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2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE

2011 Aviation Week Program Excellence Award Submission

P-8A Poseidon

Boeing Military Aircraft / P-8 Program

2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 1

I. Program Overview Organization Name/Program Name:


Program Leader Name/ Position/Contact information – E-mail, Phone

Charles “Chuck” Dabundo / Vice President; P-8 Program Manager [email protected] / 425-965-8000

Customer: Organization/Name/Position/ Contact information – E-mail, Phone

NAVAIR / PMA-290 PMA-290 / Captain Michael T. Moran / Program Manager [email protected] (301) 757-5703

Program Category

System level R&D/SDD Program

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

Overarching Need: The P-8A Poseidon is a long-range anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance aircraft capable of broad-area maritime and littoral operations designed to replace the US Navy’s fleet of aging P-3C aircraft. Program History: Boeing was awarded a $3.89 billion contract for system development and demonstration (SDD) on June 14, 2004. SDD activities include developing and integrating all the necessary software and onboard mission systems and developing training systems. The team started production on the first test aircraft on Dec. 11, 2007, at Spirit Aviation. Fuselage assemblies come together using existing 737NG production lines. Spirit delivered the first fuselage to Boeing in late March 2008 and final assembly of the aircraft began the same day in Renton, Wash. The P-8A made its first flight on April 25, 2009. To date three test aircraft have been delivered and four additional P-8As are in production. Full-scale static testing of the P-8A was completed in January 2011. Program Product: A derivative of the 737-800NG, the P-8A includes Raytheon’s multi-mode radar; Boeing’s advanced acoustics subsystem, N-G’s Early Warning -- Self-Protection and Electronic Support Measures subsystems; WESCAM EO/IR, GE’s Flight Management and Stores Management System and a line-of sight and beyond line-of sight communications suite. Boeing provides the fully integrated mission system and mission system software. The P-8A carries up to 129 sonobuoys internally; up to five (5) MK-54 torpedoes in the weapons



bay, and up to four (4) SLAM-ERs on the wing pylons. Expected Deliverables: The U.S. Navy plans to purchase 117 P-8As to replace its fleet of P-3C aircraft. Deliveries to the US Navy are planned through the early 2021. Current Status: T-1, T-2, and T-3 are in flight test at Patuxent River NAS; T-4, T-5, and T-6 are in installation and check-out at Boeing’s facility in Seattle (all three were flown from Boeing’s Renton facility to Boeing Field), S-1 has completed static testing; S-2 is ready to begin fatigue testing, and the first Low Rate Initial Production aircraft fuselage has been delivered to Renton and is in final aircraft assembly.

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?

Value to Customers: The P-8A Poseidon is the US Navy’s replacement for the aging P-3C. The P-8A leverages the production efficiencies of the 737NG, the industry leader in reliability and operating cost, providing the US Navy next-generation capabilities with greater availability at reduced cost. The P-8A program has met all program of record milestones since inception and is on-track to support Initial Operating Capability in 2013. Value to Company: The P-8A program strengthens the Boeing Company as a whole, not only its Defense business unit but Commercial Aircraft as well. The program has already grown to a multi-customer, international family of products with a sale to India. Internally, the concept of leveraging optimized, high–volume commercial aircraft production concepts into the customized and unique world associated with the military market lead to Boeing’s in-line production model for the military derivative market. Lessons learned on the P-8A program were leveraged into the winning tanker proposal. Scientific/technical value: The technical value of the P-8A program is that Boeing has successfully implemented in-line production of a derivative of a commercial platform. In addition, Boeing has created value through the integration of COTS systems versus developing new technologies reducing program cost and risk. Excellence and Uniqueness: The in-line production model melds two Boeing business units to meet customer needs. Prior to P-8A, military variants of commercial aircraft were re-worked from a completed commercial product. The P-8A program has set the stage for how future military derivative aircraft will be designed and built. The program has incorporated a true commercial airplane in



