Profile: Staying Focused on the Businesses Critical to the Big Picture

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  Space News Business

Profile: Staying Focused on the Businesses Critical to the Big Picture

By LON RAINS & JEREMY SINGER
Space News Editor and Staff Writer
posted: 05 May 2008
01:59 pm ET





Profile:
James F. Albaugh,
President and Chief Executive Officer, Boeing Integrated Defense Systems

 

W
hile s
pace systems do not dominate Jim Albaugh’s portfolio at Boeing Integrated Defense Systems (IDS) – they account
for about $7 billion to $8 billion of IDS’s
$32 billion in annual revenue –
he nevertheless views the space work as critical to the big picture.

“I don’t think you can be a complex, large-scale systems integrator in the defense industry without having great expertise in space,” he said. “It’s a very big part of what we do when we work through a lot of issues with commercial space, and we’ve come out of it much better for it.”

 

Albaugh, who previously headed Boeing’s Space and Communications and Space Transportation sectors, was outspoken during a
keynote address at the National Space Symposium in Colorado Springs, Colo., about the need for boosting U.S. government investment in space work to help the country
maintain its leadership role
in space and attract new engineers to the business. He worries that tight federal budget
s might
be constraining industry’s ability to pursue the kind of exciting high-risk, high-payoff efforts that will help industry
attract and retain a qualified work force in the face of significant pending retirements.

 

Albaugh spoke with Space News
Editor Lon Rains and staff writer Jeremy Singer in an April 8 interview at the National Space Symposium.

 

Given the current status of the commercial space business and value of the U.S. dollar against the
euro, are you rethinking your strategy of developing only high-end spacecraft for the commercial market?

 

We’ve had a difficult time competing on what I’ll call the standard communications satellites. What we bring is technology that some customers are willing to pay a premium for. And I think that’s the part of the market that we’re going to stay in. A lot of people like to say that “Albaugh is not interested in the commercial space business.” I’m interested in any business where we can add value for the customer and we can be profitable for the Boeing Co.
, and we haven’t put any restriction on people.

Do you give them a profitability target?

 

We do, though I’d rather not say what it is. Every proposal goes through a lot of scrutiny. We want people to put together low-risk proposals that have reasonable profit levels, and we want to be sure that they are being managed with discipline to meet the schedule and cost requirements that we put in place.

How would Boeing’s military space work be affected if the company fails to win either GPS-3 or the Transformational Satellite Communications System (T-Sat)?

Obviously, if we lost them both, it would have some real impacts on our team at El Segundo. I think the team has put together a very good end-to-end solution on T-Sat, and we’ve had some very good reviews with our customer. Then again, Lockheed is a great company, and they’re going to write a good proposal. I’d like to think that we’re going to be the winner, but I certainly wouldn’t go to our board or Jim McNerney and say that either one is
a slam dunk
.

What is your view about the future of the T-Sat program?

The acquisition strategy that the Air Force has put in place is a very good one – to keep two competitors in for an extended period of time to burn down the technical risk on the program. It will be a much better program as a result. That said, the defense budget is a very difficult one. And as we’ve seen over the last couple of years, there has been a tendency to push T-Sat to the right and buy more Advanced Extremely High Frequency and Wideband Global satellites. I suppose that could happen, but what I’m hearing is that they’re going to make a selection. And whoever wins that competition will own milsatcom for the next couple of decades.

Do you imagine spinning off the T-Sat technology for commercial satellites?

You’ve got to remember, T-Sat is almost a spin-in. A lot of the technologies associated with T-Sat came from what we’re doing on Spaceway, and what we’ve done with Thuraya satellites. You look at the history of satellite manufacturing at Boeing, and Hughes before Boeing

there have been spin-ins and spin-outs, and I think having a commercial and having a military product line really benefits both in our experience.

 

With spectrum, there is only so much data you can transfer, and with space-based laser links, clearly you can expand your ability to transfer data.

 

What is your perspective on the potential for smaller or less complicated, single sensor satellites that can be built faster?

 

We have made military satellites that are very complex. There is no question about that. Some of the contracts that were let in the past took on an awful lot of risk, with technologies that were immature, and predicated on miracles happening along the way.

 

Right now, as I talk to the customer, they’re not interested in taking on high risk, they’re not interested in pushing technology any further than they have to, and certainly there is discussion about smaller satellites where you don’t put all your eggs into one basket, where you can have more predictable schedules, where you can have lower risk, where you can have more predictable cost figures at the end of the program. I support that. I think it’s the right thing to do.

 

Is Boeing interested in building smaller satellites?

I believe in offering the customer what they want, not what we have. And we do have a small bus, and we’re looking at having other smaller busses. It doesn’t have to be a 601 or 702.

 

Now, are we a high-end outfit? Yeah, we are. We think we have a lot of capability in terms of digital signal processing on board the satellite, a lot of capability with phased array antennas. The question is h
ow do you take that technology and how do you apply it to smaller satellites and get the low risk and certain predictable costs that our customer wants.

 

Has Boeing’s difficulty with the Future Imagery Architecture satellites, which led to the government’s restructuring of the effort, hurt your ability to compete for classified programs?

Certainly past performance is a factor that is weighed. We’ve got a whole family of programs that we do for the intelligence community. Clearly every program is factored in. I think we’ve done very well on some programs. We clearly have not distinguished ourselves on others. I don’t think we’re unique in having not distinguished ourselves on some of the programs. I don’t think there is anybody right now who stands apart in terms of how they perform.

Is there any downside to the back-to-basics approach to satellite acquisition?

 

Back
to
basics makes a lot of sense. I reflect back on a lot of the things that we’ve done. Clearly we could have done supplier management better. Clearly we could have done systems engineering better. We clearly could have done risk management better. Those are all things that we’re applying across the board.

I
n the 1990s, people were willing to take on high-risk technology. They were willing to take on programs with 50/50 probability of delivering to cost. I’m not sure there are too many on the side that delivered to cost. I think that most of them certainly didn’t perform. I think measuring people against the Pentagon’s Cost Analysis and Improvement Group’s estimates and making part of the selection process cost-reasonableness and adjusting risk accordingly and grading people on their proposal, not just on the technical merit of the proposal, but on systems engineering, software engineering, supportability
�- all these things make a lot of sense.

 

Does the Air Force have the people to actually do that?

I think that’s a question for the Air Force. Everybody struggles a little bit. How many space programs have there been over the past several decades? There haven’t been a lot. There is a lack of depth across the industry, which certainly translates to a lack of depth in some cases with the customer. You think about the benefits with more, smaller programs – working on one new program a decade versus several. It’s the same issue we have in tactical aircraft – there is one new tactical airplane every decade or two. It doesn’t allow an industry to have the experience base that they really need to take on new challenges.

How do you get Congress to fund the advanced propulsion work to the level that you believe is necessary?

 

It’s really hard. There are too many requirements chasing too little in terms of investment. You’re not going to get a company like Boeing
�or Lockheed or Raytheon or Northrop Grumman or the others to invest in a technology that has an uncertain application to a program. You can’t close a business case like that. You really need DARPA [the Defense Advanced Research Programs Agency] and NASA and other organizations like that to step up and be much more aggressive in the funding of those break
through technologies that will be good for commercial space, military space
�and civil space.
�That’s the role of the government.