[iwar] [fc:Sunk.Costs.Sink.Innovation]

From: Fred Cohen (fc@all.net)
Date: 2002-05-16 22:37:23
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Sunk Costs Sink Innovation

By Captain Terry C. Pierce, U.S. Navy

Proceedings, May 2002

©2002 SOLYPSIS CORPORATION

The tactical component network could be a great leap forward in linking
warfighting forces‹if given a chance.

Our warfighting admirals are at risk of losing a dramatic technological
innovation. Using advanced information networking concepts and Internet-age
technology, the tactical component network (TCN) outperforms the cooperative
engagement capability (CEC) device by sharing radar-tracking data while
allowing more participants to function within the network. Unfortunately,
CEC product champions, arguing that the Navy already has invested more than
$2 billion in CEC over 15 years, have dismissed TCN from consideration.1 The
Navy instead will rush to install the CEC system as soon as a Milestone 3
production decision can be obtained‹delivering a "Commodore 64-era"
networking solution to the fleet when a "Pentium 4-era" system is possible.2

Few senior warfighters in the Navy and Marine Corps are even aware of the
TCN innovation for network-centric warfare.3 This is unfortunate, because
TCN is an order of magnitude leap beyond CEC. At a fraction of the cost, it
could link Navy and Marine Corps units while exceeding CEC's performance
from both technical and programmatic perspectives.

TCN's adversary is not a particular person, but an aquisition process that
stifles free thought and crushes new ideas‹a process, quite simply, that
rewards bureaucrats and insider business interests and punishes innovation.4
For next-generation network-centric innovation, this poses a serious threat,
as lethal as the one our Navy faced in 1949, when construction on the first
flush-deck supercarrier was halted. During that fight for aviation
technological innovation, senior Navy officers openly challenged the
decision at great personal risk, an act termed the "Admirals' revolt" by the
press.5

If TCN innovation is to bring about dramatic changes in naval warfare, our
warfighting admirals will have to stage a second revolt. The stakes are
considerable. Because this innovation could transform the way the naval
services fight, the outcome of the debate will have a powerful impact on
embedded and emerging legacy systems and the naval services' ability to
absorb network-centric advances and could affect our ability to
revolutionize U.S. homeland defenses against catastrophic terrorism.

Network-Centric Warfare

Network-centric warfare (NCW) focuses on linking ships, aircraft, and shore
installations into highly integrated networks so they can share
command-and-control and target data. The aim of NCW is to turbocharge "speed
of command" to generate a higher tempo of action than the enemy.6 In an
environment where chaos is the rule, speed of command will help naval forces
adapt to rapidly changing situations and exploit fleeting situations at much
higher speeds than the adversary. This, in turn, will permit them to disrupt
the enemy's ability to function.

One of the legacy pillars of Navy network-centric warfare is the cooperative
engagement capability. CEC was designed during the Soviet era to link
dispersed guided-missile ships and communications relay aircraft operating
in a particular area into a single air-defense network. Sensor-netting
software and special-purpose hardware allow CEC ships to exchange radar
detection information in a way that supports guided-missile engagements from
one Aegis combatant based on the radar data provided by another. Generally
speaking, a CEC system installed on a ship or aircraft includes CEC
software, a computer processor, and a high-powered directional phase-array
antenna for receiving and transmitting information. Sensor data are
processed and transferred to the data distribution system (DDS), which
transmits the data at extremely high rates to other CEC network
participants. Meanwhile, the processor on board each unit fuses the sensor
data received from other network players for use by the ship's Aegis air
defense weapon system.

Since the early 1980s, the Navy has sunk more than $2.5 billion into CEC.
After it passes the final operational evaluation, the Navy plans on
installing the system at an estimated cost of nearly $80 million for each
unit.7

Several significant problems exist for this 15-year-old technology. The
result has been a disturbance within the surface force between the CEC and
Aegis warlords. For example, in January 1999, Rear Admiral George Huchting,
the senior Aegis manager for nine years, stated, "CEC was invasive to the
Aegis system."8 The Aegis community felt it was being forced to incorporate
a questionable system. CEC advocates countered that integration testing
revealed glitches in the Aegis software that limited CECAegis
interoperability.