line production process with its proven practices and efficiencies. Building upon that, it has been customized for all the controlled requirements of the military resulting in an optimized product at an optimized 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 P-8 strategy leverages large scale systems integration experience from both Boeing Defense Space & Security (BDS) and Boeing Commercial Airplanes (BCA). With a highly successful commercial aircraft being the basis of this military derivative program, the team was challenged with putting into practice in-line production and executing to plan. Progress toward achieving our strategy is monitored through direct feedback from our customers and through key program performance measures of technical results, schedule progress and cost performance combined with a Risk Management process that tracks program risk levels, and measures progress against mitigation plans. The unit fly-away cost of the aircraft has been on a steady improvement trend since program inception. The 737 platform enables customers to leverage existing 737 worldwide logistics further reducing cost.

Strategic: Strategic Supply Chain Integration and Cost Effectiveness Management: - Describe how your program is integrating its supply chain to assure visibility and adapting long-term cost effectiveness up and down the supply chain.

The P-8 Supplier Management organization uses established, well defined processes to identify, select and manage the best qualified suppliers to achieve cost effective solutions to program objectives. Boeing maintains a working group to develop optimal engineering change proposals (ECPs) that reduce the recurring manufacturing and maintenance cost to the Government. ECPs are coordinated across all IPTs, including the US Navy team. In addition, a Poseidon Industry Team (PIT) was formed that meets bi-weekly. This team promotes the working-together relationship of the P-8 team. Executive-level leaders from the PIT meet annually to discuss program status and further enhance their relationship.

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.

Critical to melding of the BDS and BCA business cultures necessary to support in-line production, the P-8A leadership team needed to create a strategic change, or paradigm shift, at the grassroots level. Beginning with Systems Engineering and then flowing to all engineering levels in both business units, they created an atmosphere enabling both IPTs and individuals to be unconstrained in overcoming their differences. Teams that originally were not familiar with their counterpart’s methodologies began to see ways to succeed at their own tasks while helping other teams succeed at theirs. The results of such



synergistic relationships not only reduced cost and schedule, but enabled the product to be done right the first time and meet program Key Performance Parameters.

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?

After initial production began, some work packages that normally would have been performed at Spirit or BCA were moved to I&CO to maintain schedule. Additionally, work that would have been done at Spirit was accepted at BCA to meet the schedule. Once initial schedules were met, program leadership initiated optimization efforts to realign work packages to proper manufacturing steps. In addition, careful implementation has kept non-recurring engineering costs in check. Lean workshops were commissioned to streamline the I&CO process. Working with defense and commercial business units, manufacturing employees tapped into the efficiencies of commercial production concepts and processes. They dissected their production flows recommending movement of certain work packages to either BCA or Spirit and, using constraint-based scheduling tools, optimized the sequencing to establish a true I&CO pulse-line.

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.

Supplier support was required in the integration of their equipment and sensors to meet performance requirements. Additionally, the P-8 derivative for India required the use of indigenous equipment with a 30 percent offset requirement that further challenged the supplier management processes. To address this, the P-8 management team directed the tracking of significant parameters indicative of supplier performance and established an operating rhythm to review those parameters. Items such as risk mitigation, contractual issues, schedule and technical performance were included. Schedule discussions included ‘line-of-balance’ type views showing detailed part movement through the supplier’s processes, as well as reviews of critical program milestones, such as qualification testing. These reviews enabled Boeing to have complete visibility of the supplier’s progress and performance, not only enabling efficient management of single suppliers but also driving good program-level decisions by viewing and understanding the whole supply base. Additionally, supplier program managers were identified to support the suppliers to allow Boeing to work the details of the above-mentioned items in real time. In addition, production rate readiness was reviewed through the entire supplier base to ensure production commitments could be achieved and maintained resulting in successful production acquisition.



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?

Three high-fidelity integration labs were built to integrate and test the system prior to aircraft test. Two Mission System Integration Laboratories (MSIL) were built to support the development of the mission system software. One MSIL was later shipped to NAVAIR and became the Patuxent System Integration Lab (PAXSIL) for development and testing use by the customer. A Weapons System Integration Laboratory (WSIL) was built that allowed key subsystems to be integrated and tested in both simulated and actual hardware environments. Over 24,000 hours of testing was conducted using the labs prior to installation on the aircraft. Using this approach, developmental issues were isolated and corrected prior to on-aircraft testing. This resulted in the delivery of a mature design and reduced costly aircraft troubleshooting and test and evaluation delays.

