Attachment_3_DSMS_Guidebook_SD-22.pdf

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SD-22 – August 2012 iii

Message from the Director Diminishing Manufacturing Sources and Material Shortages (DMSMS) problems can be caused by many factors, but they will happen. Robust DMSMS management is crucial. Without it, the readiness of our weapons systems will be degraded, hampering the ability of our warfighters to accomplish their mission and putting their safety at risk. Further, failure to continually address DMSMS issues throughout a system’s life cycle can sometimes cost taxpayers millions of dol-lars.

The B-1 program’s DMSMS management team (DMT) overcame obsolescence and supportabil-ity issues, resulting in an estimated 10-year cost avoidance of $316 million. Similarly, the Apache program’s DMT avoided more than $200 million in expenditures, and the Virginia-class submarine’s DMT resolved over 1,090 obsolescence issues and reaped over $124 million of doc-umented cost avoidance since inception.

It is imperative for program managers to adopt and fund a robust DMSMS management strategy and plan, in concert with proactive technology management, early in the life cycle. This is a pro-gram’s most effective and efficient way to minimize materiel readiness risks due to DMSMS is-sues, realize future savings during production and sustainment, deliver better buying power, and improve overall life-cycle management. All program managers should task their DMSMS offices to assess the adequacy of their DMSMS management efforts. Deficiencies should be corrected as soon as possible. It’s a matter of lives, readiness, mission success, and dollars.

A robust DMSMS management program consists of five interrelated steps: prepare, for example, develop a DMSMS strategy and obtain funding; identify items with immediate or near-term ob-solescence issues; assess the items to prioritize those most likely to affect readiness or availabil-ity; analyze possible resolutions; and implement the most cost-effective solutions. This guidebook—designed primarily for the DMSMS practitioner, provides best practices for robust DMSMS management. Program managers, engineers, and life-cycle logisticians should find the guidance particularly useful.

The guidebook will be updated periodically. This version of SD-22, Diminishing Manufacturing Sources and Material Shortages: A Guidebook of Best Practices for Implementing a Robust DMSMS Management Program, replaces a version published in September 2010. Recommended changes to this document should be addressed to the Defense Standardization Program Office, 8725 John J. Kingman Road, Stop 5100, Fort Belvoir, VA 22060-6220 or email at DSPO@dla.mil.

Gregory E. Saunders Director, Defense Standardization Program Office iv

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Table of Contents

1. Introduction

1.1. Scope and Objective

1.2. DMSMS Policy and Guidance

1.3. The Importance of a DMSMS Management Program

1.4. DMSMS Emphasis Areas

1.5. Overview of the DMSMS Management Process

1.6. Organization of This Document

2. DMSMS Management Links to Affordability and Defense Acquisition System Policy and Guidance

2.1. Overview

2.2. Design Effectiveness and DMSMS

2.2.1. Technology and Supply Chain Management

2.2.2. DMSMS As a Consideration in Design

2.2.3. Consideration of DMSMS in Systems Engineering Technical Reviews ...19

2.3. Process Efficiency and DMSMS

2.3.1. Acquisition Strategy

2.3.2. Product Support Strategy

2.3.3. Integrated Product Support Elements

2.3.4. Consideration of DMSMS in Logistics Assessments

3. Prepare: Establishment of a DMSMS Management Program Infrastructure

3.1. DMSMS Management Plan

3.1.1. Planning Considerations

3.1.2. Outline of DMP Contents

3.2. DMSMS Management Team

3.2.1. Roles and Responsibilities of DMT Members

3.2.2. DMT Training Needs

3.3. DMSMS Operational Processes

3.3.1. DMT Operations Funding

3.3.2. Case Management

3.3.3. Program Evaluation

3.3.4. Quality Assurance

vi

4. Identify: DMSMS Monitoring and Surveillance

4.1. System Prioritization

4.2. Identification and Procurement of Monitoring and Surveillance Tools

4.3. Collection and Preparation of Parts Data

4.3.1. Parts Data Collection

4.3.2. Parts Data Preparation

4.4. Analysis of Parts Availability

4.4.1. Predictive Tools

4.4.2. Vendor Surveys

4.4.3. Product Discontinuation Notices

4.5. Collection and Update of Programmatic and Logistics Data

5. Assess: DMSMS Impact Assessment

5.1. Data Needs

5.1.1. Programmatic Data

5.1.2. Availability Data

5.1.3. Criticality Data

5.1.4. Logistics Data

5.2. Assessment of the Effects of a DMSMS Issue

5.2.1. Should a Resolution to the Problem Be Pursued?

5.2.2. Which Problem Should Be Addressed First?

5.2.3. At What Level Should a Resolution Be Applied?

6. Analyze: Resolution Determination

6.1. Resolution Cost Elements

6.2. DMSMS Resolutions

6.3. Selection of the Resolution

7. Implement: Implementation of DMSMS Resolutions

7.1. Resolution Funding

7.2. Implementation Considerations

vii

Appendix A. Developing DMSMS Workforce Competencies

Appendix B. Contracting

B.1. Determining Whether to Contract for DMSMS Management

B.1.1. General Factors to Consider

B.1.2. Considerations by Function

B.1.3. Exit Clauses

B.2. DMSMS Management Activities in Contracts by Life-Cycle Phase

B.3. Examples of DMSMS Management Contract Language

Appendix C. DMSMS Management Questions for Systems Engineering Technical Reviews ...105