Following the lukewarm CECAegis integration test, Ronald O'Rourke, the lead
defense specialist for the Congressional Research Service, reported three
sets of CEC hurdles to Congress:9

    * Significant interoperability problems exist between the CEC system's
software and the software used to run the Navy's Aegis air defense system.
Although the Navy is addressing these problems, O'Rourke is not convinced
the Navy's solution will fix the challenges of incorporating shared radar
data with complex weapon systems. At risk is the Navy's goal of CEC becoming
the backbone for a DoD initiative to link all air radar sensors into a
single integrated air picture (SIAP).10
    * CEC requires an enormous amount of bandwidth, and the requirement
increases with the number of participants. The reason is the system's
user-push approach, which disseminates all detected data, useful or not, on
the network. An imperfect illustration can be made using sports. CEC is like
a cable network that requires all its subscribers to receive all the Sunday
NFL games it provides, regardless of an individual user's interest only in
select teams. Similarly, the network simultaneously monitors all of the
action of each participant. Presently, the Navy does not have a plan to
manage the limited data-transmission bandwidth capability, which would be
severely strained by CEC.
    * CEC is a 15-year-old technical construct that does not benefit from
modern network concepts and innovations. Therefore, although CEC has
validity as a warfighting concept, it is in great need of a "technology
refresh."11 Ronald O'Rourke ends his report by noting that TCN might be that
refresh.

In sum, at the heart of the CEC issue is the fact that it is a
single-purpose device trying to be a network foundation, that is, CEC is a
set of equipment with which all network combatants must integrate. The
mission requirements of each combatant become subordinate to the mission
requirements of CEC, and existing equipment must be reconfigured to support
it. This results in numerous interoperability issues and restrictive
physical and functional coupling between all participants, both technically
and programmatically. Extending the point, if the Internet worked like CEC,
whenever a Web site was modified, visitors would have to reprogram their
computers.12

The Tactical Component Network

Based on modern network concepts, the tactical component network is a
collaborative tracking system with Internet-like attributes.13 Each sensor
user has the equivalent of a Web page that any other unit can browse. Thus,
TCN can be thought of as a generic enabler‹as opposed to a gizmo or device.
A user or data source merely plugs into it. Element independence is
maintained and bandwidth is consumed in minuscule amounts compared to CEC.

TCN avoids the CEC problems by using collaborative tracking. In this method,
each sensor contributing to the network is provided with a set of software
applications that run in commercial off-the-shelf computers. Using a
well-defined applications program interface, each sensor collaborates with
all other sensors in the network in a manner that ensures only contributory
information is exchanged in the creation of the network track picture and in
accordance with the needs of each information user. This minimizes the
communications capacity required to support even enormous networks of
sensors. In other words, TCN allows each user to tune in to the NFL game of
his choice. Similarly, the radar network pulls only those NFL game
highlights it desires from each net participant. In the TCN network, less
bandwidth is necessary as selective data routing permits for efficient
rationing.

TCN has demonstrated the ability to support thousands of tracks to CEC
specification accuracy using low-cost radios already in the military
inventory, such as EPLARS and PRC-117. It also supports DDS linkages for the
Aegis combatants that need communications attributes consistent with remote
Standard missile engagements. The result is a network of participants that
are physically and functionally independent.

The key to a viable network foundation, it supports the mission requirements
of the participating combatants rather than the other way around.

An Advocate

One senior warrior has begun to champion the TCN cause. Rear Admiral Paul
Schultz, Commander, Amphibious Forces Seventh Fleet, has been quietly
promoting expeditionary network-centric command and control. He calls his
innovation the Modular Command Center (MCC), with TCN as the backbone
architecture.
  TCN used during Foal Eagle '02 exercise
 

©2002 SOLYPSIS CORPORATION
 
 

TCN was used during the Foal Eagle '02 exercise with the Republic of Korea.
Here, Solypsis president Warren Citrin stands with screen captures of
tactical displays from the exercise showing a portion of the carrier task
force and surrounding air traffic‹derived from TCN. The network was created
using an Iridium satellite communication link back to a processing hub in
Laurel, Maryland.
 