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 forward-leaning processes to support.

The P-8A program uses a structured process and a well defined tool called BORIS to manage opportunity and risk. Opportunity management focuses on identifying and capturing opportunities for improvement in cost, schedule, and/or performance beyond the current plan. An affordability team was formed with representation from each integrated product team to institute, share and encourage each team member to bring innovation to existing tasks and develop corresponding improvement plans. Capture plans are developed for each accepted opportunity and owners monitor them to ensure events are successfully executed as scheduled. Boeing and US Navy management conducts joint weekly reviews to assess the progress of all open opportunities. Program risks are identified and defined in terms of likelihood and consequence on a scale of 1 to 5. Mitigation plans are then established for step-by-step risk-level reductions of both indices. Integrated product teams status their risks weekly in program management meetings (PMMs) and the program manager holds a monthly risk review. R/O boards are held every two weeks. The US Navy customer and Boeing also hold comprehensive quarterly risk reviews with emphasis on any top program risks. Future issues or risks are avoided or mitigated by an on-going review of predictive metrics in the weekly PMMs. Teams review technical, schedule and financial measures (predictive metrics) which promote early detection of potential risks, allowing the program to predict potential problems and take action to avoid negative consequences.

Team Leadership: Following the Critical Design Review, the management



Team Culture and Motivation Describe how you created your team spirit and culture, and accomplished entire team integration and individual team member motivation.

team initiated efforts to focus on meeting individual commitments for drawing releases. A simple ‘bell ringing’ ceremony developed for drawings released on time to spur teams on to meet schedules. This grassroots effort was supplemented by the institution of two important process improvements: 1) Non-recurring product development (NRPD) and 2) Basic drawing quality process improvements. Because of the cross-functional management team, successes applied from the BCA business units, such as NRPD, were seen as process improvements for BDS. NRPD is an extensive, disciplined and rigorous engineering approach utilized by BCA to mature engineering drawings prior to initial release to ensure functional requirements are met. Experienced BCA engineering teams helped leverage the NRPD process into BDS integrated product teams who had prime responsibility for defining and documenting the militarized changes required to the 737-800 aircraft. As NRPD was implemented, the cross-functional, cross-organizational, collaborative efforts produced first-time quality drawings resulting in a more stable engineering baseline and improved schedule flow and improved the quality of the engineering and reduced subsequent change. Additionally, the Boeing and US Navy team conducted and Operations Evaluation (OpEval) prior to Milestone C. This OpEval included current P-3 operators and Boeing engineers to validate P-8A requirements. This ensures that the delivered product meets the requirements of the warfighter rather than merely an engineering solution that meets requirements without an operational framework.

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?

With the overarching goal of keeping the US Navy needs as first priority, it was necessary to meld the two business cultures. The BDS/BCA P-8A leadership manned IPTs with both BCA and BDS SMEs and empowered them to be unconstrained in overcoming their differences. Teams that originally were not familiar with their counterpart’s methodologies began to see success. Individuals on those teams began to 1) keep the overall Boeing Company in the forefront of their mind, 2) look at the world through the other business unit’s eyes, 3) become open to new ways of thinking, 4) identify problem solutions without risk of peer or management pressure, and 5) constantly look for new ways through untraveled territory. This lead to best-in-industry production. These concepts were applied to the Tanker proposal and contributed to winning the contract. Employees from all levels of the P-8A program have



subsequently transferred to the Tanker program to share their lessons-learned and assist that program to achieve the same success as that of the P-8A program.

