Collaboration Is Cornerstone Of $19B Defense Contract

Lockheed Martin Aeronautics Co.'s ability to share complex project information across an extended supply chain in real time was key in its recent win of a $19 billion Defense Department contract to build 21 supersonic stealth fighters.

New government-procurement rules require defense contractors to communicate effectively to ensure that deadlines are met, costs are controlled, and projects are managed throughout the life cycle of the weapons systems.

The Fort Worth, Texas, unit of Lockheed Martin Corp. developed a real-time collaboration system in anticipation of the contract that can tie together its partners, suppliers, and Defense Department customers via the Internet. The platform lets participants collectively work on product design and engineering tasks as well as supply-chain and life-cycle management issues. Lockheed will host all transactions and own the project data.

The platform will let Defense Department and Lockheed project managers track the daily progress of the project in real time. This is the first major Defense Department project with such a requirement. The contract, which was awarded to the Lockheed unit and partners Northrop Grumman Corp. and BAE Systems on Oct. 26, is the first installment in what could amount to a $200 billion program for 3,000 jet fighters over a 40-year period.

Lockheed all but has the larger production contract sewed up, says AMR Research analyst Michael Burkett. But the company must demonstrate it can use its advanced IT tools to manage the design and manufacturing process with co-development partners. At the same time, Lockheed must design a logistics support system that will be as new and innovative for the Defense Department as it is for Lockheed.

The Defense Department traditionally breaks this type of defense project into two parts--one company or partnership manufactures the plane, and another provides support for planes in the field. The Joint Strike Fighter contract requires Lockheed to take responsibility for both aspects of the project.

The Internet-based tools make it simple for suppliers to link their production and inventory systems with Lockheed, says Mark Peden, Lockheed Martin Aeronautics' CIO. "Whether it's suppliers or new customers, we can get them working with us in a short period of time," he says.

It's unlikely Lockheed would have won the contract without the modern collaboration system, says John Burdett, Lockheed Martin Aeronautics' IT infrastructure architect for the Joint Strike Fighter project. "This is a new era in how we contract for business and how we execute on contracts," he says. The government's demands for deep collaboration are so strict that defense contractors couldn't satisfy them without advanced IT systems, Burdett says.

Defense contractors traditionally break up projects among the various partners. Each vendor outsources components of the system to multiple subcontractors, usually meeting every three months to compare progress and evaluate design drawings.

Lockheed Martin Aeronautics used to have 25 to 30 project managers making daily phone calls to suppliers to get deadline updates. The collaboration system gives the company visibility into the inventories and production schedules of suppliers. The system automatically alerts the appropriate manager if a supplier is having problems meeting inventory deadlines.

The Lockheed unit's system is based on two commercial applications--EDS's Metaphase and Parametric Technology Corp.'s Windchill. Metaphase handles engineering, design, and production planning collaboration. Windchill handles program-management, supply-chain, and product life-cycle processes. Windchill also integrates project data with Artemis International Solutions Corp. financials, scheduling, and earned-value reporting tools, and the shop-floor management tools used

for production. Northrop Grumman and BAE also have standardized on Metaphase and Windchill.

Collaborative product design has brought about considerable efficiencies for Lockheed Martin Aeronautics and its partners. The company and its design partners used to work separately on designs. It took lengthy meetings to hammer out design differences. Now, the Lockheed unit, BAE, and Northrop Grumman each assign their best designers and engineers to a particular part of the project, and they work together on the design over the Internet. A drawing that once took 400 hours now takes 125 because of the new system. The design phase of the project has been cut in half. "That's the kind of results you can get virtually without travel when team members all collaborate," Burdett says.

The first 21 Joint Strike Fighter planes are due off the assembly line Nov. 29, 2004, for testing, and the first flight is scheduled for May 2, 2005. Before the manufacturer is awarded the rest of the $200 billion contract to begin full production in 2008, it has to prove it can build the jet on time, on budget, and according to contract requirements.

Burdett's not worried. The company's new IT system lets the government peer over its shoulder as much as it wants to get real-time information on the progress of the project.