U.S. Air Force seeks to apply satellite savings lessons to other programs

By Andrea Shalal WASHINGTON (Reuters) - The U.S. Air Force hopes to translate its recent successes in driving down the cost of huge satellite programs to a range of other weapons, including Lockheed Martin Corp's C-130J transport plane, a top official told Reuters. Lieutenant General Ellen Pawlikowski, who won praise for reversing years of cost increases on big satellite programs in her previous role, hopes to apply those lessons to other programs after she took over in June as the service's top military acquisition official. Pawlikowski has launched a new "matchmaking" initiative to bring together industry executives from different weapons programs to compare notes on ways to reduce costs. "This is part of our 'bend the cost curve' initiative. We need to figure out how to continue to afford the systems that we need," she told Reuters during an interview this week in her office at the Pentagon. The three-star general will travel to the Marietta, Georgia, plant next week where Lockheed builds C-130J transport planes to work with officials there on possible cost-cutting measures. That could help lower the cost of a multibillion-dollar C-130J contract the Air Force is negotiating with Lockheed. Pawlikowski has urged Lockheed's space division to show the company's aeronautics division how it was able to lower the cost of recent orders for Space-Based Infrared System satellites and Advanced Extremely High Frequency satellites by over 30 percent. The Air Force cut the projected cost of the AEHF contract by $1 billion by changing the contract terms, buying two satellites at a time, and changing the order of work on the satellite. Pawlikowski said the Air Force was able to drive down the projected cost of the SBIRS program by several hundred million dollars through a variety of measures, including reducing the amount of government oversight and streamlining the contract. Lockheed said it was eager to work with the Air Force to make its programs more affordable. "We’ve had success driving down costs on our satellite programs by working with our customers to structure block buys, which give us the benefit of economies of scale. That helps us negotiate better prices with suppliers, maximize the efficiencies in our production line, and take full advantage of the production learning curve," said spokesman Matt Kramer. The Air Force has also pushed for greater use of prototypes and computer-based modeling, as well as "open architecture" systems that enable easier updates and do not rely on proprietary systems, Pawlikowski said. "We're not inventing anything new. We're trying to hone our skills," she said, noting that the Air Force was also trying to be more precise in determining its priorities, and sticking to them, as it developed new acquisition plans. She said the measures that helped cut costs on satellites and other arms would be included in a contract for a new long-range radar to be awarded soon, and in structuring a program to end U.S. reliance on Russian rocket engines. The Air Force was also looking carefully at the "Blueprint for Affordability" initiative launched by Lockheed and other contractors on the $400 billion F-35 fighter jet program to see if it could be applied to other programs, she said. Under the initiative announced this summer, Lockheed and key partners will invest $170 million of their own funds to lower manufacturing and maintenance costs, but could recoup that money from the government if the savings are actually achieved. (Editing by Ros Krasny and Matthew Lewis)