Team Leadership: Leadership Development How do you develop team’s skills and build future leaders

Developing individual employee and team skills as well as the development of future leaders is a foundation of Boeing success. P-8 program leaders have participated in the Boeing Executive Program, program management workshops, Defense Acquisition University courses, and Boeing’s Internal Audit Rotation Program. Each employ is encouraged to define an annual development plan that establishes a personal career plan combining formal training, goals and specific job assignments that enables an individual to move toward their goal. In addition, P-8 leadership supports the Employee Involvement Program that enables individuals to lead work teams and participate in the mentoring program. The P-8 program is also involved with the “high potential” program that identifies and creates opportunities for individuals who exhibit the potential for accelerated upward mobility via a human resources talent management program.

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.

The success of the P-8A program traces back to combined team of the Navy customer and Boeing. Since the program’s inception, open lines of communications, not only at the leadership level but at the IPT and SME level, have ensured any issues are clarified and/or resolved efficiently and expeditiously. Additionally, the application of in-line production to military derivative aircraft leverages production efficiencies and performance of the 737NG with a proven track record, continuous innovation, industry leader in reliability and operating costs.

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

The P-8 is a New to the Market system. At a time of defense budget uncertainty, it was paramount that Boeing provide the highest quality product to the Government at the lowest life-cycle cost. It was equally important to manage risk to control development cost and maintain schedule. To meet these objectives, Boeing focused on using existing subsystems to the maximum extent possible. Over 60% of the airframe is common with the commercial 737NG aircraft. Sensor and communication subsystems are off-the-shelf systems or derivatives of systems currently in-use and are installed using a newly opened pulse-line further applying commercial production efficiencies. The subsystems are integrated through a mission system that leverages a previous design. In



product or system adopted from another market

- New to the World - breakthrough product, never seen before

addition, the software uses open-architecture to facilitate baseline integration and to support future upgradability. Combining COTS use to the maximum extent with commercial in-line production results in a highly reliable, lower life-cycle cost, upgradable weapon system that meets current and future warfighter needs.

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: non-existing technology that needs to be developed during the program.

The P-8A design’s technological uncertainty is medium to high technology. The program transform’s the commercial 737 into a multi-mission maritime aircraft; combining the best of Boeing’s commercial and defense capabilities. The P-8 uses a variety of components ranging from existing government furnished equipment, commercial-off-the-shelf equipment and newly developed subsystems. The P-8A is a comprehensive, highly integrated system that includes six major subsystems, vast communications nodes, and weapons capability into a derivative of the commercial 737NG platform. The P-8 took advantage of existing components whenever possible to reduce risks. A new mission computing and display system was designed to address the complexity of a wide variety of intercommunication interfaces including ARINC-429, 1553, Ethernet, RS-422, and digital video. Each of the five operator stations is equipped with two 24-inch high definition displays are fully driven by the mission processor hardware and software. Over 20 million lines of code were developed or re-hosted to enable the mission processor to integrate the wide array of subsystems.

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.

The system complexity level for the P-8A is that for a system, an integrated collection of subsystems performing multiple functions. The P-8A production concept is enabled by an optimal work breakdown structure consisting of basic aircraft components manufactured utilizing the efficiencies of commercial aircraft production combined with the unique and demanding requirements of a complex military weapon system. The P-8A fuselage, manufactured by Spirit AeroSystems in Wichita, Kan., is transported to the 737 commercial aircraft production facilities (Renton, Wash.) where it is joined with in-factory produced wings, and just-in-time available components such as engines and the empennage. Since there are military requirements that cannot be met on a commercial production line (security, DoD regulations, etc.), the aircraft is then delivered to the integration and checkout (I&CO) facility in Seattle where the P-8A’s mission equipment is installed. The I&CO facility uses a pulse-line further leveraging commercial efficiencies. By utilizing this commercial aircraft derivative concept, efficiencies are achieved from established commercial



practices, a trained and certified workforce, an agile industrial supply chain and established aircraft support systems.

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 critical-to-success deadline.

