have access to corporate-funded graduate degree programs to promote leadership development. Knowing and fully appreciating the importance of completing U.S. Air Force Operational Test & Evaluation (OT&E) based on lessons learned from multiple programs, an HC/MC-130J operational readiness manager (ORM) was assigned to coordinate planning and execution of HC/MC-130J OT&E. The ORM s objective was to look at the customer s Capability Description Document (CDD), System Requirements Document (SRD) publications and procedures and map those against system performance specification and other publications to identify gaps in Key Performance Parameters, objectives and threshold capabilities. This took significant time and effort to research with a multitude of authorities. It led to a comprehensive gap analysis report that was vetted by the customer and stakeholders during development and ultimately delivered to the customer in time to address mitigation actions. The efforts of this cross-functional team yielded a seamless transition to IOT&E that found the HC/MC-130J to be suitable, effective and mission capable on the first pass which is a rare occurrence. IV. ADAPTING TO INNOVATION AND COMPLEXITY: (HOW DO YOU DEAL WITH YOUR PROGRAM S UNIQUE COMPLEXITIES) = 20 POINTS 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 7

8 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 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: nonexisting 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. The Market Uncertainty was at the Platform level. The U.S. Air Force s C-130-based SOF fleet evolved to its current form over many decades by way of multiple modifications performed by the U.S. Air Force, Lockheed Martin and other contractors. Adapting a new generation of purpose-built SOF aircraft into the existing C-130 baseline configuration meant getting key ACC and AFSOC stakeholders to agree on a common set of requirements. Without a common set of requirements the market may not have developed. To meet the aggressive schedule commitments for the program, Lockheed Martin took significant technical and financial risks in advance of finalized program requirements to develop the unique HC/MC-130J configuration. Lockheed Martin selected key capabilities to start this process such as moving UARRSI, larger power generation systems and adapting a flush mount Large Infrared Countermeasure System into the baseline production aircraft. These systems had all previously been installed as post- production modifications and making them in-line installations saved the Air Force months of aircraft down time and millions of dollars in acquisition cost. Technologically, the HC/MC-130J program is a medium technologically uncertainty. Numerous production modifications were adapted from existing designs and modernized for current standards and installation in an in-line production environment. The team recognized the inherent risk with incorporation of major structural and system changes in a moving production line and established weekly risk meetings to breakdown each capability and its overall system effect on the aircraft as well as technical publications. This process, as well as consistent and detailed communication with the customer, drove uncertainty down to acceptable levels. The HC/MC-130J System Complexity is that of a System. The integrated nature of the C-130J was blended together with Special Operations specific sub-systems to yield a superset of system requirements targeted for specific Special Operation s needs. The level of commitment required to execute the program required the collective team to buy-into the concept that something not only different, but very special was taking place. That translated to engaging the workforce early, often and frequently during all business rhythm meetings. The 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 8

9 - 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 competitiveness. - Time Critical there is an absolute and criticalto-success 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. constant communication established the norm and drove the expectations and ultimately the performance of the team. It also kept the end-goals present and reminded the team members what they needed to do to ensure these goals were successfully met. All HC/MC-130J modifications were incorporated into the existing production line, therefore performing all system engineering activities as well as making all engineering drawing release, make/buy decisions and first articles very time critical. Weekly meetings were held to cover engineering release, make/buy release, fabrication delivery, supply chain delivery, tooling development and make, tool try and first article. The focus on the meeting ensured that the product was being delivered on time and mitigation strategies were in place for late delivery. In all, the team executed three incremental configuration changes with no more than three weeks of deviation The greatest uncertainty was how the team would adjust to the pace that the customer demanded. Evolving requirements and the number of follow-on modifications drove the team to develop better practices and improve accountability that ultimately lead to the successful program execution. The success was largely due to the team establishing a business rhythm in key areas to include weekly meetings for EV and financial performance, risk and opportunity, technical reviews, requirements management, proposal progress, contract reviews and production reviews 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 numerical evidence. Customer satisfaction is the ultimate goal with each HC/MC- 130J delivered. Lockheed Martin program managers are in frequent, if not daily, conversation with customer counterparts to gauge and monitor the health of the aircraft fleet and program. Specific collaborations with HC/MC partners include: regular visits at HC/MC SPO, AFSOC and SOCOM; annual program management reviews; annual customer satisfaction surveys; frequent production line tours; and support customer at key industry events including trade shows 2014 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 9

10 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. (SOFIC), deliveries. Core program CPAR scores averaged 4.44 and award fee scores were greater than 92 percent over the period of performance. While Lockheed Martin s HC/MC-130J team relies on traditional financial benchmarks for performance, the main focus has always been satisfaction of the acquisition community, the commands and the ultimate critic, the enduser of the product. To date program metrics include: all aircraft were delivered on or ahead of aircraft schedule; general financial: the program executed the baseline effort below target threshold resulting in projected life cycle savings of over $2 billion; testing AFSOC declared IOC three months ahead of plan while ACC was on plan; and performance: Mission Capable Rate during OT&E was at or above 94%. The HC/MC-130J Recapitalization Program acquisition decision memorandum documented requirements for 131 aircraft. Lockheed Martin has delivered 31 HC/MC aircraft and is focused on continuous improvement to include removing unnecessary cost in the production process and in the supply chain to keep the program efficient and cost contained. Additionally, aircraft field performance has consistently exceeded requirements with greater than 85 percent mission capable rate. Creditable and proven affordability initiatives, on time deliveries and superior field performance, all of which are affirmed by a Multiyear procurement requirement to further stabilize C-130 production and its supply chain. Lockheed Martin relies on several resources to gauge employee feedback. It starts with a new employee orientation and continues into skip level informal meetings with employees and leadership, developmental training opportunities, leadership engagements and continuous open door policy for access to all program leaders. The program holds monthly mix and mingles to provide employees opportunities to meet with leaders in informal settings. These events offer insight into the overall attitude of the workforce and generate continuous improvement ideas. Additionally, annual program and corporate-wide surveys provide employee feedback. The HC/MC-130J program took advantage of a mature work force and production line and integrated this highly unique program and leverage what was already successfully implemented within the overall program structure AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 10