The Manufacturing risk assessments have been performed on defense acquisition programs for over 50 years in a variety of forms (e.g., Manufacturing Feasibility Assessments, Production Readiness Reviews, Manufacturing Management/Production Capability Reviews, etc.). However, these reviews did not use a uniform metric to measure and communicate manufacturing risk and readiness. Nor were they conducted on technology development efforts or in the early acquisition phases. In addition, the frequency and depth of these types of reviews has declined sharply since the 1990s. Furthermore, many of the skilled personnel that had performed these reviews have either retired or moved on to other acquisition career fields, leaving acquisition programs ill prepared to perform detailed manufacturing risk assessments.
Manufacturing-related impacts on cost, schedule, and performance have grown significantly paralleling the decline in manufacturing assessments. Studies by the GAO cite a lack of manufacturing knowledge at key decision points as a leading cause of program cost growth and schedule slippages in major DOD acquisition programs. Consequently, laws have been passed and DOD policy has been developed to strengthen the way in which manufacturing issues and risks are considered in the defense acquisition system. The rest of this section will address laws, policy and guidance related to the assessment of manufacturing risks.
The National Defense Authorization Act (NDAA) Section 812 required the Secretary of Defense to issue comprehensive guidance on the management of manufacturing risk in major defense acquisition programs and that the guidance shall at a minimum:
- Require the use of manufacturing readiness levels as a basis for measuring, assessing, reporting, and communicating manufacturing readiness;
- Provide guidance on the definition of manufacturing readiness levels and how manufacturing readiness levels should be used to assess manufacturing risk and readiness;
- Specify manufacturing readiness levels that should be achieved at key milestones and decision points for major defense acquisition programs;
- Identify tools and models that may be used to assess, manage, and reduce risks that are identified in the course of manufacturing readiness assessments; and
- Require appropriate consideration of the manufacturing readiness and manufacturing readiness processes of potential contractors and subcontractors as a part of the source selection process.
The act also requires that the workforce be trained in critical manufacturing readiness knowledge/skills.
Department of Defense Instruction (DODI) 5000.02 establishes new policy to address manufacturing over the entire life cycle. For example:
- During the Materiel Solution Analysis (MSA) Phase, the policy requires the Analysis of Alternatives (AoA) to assess manufacturing feasibility.
- During the Technology Development (TD) Phase, the new policy also affirms that:
- Prototype systems or appropriate component-level prototyping shall be employed to evaluate manufacturing processes.
- A successful preliminary design review will identify remaining design, integration, and manufacturing risks.
- A program may exit the TD Phase when the technology and manufacturing processes for that program or increment have been assessed and demonstrated in a relevant environment" and "manufacturing risks have been identified.
- During the Engineering and Manufacturing Development (EMD) Phase, the goal is to "develop an affordable and executable manufacturing process." Consequently, "the maturity of critical manufacturing processes" is to be described in a post-Critical Design Review (CDR) Assessment; the System Capability and Manufacturing Process Demonstration shall show "that system production can be supported by demonstrated manufacturing processes;" and the EMD Phase shall end when "manufacturing processes have been demonstrated in a pilot line environment."
- During the Production and Deployment (P&D) Phase, the policy establishes two entrance criteria:
- "No significant manufacturing risks," and
- "Manufacturing processes [are] under control (if Milestone C is full-rate production).
- "Low Rate Initial Production (LRIP) should result in an "adequate and efficient manufacturing capability" so that the following knowledge will be available to support Full-Rate Production (FRP) approval to include:
- Demonstrated control of the manufacturing process;
- The collection of statistical process control data; and
- Demonstrated control and capability of other critical processes.
The Defense Acquisition Guide (DAG) Chapters 2 and 4 provide several recommendations or guidelines for assessing manufacturing risk. This includes the following guidance:
Chapter 2.2.9 Industrial Capability and Manufacturing Capabilities: During the Materiel Solution Analysis Phase, the industrial and manufacturing capability should have been assessed for each competing alternative in the AoA. The results of the assessment should be used to develop the TDS by illustrating the differences between alternative approaches based on industrial and manufacturing resources needed.
Chapter 2.2.9.1 Industrial Capability and Manufacturing Readiness: The Technology Development Strategy (TDS) should summarize plans for how the manufacturing readiness will be addressed in the Technology Development (TD) Phase to ensure that manufacturing is mature enough to enter Engineering and Manufacturing Development (EMD), particularly for new or high risk manufacturing endeavors.
Chapter 2.3.9.3 Industrial and Manufacturing Readiness: The Acquisition Strategy should highlight the strategy for assessing manufacturing readiness. During the EMD and P&D Phases, the manufacturing readiness should be assessed to identify remaining risks prior to a full-rate production go-ahead decision.
Chapter 4.4.14.2. Assessment of Manufacturing Readiness: Manufacturing risk is evaluated through manufacturing readiness assessments which are integrated with existing program assessments during the acquisition lifecycle. Assessment shall begin in the programs earliest phase; it should also be continuous and concluded prior to each systems engineering technical review, Program Support Review (PSR) or their equivalent, and before each milestone decision.
Successful manufacturing has identified nine manufacturing risk areas which should be assessed during technical reviews and before acquisition milestones. These nine risk areas include:
- Technology and Industrial Base, including small business
- Design
- Cost and Funding
- Materials
- Process Capability and Control
- Quality Management
- Manufacturing Personnel
- Facilities
- Manufacturing Management
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