A cruiser-destroyer sailor with extensive network-centric experience as the
CEC program sponsor in the Office of the Chief of Naval Operations, Admiral
Schultz found deficiencies in the situational awareness available to his
amphibious ready group. He attempted to work with the surface Navy to field
the Modular Command Center and assess the TCN technology in an operational
environment, but fearing a threat to the CEC acquisition program, the
surface community turned him down.14 With support from interested
congressional leaders and the Office of Naval Research, Admiral Schultz and
his staff were able to put the MCC to sea in fall 2001.15 Working diligently
but quietly, he successfully tested MCC with TCN during predeployment
work-ups in the fourth quarter of 2001. The results have been superb.16

The Adversary

Despite its obvious advantages, TCN could fall victim to an archaic
acquisition bureaucracy that stifles innovation through inertia. This
paralyzing inertia comes from many sources. In the realm of defense
information technology (IT), one notable source is the military laboratory
community. Years ago, before the digital commercial revolution, university
and military labs had the defense IT field much to themselves. As industry
caught up to and even surpassed the labs in this arena, their mission
diminished, and they since have become industrial product developers,
competing with civilian industry. In and of itself, this is not a problem.
The labs, however, retained their status as trusted government agents and
product assessors, even in areas wherein they are competing. The resulting
conflicts of interest and impediments to innovation are enormous.

This problem is central in the TCN case. The Johns Hopkins University
Applied Physics Laboratory (APL) originated CEC and still is heavily funded
for CEC and related products. Although Raytheon is the industry design
agent, APL continues as the developer of upgrades. Having CEC as the focus
of future joint and coalition networking efforts is very important to APL's
business plan for the next decade or more. Yet APL also acts as the Navy's
technical direction agent for these matters, including the determination of
matters that materially affect the selection of TCN or CEC as the networking
basis. An APL employee acts as the Navy technical director in a
quasi-governmental position overseeing these very issues. As one might
expect, APL has been among the most vocal detractors of TCN.

Although APL and the labs certainly are not the lone forces hampering
innovation in the defense community, their role in the TCN and CEC case
illustrates an acquisition process that kills innovation.

Another obstacle to innovation is the often-used sunk cost argument. With
$2.5 billion sunk in CEC, the surface warfare community has decided it is
better to ignore TCN. In fact, it is preparing to sink another $4-8
billion‹the cost of outfitting and maintaining 215 Navy units.17

As Greg Schneider of The Washington Post reported, "It's just that the Navy
has invested too much time and money in its current system‹the Cooperative
Engagement Capability, or CEC, built by Raytheon Co.‹to think about changing
course now, according to Navy officials." Rear Admiral Phillip Balisle, who
oversees surface warfare, confirmed this, stating, "CEC‹we need it today . .
. I do not have the luxury, no matter how attractive the [TCN] option is, to
simply wipe the slate clean."18

CEC product champions are making a classic reasoning error when they are
influenced by what has been spent. Sunk costs are expenses already incurred
that cannot be recovered regardless of future events. One example of
decision makers letting sunk costs sway subsequent decisions was the
argument to continue the Vietnam War so as not to waste those lives already
lost in the conflict. But because sunk cost cannot be regained, the rational
action is not to use them to determine the merits of future options. For
decision-making purposes, sunk costs are irrelevant. What does count is a
rational assessment of the expected marginal cost and benefits of committing
further resources.

Unmasking TCN's Hidden Benefits

Areas as diverse as expeditionary humanitarian and disaster relief from
amphibious forces to Federal Aviation Administration efforts for homeland
defense could benefit greatly from TCN. One of the most important areas is
undersea warfare. TCN would allow submariners to conduct undersea and strike
warfare in a network-centric world.

In today's netted force, submariners are at a technical disadvantage
compared to air and surface units because of their operating environment.
The submarine's strengths are stealth and independence, but network-centric
operations depend on continuous radio connectivity to transmit data and link
weapons across platforms‹which requires the submarine to be at periscope
depth. The more information that must be transmitted‹as a closed system
architecture, CEC's aim is to disseminate all detected data, useful or
not‹the longer the submarine must remain on or near the surface.

TCN, an open architecture system, would allow the submarine to pull
selective data from the network at the time and place of its choosing.
"Systems and missions, not equipment," says retired Rear Admiral William
(Jerry) Holland, "must define the submarine's role in network-centric
warfare."19 As an enabling system, TCN permits submariners to exploit
network-centric data in accomplishing their mission.

