In my last posting, I provided an example of how Government Affordability has worked in the past. This blog/essay is yet another example of how Government Affordability has worked for the US. The current effort to cut out large waste areas in the government by eliminating departments such as the Department of Education. In 2007, an effort was begun to reduce the price of a government purchase. During the first buy, after Government Affordability was applied, more than $600,000,000.00 was saved for the American Taxpayer.

Early in 2007, a colleague of mine, Dr Beth Cudney and I were asked to implement a program to reduce the price of the F/A-18 price, improve the quality and increase the availability of “The Super Hornet” for use in Iraq and Afghanistan. With the war raging on two fronts, the use of the F/A-18 was wearing the fleet, and replacement units were needed to replace older models.

Boeing the contracted provider of Super Hornets, while 60% of the statement of work completed by Northrop Grumman. The core of the aircraft was built and shipped from El Segundo, CA to St Louis, Mo for the finishing processes and preparation to sell to the government. In 2006, 42 were produced, at a quality level of 4-5 sigma, at a price of $50,000,000.00 per plane. The goal was to increase the capacity to 67, increase the quality to 6 sigma and reduce the price by at least $5M.

Beginning in April 2007, Beth and I applied Affordability techniques with an initial group of 18 individuals that were applied to 3 performance improvement projects. One month later, we returned and checked status, and worked with the improvement teams to complete their projects. We continued this rhythm, of 18 people per group with a new group every other week with three prioritized projects. In 2007 12 projects were completed, in 2008 18 projects were completed, in 2009 18 more projects were completed and in 2010 12 more projects were completed through August pf 2010. All in all, 60 prioritized projects were completed.

On September 14, 2010 Under Secretary of Defense, Mr. Ashton Gates, distributed a memorandum for all acquisition professionals titled, “Better Buying Power, Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending” … on page 7 paragraph 3: … “a multi-year procurement of 124 F/A-18 strike fighter and the E/A-18 electronic attack aircraft, which will yield over $600 million (greater than 10%) savings to the Department and the Taxpayer.”

The end result of a program, titled “Affordability” increased the capacity from 42 to 67, improved the quality from 4-5 sigma to better than 6 sigma and reduced the price by $5.1M to $49.9M. This also opened up the market for Austrailia, Canada, Japan and Switzerland to purchase F/A-18 Super Hornets. Government Affordability works!