Appendix D. DMSMS-Related Questions for Logistics Assessments

Appendix E. Counterfeit Parts and DMSMS

E.1. Background

E.1.1. How Counterfeit Parts Are Made

E.1.2. Risks of Using Counterfeit Parts

E.1.3. Types of Parts Being Counterfeited

E.2. The Impact of Counterfeit Parts on DMSMS Management

Appendix F. Accessing Organic Services and Capabilities to Mitigate DMSMS Issues

Appendix G. DMSMS Knowledge Sharing Portal

Appendix H. DMSMS Quality Assurance Process

H.1. Quality Plan

H.2. Metrics

Appendix I. DMSMS Program Capability Levels

Appendix J. Lead-Free Electronics and DMSMS Resolutions

Appendix K. Abbreviations

Figures Figure 1. Steps in the DMSMS Management Process

Figure 2. Interrelationships among the DMSMS Processes and the Document’s Components

Figure 3. Acquisition Life Cycle

Figure 4. Framework for Ensuring Affordable System Operational Effectiveness

Figure 5. Relationship between a Program’s Expended Life-Cycle Cost and Locked-in Cost

Figure 6. Timing of Systems Engineering Technical Reviews and Logistics Assessments

Figure 7. DMSMS Management Processes

Figure 8. DMSMS Monitoring and Surveillance Processes viii

Figure 9. Hierarchy of System Parts

Figure 10. Comparison of Flat-File and Indentured BOMs

Figure 11. DMSMS Resolution Determination Process

Figure 12. Breakdown of Counterfeit Electronic Parts

Tables Table 1. Summary of Principal Systems Engineering Technical Reviews

Table 2. Summary of Logistics Assessments

Table 3. Notional ARCI Chart

Table 4. Recommended DMT Training

Table 5. DMSMS Resolution Options, Definitions, Solution Types, and Examples

Table 6. Applicability of Cost Elements to DMSMS Resolution Options

Table 7. Courses Beyond DAU Certifications Needed to Achieve DMSMS Competency

Table 8. DMSMS Management Questions for Systems Engineering Technical Reviews:

Prepare (Section 3)

Table 9. DMSMS Management Questions for Systems Engineering Technical Reviews:

Identify (Section 4)

Table 10. DMSMS Management Questions for Systems Engineering Technical Reviews:

Assess (Section 5)

Table 11. DMSMS Management Questions for Systems Engineering Technical Reviews:

Analyze (Section 6)

Table 12. DMSMS Management Questions for Systems Engineering Technical Reviews:

Implement (Section 7)

Table 13. DMSMS Management Questions for Systems Engineering Technical Reviews: Other

Table 14. DMSMS Management Questions for Logistics Assessments: Prepare (Section 3)

Table 15. DMSMS Management Questions for Logistics Assessments: Identify (Section 4)

Table 16. DMSMS Management Questions for Logistics Assessments: Assess (Section 5)

Table 17.DMSMS Management Questions for Logistics Assessments: Analyze (Section 6)

Table 18. DMSMS Management Questions for Logistics Assessments: Implement (Section 7) 120

Table 19. DMSMS Management Questions for Logistics Assessments: Other

Table 20. DMSMS Program Capability Levels

1. Introduction

1.1. Scope and Objective

A Diminishing Manufacturing Sources and Material Shortages (DMSMS) issue is the loss, or impending loss, of manufacturers or suppliers of items, or raw materials, or software. The De-partment of Defense (DoD) loses a manufacturer or supplier when that manufacturer or supplier discontinues production of needed components or raw materials, or the supply of raw material is no longer available. This can be caused by many factors—such as low-volume market demand, new or evolving science or technology, detection limits, toxicity values, and regulations related to chemicals and materials—that significantly affect the DoD supply chain and industrial base.

This situation may cause shortages that endanger an ongoing production capability and/or the life-cycle support of a weapon system or any training, support, or test equipment already in the field.1

No system or program is immune from DMSMS issues. They affect short- and long-lived sys-tems; reparables and consumables; space-based, air-based, ground-based, and sea-based equip-ment (including support and test equipment); and so on. DMSMS issues are not confined to piece parts or devices; obsolescence may occur at the part, module, component, equipment, or system level. DMSMS issues are also not limited to defense-unique items; commercial off-the-shelf (COTS) items represent a significant obsolescence problem, because such items are most suscep-tible to market forces. Historically, DMSMS management has been most closely associated with electronics. This is no longer the case. DMSMS managers are now equally concerned with mate-rials, non-electronics items, and software.

Ultimately, DMSMS issues affect materiel readiness and operational availability, which, in turn, affect both combat operations and safety.

This standardization document, which replaces the September 2010 version of SD-22, is intend-ed primarily for the DMSMS practitioner community. It is a guidebook of best practices for im-plementing an effective DMSMS management program throughout the system life cycle.

Because DMSMS considerations affect how a system is designed and sustained, program man-agers (PMs), engineers, and life-cycle logisticians (including supply chain managers, inventory managers, and maintainers) are also affected. Consequently, as beneficiaries of DMSMS man-agement best practices, these communities and their associated policymakers are also part of the intended audience.