- Blitz – there is a crisis element driving the need for immediate response

The P-8A is a time critical development effort based on the grounding of the aged fleet of P-3Cs. The program is required to provide an initial operation capability in 2013 to the US Navy as well as first delivery to India the same year. The importance of meeting this timetable has been the driving factor in system design and risk reduction efforts since program inception. The Boeing P-8A management team decided early that as long as technical performance could be maintained, the most critical component of managing the program would be to maintain schedule and cost. A significant factor in the success of this program was the team’s ability to maintain cost and schedule despite obstacles encountered. This was accomplished by the leadership continually focusing the team, including suppliers, on the job at hand and the role they have in providing this capability to the warfighter. The P-8A program, in concert with industry partners, has met all program of record milestones.

Other Complexities & Uncertainties - Describe other complexities and unknown factors faced by this program and how you addressed them.

After initial production began, some work packages that normally would have been performed at Spirit or BCA, were moved to I&CO to maintain schedule. Additionally, work that would have been done at Spirit was accepted at BCA to keep costs in check and meet the schedule. Once initial schedules were met, program leadership initiated optimization efforts to realign work packages to proper manufacturing flow. Those efforts pushed towards the lowest overall cost and are ongoing today resulting in continuous efficiency improvements. In addition, careful implementation has kept non-recurring engineering costs in check. Lean workshops were commissioned by P-8A leadership to streamline the I&CO process. Working with BCA, BDS manufacturing employees applied the efficiencies of commercial production line concepts and processes. They dissected their production flows and recommended movement of certain work packages to either BCA or Spirit and used constraint-based scheduling tools to establish a true I&CO moving-line.

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

The P-8 program is formally evaluated by the customer each year under the Contractor Performance Assessment Reports (CPAR). The major categories of CPAR are Technical (Quality), Schedule, Cost, Management, and Utilization of



customer’s satisfaction? Include a description of your metrics, as well as numerical evidence.

Small Business. There are 12 individual categories evaluated each year. Over the last three years the ratings have averaged 75% “very good” and 25% “satisfactory. Two “exceptional” ratings were received as well for Schedule and Management Responsiveness. Additionally, our close working relationship with the US Navy customer facilitates direct feedback at all program levels, from the line engineer to senior program leadership. Weekly interchange meeting with the customer and daily internal meetings are held where feedback is openly exchanged. The Secretary of the Navy identified the P-8 as one of three model acquisition programs in 2010.

Performance - How do you measure your program’s performance in traditional terms such as schedule, budget, requirements, and business results?

P-8A business success will be measured over the total opportunities of the SDD program, the Low Rate Initial Production (LRIP) and Full Rate Production (FRP) programs. As a cost-plus developmental program, the current SDD program earnings and margins are known; LRIP and FRP, however, are firm fixed price. We are meeting our long-range business plans for earnings, revenue, and margins. This will be closely tracked throughout the program.

Preparing the Future - How do you measure and assess the long-term contribution of your program to the corporation/organization?

P-8A long-term contribution to the Company will be measured by the successful transition from the LRIP to the FRP for 117 US Navy P-8As and the continued successful sale of P-8 derivatives on the international market. In-line production of military derivatives, applying commercial in-line build practices, has not only been validated on the P-8 program but was also applied to and is a cornerstone of Boeing’s successful KC-46A proposal / contract award.

Team - How do you measure and assess the impact of your program on your team development and employee satisfaction?

Boeing conducts surveys to measure employee’s opinion on policy, leadership, and job satisfaction. Results for 2009 and 2010 prove that P-8A program continues to outperform other like programs in several key satisfaction areas: • Real opportunity to improve my skills (18% higher) • Encouraged to institute new ideas (15% higher) • Feel recognized for work performed (12% higher) The Program manager conducts monthly Webcast to provide program updates to all employees. The Webcasts concludes with an interactive Q&A and follow-up surveys are conducted to support continuous improvement.

Unique Metrics - Describe any unique metrics you are using to measure your program’s progress and how do you focus it for outstanding success.

In addition to standard metrics, such as Schedule Variance, the P-8A program uses Technical Performance Measurements (TPMs) that enable management to institute corrective actions before problems manifest as cost and schedule deviations. TPMs provide dual benefits; they track technical progress and they feed KPP status. Working in collaboration with the Navy, the program has identified TPMs at the system level as well as lower-tier TPMs at the IPT level.

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