The purpose of this document is fivefold:

• Create awareness of the extent and impact of DMSMS issues on DoD systems.

• Define a robust DMSMS management process that a PM can use to build an effective DMSMS management program.

• Define DMSMS support metrics to measure the effectiveness of a robust DMSMS manage-ment program.

1 The word “system,” as used in this document, encompasses weapon systems and training, support, and test equipment.

2 Software obsolescence will be covered in a future update of this document. Generally, the use of the word

“item” in this document is intended to be all-inclusive of parts, assemblies, software applications, and material.

• Promote affordable and efficient program support through rapid and cost-effective DMSMS best practices and resolutions that take into account equipment life cycles, technology chang-es, and preplanned obsolescence.

• Promote the exercise of DMSMS management best practices throughout the acquisition life cycle.

1.2. DMSMS Policy and Guidance

The DoD Supply Chain Materiel Management Regulation establishes DMSMS policy for DoD.

Within this regulation, DMSMS policy directs that DoD components do the following:3

• “Proactively take timely and effective actions to identify and minimize the DMSMS impact on DoD acquisition and logistics support efforts.

• “Develop a process to resolve problems created by DMSMS and reduce or eliminate any negative impacts.

• “Proactively consider DMSMS through[out] a system’s life cycle by anticipating potential DMSMS occurrences and taking appropriate logistics, acquisition, and budgeting steps to prevent DMSMS from adversely affecting readiness or total ownership cost.

• “Aggressively pursue … actions,” when an item is identified to have a DMSMS problem, “particularly, when those items threaten to degrade weapon system readiness below estab-lished goals.4

• “Establish DMSMS programs that shall reduce or eliminate the cost and schedule impacts of all identified DMSMS problems and help ensure that DMSMS problems do not prevent weapon system readiness and performance goals from being met.”

Procedures for meeting DMSMS management requirements are also established as follows:5

• “Each DoD Component shall designate a focal point to plan and coordinate actions to mini-mize the impact of DMSMS.

3 DoD Supply Chain Materiel Management Regulation, DoD 4140.1-R, May 2003, p. 75. Terminology and or-ganizational entities used in quoted material have evolved since the last update of DoD 4140.1-R.

4 According to DoD 4140.1-R (pp. 77–78), mitigating actions include the following: “C3.6.2.4.1. Encourage the existing source to continue production”; “C.3.6.2.4.2. Use the current item specification to find another source”;

“C3.6.2.4.3. Convert the existing item specification to a performance-based specification, which provides more flex-ibility in acquisition approaches and facilitates identifying another source”; “C3.6.2.4.4. Obtain an existing substi-tute item that will perform fully (in terms of form, fit, and function) in place of the DMSMS item”; “C3.6.2.4.5.

Redefine requirements through applicable engineering support activities, and consider buying from a commercial source”; “C3.6.3.4.6. Use current manufacturing processes to produce a substitute item (form/fit/function) for the unobtainable item”; “C3.6.2.4.7. Make a ‘bridge buy’ of a sufficient number of parts to allow enough time to devel-op another solution”; “C3.6.2.4.8. Make a life-of-type buy”; “C3.6.2.4.9. If a contractor using Government Fur-nished Equipment (GFE) stops production, reclaim the GFE and reissue it to a new source to help establish production capabilities”; “C3.6.2.4.10. Reclaim DMSMS parts from marginal or out-of service equipment or, when economical, from equipment that is in a long supply or potential excess position”; “C3.6.2.4.11. Reverse engineer the item to develop an exact replica of the item”; “C3.6.2.4.12. Modify or redesign the end item to drop the part in question or replace it with another”; “C3.6.2.4.13. Replace the system in which the DMSMS item is used”;

“C3.6.2.4.14. Require the using contractor, through contractual agreements, to maintain an inventory of DMSMS items for future DoD production demands”; and “C3.6.2.4.15. Obtain a production warranty.”

5 DoD Supply Chain Materiel Management Regulation, DoD 4140.1-R, May 2003, pp. 75–79.

• “Commanders of activities with responsibility for design control, acquisition, and manage-ment of any centrally managed item used within weapon systems or equipment shall imple-ment the DMSMS program by establishing internal procedures.

• “When an item is identified as [having a] DMSMS [problem], the DoD Components should implement the most cost-effective solution consistent with mission requirements.

• “The DoD Components shall send to the cognizant [integrated materiel manager] (IMM) the information that was originally obtained from industrial sources about an actual or prospec-tive announcement of a manufacturer’s intent to stop production. This information shall al-low DMSMS broadcast alerts to be generated, if applicable. The cognizant IMM shall notify the [Government-Industry Data Exchange Program] (GIDEP) to establish a DMSMS case.

• “The DoD Components shall ensure that the [Inventory Control Point] (ICP) maintains post-action surveillance throughout the life of DMSMS items in the logistics system.

• “The DoD Components and Security Assistance customers who use the specific items shall respond to requests for requirements information needed to decide the best course of action for ensuring continued supply of DMSMS items. Timely responses are required to meet con-tractor-imposed final action deadlines. For DMSMS cases involving multiple parts and mul-tiple users, Integrated Product Teams (IPTs) shall be established to coordinate DoD assessment and response to ensure that adequate logistics support may be maintained for af-fected weapon systems.”

This standardization document contains DoD-wide DMSMS management guidance. The role of guidance is to amplify policy and help close gaps between policy and practice.

Considering overarching DoD policy and guidance, the DoD components have created their own policies, which can be found in the DMSMS Knowledge Sharing Portal (DKSP), described in Appendix G. The DKSP also shows DoD component guidance documents.

1.3. The Importance of a DMSMS Management Program

Because DMSMS management has a significant effect on many aspects of a program, it is not a standalone function. DMSMS management is inherently linked with reliability, maintainability, supportability, and availability. Within this context, it is important to plan for, minimize, and manage the risks associated with DMSMS issues, due to their detrimental impact on materiel readiness, operational mission capability, safety of personnel, and affordability.

Materiel readiness is an immediate and urgent concern for the warfighter. Missions are affected if equipment cannot be supported; either the equipment is not available for the mission, or it can-not be sustained throughout the mission. DMSMS issues can negatively affect supportability if the parts needed to repair a system are not available or in scarce supply. It is unacceptable for a system to be non-mission capable due to a DMSMS issue. To allow a DMSMS situation to pro-gress to the point of affecting a mission (because parts are not available) is contrary to DoD poli-cy and is an indication of ineffective DMSMS management. In addition, ineffective DMSMS management can cause rapid escalation of the costs for parts.

A robust DMSMS management program is the most effective and efficient way to minimize ma-teriel readiness risks due to DMSMS issues, deliver better buying power, and improve overall life-cycle management. DMSMS resolutions are based on the most cost-effective approach to managing the problem before operations are affected. Cost avoidance can be substantial, as dis-cussed below:

• The B-1 program office was informed by the original equipment manufacturer (OEM) that a radar system was experiencing obsolescence and the recommended system upgrade needed to resolve the problems would cost $350 million. DMSMS monitoring and surveillance indi-cated only minimal obsolescence existed, and the analysis team identified readily available alternate component parts to replace the ones identified as obsolete. The bottom line was that obsolescence and supportability issues were easily overcome, allowing adequate cost-effective system support through continued organic depot repair with an estimated 10-year cost avoidance of $316 million.

• The Apache obsolescence working group shares power equally between the government and contractor. Issues and details are discussed and resolved within this small team with an ex-pansion of participation as needed from other functional disciplines. An empowered program office champion drives recommendations to reality. This model has resulted in early discov-ery and intervention of obsolescence risks in an environment of agreed-to mitigation plans.

The benefit has been no part shortages or schedule delays, identification of funding to miti-gate obsolescence that does not require “robbing Peter to pay Paul,” and required redesign blended into planned design updates. The success of this model and this program is best rep-resented by the cost avoidance realized by this working group across all configurations and life-cycle phases of this system—over $200 million.

• The Virginia-class submarine program integrated DMSMS management into the construction program early in the design/build process. To ensure consistency and repeatability of results, the program office established a technology refresh IPT, formalized a standard operating procedure, developed a memorandum of agreement with the Naval Supply Systems Com-mand for the advanced procurement of spares, and established a budget. As a result, the pro-gram has resolved over 1,090 obsolescence issues and reaped more than $124 million of documented cost avoidance since inception.

• A foreign military sales (FMS) DMSMS team was asked to look into an obsolete part (a digi-tal display indicator) needed for critical support equipment used by FMS customers. The OEM was unable to fulfill a request for the support equipment due to the obsolete part and quoted $2.6 million for redesign. The FMS DMSMS team examined an available drawing, identified the vendor part number, researched the supply system, located the original vendor, and was able to obtain 50 of the parts needed (more than the required quantity) for $327,000, resulting in a $2.3 million cost avoidance. The extra parts were transferred to the inventory of another platform using the same equipment.

The examples demonstrate how DMSMS management can result in better value for the taxpayer and the warfighter. However, benefits extend well beyond these examples. The Under Secretary of Defense for Acquisition, Technology, and Logistics signed a memorandum for acquisition professionals that provided specific guidance for improving the way DoD does business. That memorandum identified the following broad initiatives:6

• Target affordability and control cost growth.

• Incentivize productivity and innovation in industry.

• Promote real competition.

• Improve tradecraft in services acquisition.

• Reduce nonproductive processes and bureaucracy.

Robust DMSMS risk management is an important contributor to the first four of these initiatives.

DMSMS management helps target affordability and control cost growth in several ways. By ac-counting for DMSMS issues during design (trades), future operating and support (O&S) costs will be reduced. For example, the use of modular open systems, standardized parts, and the latest technologies can reduce the impact of DMSMS issues during sustainment by enhancing the in-terchangeability, reliability, and availability of parts. Robust DMSMS management may enable programs to control cost by achieving “should cost” estimates.

To incentivize productivity and innovation in industry, robust DMSMS management will culti-vate long-term relationships with suppliers. Given such relationships, suppliers should be less likely to discontinue an item, and if they decide to discontinue the item for business reasons, the government is more likely to have advanced warning, placing it in a better position to plan an alternative course of action. This planning could be done in coordination with industry.

Promoting real competition by developing alternate sources of items with DMSMS issues is also a key element of robust DMSMS management. Both open systems architecture and data rights in designs enable competition by providing a framework for decomposing a system into compo-nents and obtaining the necessary technical information for them. Open systems architecture is an important DMSMS-related design consideration, because it makes it easier to substitute alter-native parts. Robust DMSMS management will secure data rights/bills of materials (BOMs) for items highly likely to face DMSMS issues.

Service contracts are often used for system support. Clauses in these contracts may require a con-tractor to manage DMSMS issues. Those clauses must have the right incentives for robust DMSMS management, including effective metrics and notification of issues to the government as soon as they are discovered. For example, if the contractor is concerned only with availability, then costs may get out of control. The proper incentives must be in place for the contractor to manage DMSMS issues, considering both industry and government perspectives. This is where the initiative to improve tradecraft in services acquisition comes into play.

6 Under Secretary of Defense for Acquisition, Technology, and Logistics, Memorandum for Acquisition Profes-sionals, “Better Buying Power Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending,” September 14, 2010.

1.4. DMSMS Emphasis Areas

The Systems Engineering Office in the Office of the Secretary of Defense (OSD) has established four goals related to DMSMS management.7

• Ensure that system engineering design trades consider DMSMS concerns. This has been a neglected area, and a significant effort is required to make this a reality. Emphasis on sched-ule and performance often leave little room in the design trade space for the consideration of other things. However, as will be discussed in Section 2 of this document, DMSMS consid-erations are one among many systems engineering (SE) design considerations that should be addressed. Appendix B discusses the contractual elements.

• Reach out to PMs and senior leaders regarding the importance and benefits of a robust DMSMS management approach. There are many types of opportunities for outreach activi-ties, such as the annual Standardization and DMSMS Conference, Defense Acquisition Uni-versity (DAU) courses, the DMSMS Working Group, and the Defense Knowledge Sharing Portal (see Appendix G). This guidebook also serves as outreach in that it documents the val-ue of and best practices for the establishment and operation of a DMSMS management pro-gram.

• Improve the early identification and dissemination of potential DMSMS issues and warnings.

The secret of a successful, robust DMSMS management program is knowledge of impending problems as soon as possible, so actions can be taken early enough to avoid negative reper-cussions. Once a problem is identified, determining its impact and identifying a solution should be straightforward, given an effective methodological approach. (However, funding for implementing the solution may prove challenging.) Current digital environments greatly enhance DoD’s capability for early identification and also enable sharing of this information across the DoD enterprise.

• Improve the methodological foundation of the DMSMS management process. Following the identification of potential DMSMS issues, the remaining steps of DMSMS management pro-cesses are to prioritize the parts most at risk, analyze the situation to develop a resolution, and implement the resolution. These steps are easily stated, but they are not always easily ac-complished. The DMSMS community should be open to a variety of approaches that are most amenable to the particular situation.

1.5. Overview of the DMSMS Management Process

The DMSMS management process is straightforward. As illustrated in Figure 1, it has five steps:

• Prepare. Develop a DMSMS strategy and a DMSMS management plan (DMP). Form a DMSMS management team (DMT) representing all stakeholders. Establish, document, and resource DMSMS management processes that the DMT should follow.

• Identify. Secure access to logistics, programmatic, and item data and to monitoring and sur-veillance tools. Identify items with immediate or near-term obsolescence issues.

7 Chet Bracuto, Alex Melnikow, and Ed Zalinski, “New Synergies between Systems Engineering and

DMSMS,” Defense Standardization Program Journal, January/March 2010.

• Assess. Considering the population of problem items, identify and prioritize the items and assemblies most at risk for current and future readiness or availability impacts.

• Analyze. Examine the problem items with near-term readiness or availability impacts first.

Develop a set of potential DMSMS resolutions for the items and their higher level assem-blies. Determine the most cost-effective resolution.

• Implement. Budget, fund, contract or arrange for, schedule, and execute the selected resolu-tions for the high-priority items.

Figure 1. Steps in the DMSMS Management Process

Each of these steps applies throughout the life cycle, from early technology development through sustainment. Although it is best to begin these activities early in the life cycle, they may be initi-ated at any point in the process. Ultimately, the DMSMS management process constitutes DMSMS risk management.

1.6. Organization of This Document

The five steps of the DMSMS management process constitute the core organizing principle for this document:

• Section 2 discusses the link between DMSMS management and the defense acquisition sys-tem, with particular focus on SE and life-cycle product support. This section provides im-portant input to and context for the rest of the document.

• Section 3 addresses the prepare step of DMSMS management. Specifically, it describes best practices for establishing a strong infrastructure—data, people, processes, management re-ports, and financial resources—for successful DMSMS management.

• Section 4 focuses on the identify step, which encompasses DMSMS monitoring and surveil-lance throughout the life cycle and includes best practices for determining where to focus DMSMS management efforts.

• Section 5 discusses the assess step of DMSMS management. It begins with a discussion of the monitoring and surveillance data collected; it also describes how to measure the opera-tional impacts of the risks and how to prioritize them.

• Section 6 focuses on the analyze step, which deals with analyzing alternative approaches for resolving DMSMS issues and identifying the preferred alternative. This section lists DMSMS resolution options and provides a basis for estimating their cost. It also identifies risk factors associated with these options.

• Section 7 addresses the implement step, which covers the implementation of the preferred resolution option. It discusses potential sources of implementation funding, the roles of the DMT during implementation, and some considerations associated with common implementa-tion issues.

Appendixes A through J contain supporting detail about DMSMS activities, such as questions that need to be addressed for SE technical reviews and logistics assessments (LAs), examples of contract language related to DMSMS management, DMSMS workforce competencies and the capabilities of a robust DMSMS management program, DMSMS implications of counterfeit parts and lead-free electronics, best practices for the quality assurance of DMSMS processes, and ways to access additional DMSMS knowledge and organic services and capabilities. Appendix K defines abbreviations used throughout this document.

Figure 2 shows the high-level interrelationships of the five DMSMS steps, the corresponding sections of this document, and the supporting appendixes. The figure does not show Appendix G, which contains reference information about all DMSMS activities.

Figure 2. Interrelationships among the DMSMS Processes and the Document’s Components

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2. DMSMS Management Links to Affordability and Defense Acquisition System Policy and Guidance

This section addresses materiel readiness and systems engineering guidance and their relation-ship to DMSMS management. Program and DMT leaders are the primary target audience. More specific information for DMSMS practitioners begins with Section 3.

2.1. Overview

Department of Defense Directive (DoDD) 5000.01, “The Defense Acquisition System,” contains principles, policies, and procedures for managing all acquisition programs. One such policy es-tablishes the importance of cost and affordability over the life cycle of a DoD system:

All participants in the acquisition system shall recognize the reality of fiscal constraints.

They shall view cost as an independent variable, and the DoD Components shall plan programs based on realistic projections of the dollars and manpower likely to be available in future years. To the greatest extent possible, the MDAs [Milestone Decision Authori-ties] shall identify the total costs of ownership, and at a minimum, the major drivers of to-tal ownership costs. The user shall address affordability in establishing capability needs.8

Figure 3 depicts the acquisition life cycle.

Figure 3. Acquisition Life Cycle

Systems engineering is the technical management approach used to ensure consideration of af-fordability. According to DoDD 5000.01, acquisition programs shall be managed through the application of a systems engineering approach that optimizes total system performance and minimizes total ownership costs. A modular, open-systems approach shall be employed, where feasible.9

8 “The Defense Acquisition System,” DoDD 5000.01, May 2003 (certified current as of November 2007, p. 5.

9 “The Defense Acquisition System,” DoDD 5000.01, May 2003 (certified current as of November 2007, p. 9.

BA

Materiel Solution Analysis

Engineering and

Manufacturing Development

Production and

Deployment

Operations and

Support

C

Full Rate Production Decision Review

Technology Development

Materiel Development Decision

Critical Design Review

Milestones

DoDD 5000.01 also provides the PM with the responsibility and authority to ensure that cost and affordability are considered throughout the life cycle. This is termed total life-cycle systems management:

The PM shall be the single point of accountability for accomplishing program objectives for total life-cycle systems management, including sustainment. The PM shall apply hu-man systems integration to optimize total system performance (hardware, software, and human), operational effectiveness, and suitability, survivability, safety, and affordability.

PMs shall consider supportability, life cycle costs, performance, and schedule compara-ble in making program decisions. Planning for Operation and Support and the estimation of total ownership costs shall begin as early as possible. Supportability, a key component of performance, shall be considered throughout the system life cycle.10

The role of the PM changes over the life cycle of a system. Before the establishment of Initial Operational Capability (IOC), the PM is responsible for the design, development, and production of the system with two primary goals: meet performance requirements and minimize life-cycle costs. Once the system is fielded, the PM is responsible for affordably supporting the system as it is used for both training and operations.

Robust DMSMS management is important to the PM, because it accomplishes the following:

• Establishes criteria for evaluating design alternatives from a DMSMS management perspec-tive

• Ensures that all parts and material to design, produce, or repair the system or equipment are available

• Reduces, or controls, total ownership cost

• Provides for risk mitigation as it applies to DMSMS issues

• Identifies potential DMSMS issues early enough to allow a variety of solution approaches

• Evaluates more than one approach to resolve DMSMS issues

• Collects metrics to monitor program effectiveness.

The importance of DMSMS management to the PM for ensuring cost and affordability through-out the system life cycle has also been highlighted: “Obsolescence and DMSMS will eat your lunch (along with breakfast and dinner if you’re not careful.)”11

Directive Type Memorandum (DTM) 10-015, “Requirements for Life Cycle Management and Product Support,” states that a “Product Support Manager (PSM) position shall be established and assigned for each Acquisition Category (ACAT) I and ACAT II system and filled by a properly qualified Military Service member or full-time employee of the Department of De-fense.”

The PM should adopt an aggres-sive DMSMS management strategy and plan. This will help ensure that modifications and ser-vice life extensions will be effective from a supportability perspective. Continuous modernization and technology insertion/refreshment are important enablers.

10 “The Defense Acquisition System,” DoDD 5000.01, May 2003 (certified current as of November 2007, p. 10.

One of the PSM’s primary duties is to “provide weapon systems product support sub-

11 Bill Kobren, “10 Things Great Program Managers Know about Product Support,” Defense AT&L, Novem-ber–December 2011.

12 Requirements for Life Cycle Management and Product Support, DTM 10-015, October 2010 (incorporating Change 2, December 2011), p. 2.

ject matter expertise to the PM for the execution of the PM’s duties as the Total Life Cycle Sys-tems Manager.”13

The Defense Acquisition Guidebook (DAG) establishes a framework for the PSM to carry out these functions, as shown in Figure 4.

To accomplish this, the PSM advises the PM about design tradeoffs that en-hance supportability and develops and implements a performance-oriented product support strategy. A product support plan is generated from the strategy and its corresponding product support package to achieve desired materiel availability results.

Figure 4. Framework for Ensuring Affordable System Operational Effectiveness

Source: Defense Acquisition Guidebook, January 2012.

According to the DAG, affordable system operational effectiveness is achieved by designing for the optimal balance between performance (design effectiveness), total ownership cost, and pro-cess efficiency that enables the delivery and sustainment of performance. The concept of afford-able system operational effectiveness is important, because it is what the warfighter sees in terms of how well the system performs its missions over a sustained period, as well as how well it sup-ports a surge, given the operating budget. In this concept, the emphasis is not only on the sys-tem’s ability to execute its mission or its reliability and maintainability, but also on the cost-effective responsiveness of the supply chain.

The framework should not be viewed as static. Initially, the design is a driver of the product sup-port strategy. However, one of the tenets of evolutionary acquisition is incremental block devel-opment. Future increments of design are influenced by new technical performance requirements, the current degree of supportability, the current product support concept, and affordability. Con-

13 Requirements for Life Cycle Management and Product Support, DTM 10-015, October 2010 (incorporating Change 2, December 2011), p. 5.

14 See https://dag.dau.mil/Pages/Default.aspx.

Technical Performance

Supportability

Design Ef fectiveness

Process Ef f iciency

Mission Ef fectiveness

Functions

Capabilities

Reliability

Maintainability

Support Features

Public/Private Support

Infrastructure

Package

Product Support

Production

Maintenance

Logistics

Operations

Life-Cycle Cost/Total Ownership Cost

Affordable System

Operational Effectiveness

Source: https://assist.dla.mil -- Downloaded: 2014-12-23T21:36Z https://dag.dau.mil/Pages/Default.aspx� sequently, life-cycle cost and process efficiency affect supportability in future increments of the system.

The following two subsections expand upon the framework’s two major elements: design effec-tiveness and process efficiency.

2.2. Design Effectiveness and DMSMS

The DAG describes how design effectiveness reflects the key design features of technical per-formance and supportability.15

2.2.1. Technology and Supply Chain Management

These characteristics should be designed into the system synergis-tically and with full knowledge of the expected system missions within the context of the proposed system operational, maintenance, and support concepts. To be effective, technical per-formance and supportability objectives should be defined in explicit, quantitative, and testable terms. This is important to facilitate tradeoffs, as well as to support the selection and assessment of the product and process technologies.

The design process translates functional architectures into physical architectures with technical specifications, ranging from higher level assemblies down to component parts and software ele-ments. The process may be applied during the design of a new system or the redesign of an exist-ing system; thus, it applies throughout the life cycle.

A strategic understanding of the supplier base improves design effectiveness. Such an under-standing provides a picture of the health of the industrial base and its ability to develop, produce, maintain, and support the system and, thereby, may serve as an early warning to designers of po-tential DMSMS issues.

DoD guidance recognizes the utility of these early warnings to acquisition in general. Every pro-gram should assess industrial capabilities during the Technology Development phase.16

From a DMSMS perspective, technology management is one of the most important aspects of supply chain management throughout the life cycle. Beyond the Technology Development phase, this approach is also referred to as modernization through spares, continuous moderniza-tion, or technology insertion/refreshment. Effective technology management enables a design acquisition strategy and life-cycle sustainment strategy that minimizes the cost of resolving fu-ture obsolescence issues, while incorporating state-of-the-art technologies to increase reliability, lower sustainment requirement costs, and increase warfighting capability to meet evolving re-quirements throughout an indefinite service life. Robust DMSMS management by itself will, of course, lower the costs associated with obsolescence issues. However, even in the best of pro-grams, DMSMS resolutions are often suboptimal. Life-of-need procurements are problematic because of limited contractual horizons and uncertainties in estimating the total requirement over the remainder of the life cycle. Finding or qualifying alternative items may work for a time, but such approaches rarely take advantage of new technologies and capabilities. Unplanned rede-

This as-sessment addresses the implications of planned technology development on competitiveness and the viability of essential industrial and technological capabilities.

15 Supportability encompasses the extent to which design characteristics and logistics resources enable attain-ment of availability goals.

16 Defense Acquisition Guidebook, January 2012, Section 2.2.9.

signs are costly. Therefore, incorporating a technology management strategy into design, acquisi-tion, and sustainment activities is a best practice to further reduce DMSMS cost and readiness impacts throughout the life cycle. Designers should consider potential seamless upgrade paths for technologies and components and should provide a timetable for replacing items even if they are not obsolete.

Effective technology management begins with a strategic understanding of the market and its trends. Market research entails collecting information about existing and emerging technologies, products, manufacturers, and suppliers. It has two components:

• Market surveillance—a continuous canvassing of the commercial market to identify existing and future technologies, vendors’ products, and market trends that can potentially meet exist-ing and emergent requirements from a strategic perspective. Market surveillance methods in-clude searching the Internet, attending trade shows, reading technology publications, hiring consultants, issuing requests for information from prospective manufacturers/suppliers, visit-ing manufacturer/supplier facilities, and viewing product demonstrations.

• Market investigation—a focused process of identifying and determining if specific technolo-gy products can meet particular functional requirements. Market investigation also includes system obsolescence profiling to proactively plan for the continued support or replacement of soon-to-be obsolete products. This product-level information and the associated budget re-quirements form the basis for sustaining the operation or functionality of a system. Market investigation methods can include beta testing; prototyping; testing for compliance, conform-ance, and compatibility; and querying manufacturers/suppliers about product obsolescence status.

Market research occurs in all of a system’s life-cycle phases, allowing the acquiring activity to do the following:

• Anticipate obsolescence situations due to rapid and asynchronous product changes.

• Plan and budget using a broader range of product obsolescence management options.

• Maintain insight into technology trends, as well as internal product changes by the manufac-turer, and to test the effects of those changes on the system.

• Assess the quality of a manufacturer and the impact on a system of a product’s change, in-cluding its suitability for the user, information security characteristics, and supportability.

• Determine the manufacturer’s support period and inventories for a particular product.

Ignoring market research increases the likelihood of poor product and technology selections, as well as an inability to effectively predict and mitigate obsolescence impacts. This can negatively impact program performance, schedule, and cost.

The result of this effort will be a technology road map that identifies alternative technology paths for meeting performance targets.17

17 Marie L. Garcia and Olin H. Bry, Fundamentals of Technology Roadmapping, SAND97-0665 (Albuquerque, NM: Sandia National Laboratories, April 1997).

The technology road map provides a basis for technology management encompassing technology updates to obtain the latest generation of components and software applications, technology insertion to increase capabilities, and technology refresh to avoid obsolescence issues. The example in Section 1 of the Virginia-class submarine with 1,090 resolved technology refresh issues is a case in point. Effective technology management implies that resolutions are planned before effects occur. The next subsection discusses some design con-siderations that can enhance the likelihood of achieving that result.

2.2.2. DMSMS As a Consideration in Design

Design effectiveness is an overarching outcome of systems engineering. This is where the PSM provides advice about design tradeoffs. Section 4.4 of the DAG, “Systems Engineering Design Considerations,” discusses how design is a complex task that must balance a large number of performance, support, safety, environmental, security, regulatory, and other requirements and constraints. Because a feasible solution can rarely satisfy all of these things in a cost-effective way, the SE process guides design tradeoffs to develop a balanced solution for all stakeholders.

In his keynote address at the 2010 DMSMS and Standardization Conference, Mr. Stephen Wel-by, the Deputy Assistant Secretary of Defense for Systems Engineering, emphasized the im-portance of DMSMS considerations in design.18

• Are we appropriately trading DMSMS concerns with other design considerations?

He posed the following questions:

• Are DMSMS management activities during O&S adequately considered in upfront design activities?

• Are DMSMS considerations adequately covered in technical reviews and engineering plans?19

DMSMS is one among many product support design considerations.

Design decisions made early in a program—for example, during the Materiel Solution Analysis, Technology Development, and Engineering and Manufacturing Development phases—have a substantial impact on operations and support costs later in the program. As shown in Figure 5, a high percentage of the life-cycle costs of a program are locked in based on early design.

The DAG points out that DMSMS issues may endanger the life-cycle support and capability of a system and that a robust approach is needed to resolve problems before they cause a negative impact on system readiness or cost.

18 Stephen Welby, Deputy Assistant Secretary of Defense for Systems Engineering, “Bridging Acquisition and

Logistics” (presentation, 2010 DMSMS and Standardization Conference, Las Vegas, NV, October 25–28, 2010).

19 Systems engineering technical reviews are an important oversight tool that the program manager can use to review and evaluate the state of the system and the program, redirecting activity if necessary. See Defense Acquisi-tion Guidebook, January 2012, Section 4.5.9.

20 The design considerations are accessibility; COTS; corrosion prevention and control; critical safety items;

disposal and demilitarization; DMSMS; environment, safety, and occupational health; human systems integration;

insensitive munitions; interoperability; open systems design; parts management; program protection and system as-surance; quality and producibility; reliability, availability, and maintainability; software; spectrum management;

standardization; supportability; survivability and susceptibility; and unique identification of items. See Defense Ac-quisition Guidebook, January 2012, Section 4.4.

Source: https://assist.dla.mil -- Downloaded: 2014-12-23T21:36Z Check the source to verify that this is the current version before use.

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Figure 5. Relationship between a Program’s Expended Life-Cycle Cost and Locked-in Cost

Source: W.J. Larson and L.K. Pranke, Human Spaceflight: Mission Analysis and Design (McGraw-Hill, 1999).

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