Another area of importance is Marine Corps and other small, mobile units
that must operate with restrictive antenna and bandwidth constraints. TCN
can enable a fast-moving Marine expeditionary force to share data about
numerous targets with other Marine support units as well as with naval
strike combatants operating in the littoral. This touches directly on the
essence of the Marine Corps Tactical Air Command Center: fuse, consolidate,
and disseminate time critical information at the field level so war fighters
have only the information they need to execute the mission.20 TCN is a major
step toward providing greater flexibility with a smaller footprint.

TCN also could support homeland security. The foundation for robust and
coordinated homeland defense must be an integrated warning, information, and
coordination network that can link Department of Defense resources with
federal, state, and local agencies. By embracing TCN as the backbone
architecture for network-centric warfare, the Navy has an opportunity to
spawn a truly joint innovation in how it conducts this mission.

Why We Need a Revolt

With the terrorist attack of 11 September we are at war, and the TCN
strategy must change. We cannot waste time winding our way through an
archaic acquisition process that rewards the status quo. If TCN is to
succeed, its potential must be brought into the open and into direct
competition with CEC.

Failure to take action will permit sunk cost to sink TCN‹the innovative
kernel for revolutionalizing network-centric warfare and U.S. homeland
defense. As Secretary of Defense Donald Rumsfeld stated, "Outdated systems
crush ideas that could save a life."21

   1. Greg Schneider, "Scuttled by the Process," The Washington Post, 29
August 2001, p. E01. back to article
   2. Milestone 3 is authorization from DoD for full-rate production. back
to article
   3. Recent reports from Solipsys, the small company that created TCN, note
that few warfighters in the Navy are aware of TCN and its disruptive
capabilities. Interview with Warren Citrin, chief executive officer of
Solipsys, 28 July 2001. back to article
   4. Secretary of Defense Donald Rumsfeld, "DoD Acquisition and Logistics
Excellence Week Kickoff‹Bureaucracy to Battlefield," remarks delivered at
the Pentagon, 10 September 2001, at www.defenselink.mil/cgi-bin/dlprint.cgi.
back to article
   5. See Jeffrey Barlow, Revolt of the Admirals: The Fight for Naval
Aviation, 1945-1950, Naval Historical Center (Washington, DC: U.S.
Government Printing Office, 1994), p. 2. back to article
   6. Ronald O'Rourke coined the term "speed of command" in his CRS Report
for Congress, "Navy Network-Centric Warfare Concept: Key Programs and Issues
for Congress," 6 June 2001. back to article
   7. Cost figure is a Pentagon estimate. See Sandra Erwin, "Stakes Are High
in Competition for Naval Air-Defense Program," Defense News, 21 June 2001,
p. 2. back to article
   8. Edward J. Walsh, "Industry and the Navy Push Technology for Future Air
Defense," Military Information Technology Online Archives, p. 3, at
www.mit-kmi.com/Archives/4_3_MIT/4_3_Art8.cfm. back to article
   9. O'Rourke, "Navy Network-Centric Warfare Concept: Key Programs and
Issues for Congress." back to article
  10. See Sandra Erwin, "Stakes Are High in Competition for Naval
Air-Defense Air-Defense Program," Defense News, 21 June 2001. back to
article
  11. Erwin, "Stakes Are High," p. 3. back to article
  12. Erwin, "Stakes Are High," p. 3. back to article
  13. TCN is the brainchild of Solipsys Corp. engineers, including Warren
Citrin and others who were on the original CEC design team at the Johns
Hopkins University Applied Physics Laboratory. Citrin cofounded Solipsys in
1996 and shortly thereafter began an internally funded effort to investigate
solutions to the myriad CEC problems he had noted over 12 years as lead
engineer. back to article
  14. Interview with Mun Fenton, Office of Naval Research (ONR-35), Program
manager and Mid-Pacific Technical Director, 14 October 2001. back to article
  15. Senator Inouye from Hawaii as well as Maryland Congressman Stenny
Hoyer have been strong proponents of TCN. Interview with Fenton, 21 October
2001. Fenton, "MCC History," PowerPoint briefing, 21 October 2001, p. 6;
Robert Holzer, "Test to Weigh TCN's Potential for U.S. Navy," Defense News,
4 June 2001; interview with Warren Citrin, 28 July 2001. back to article
  16. Subsequent TCN testing by ONR during Foal Eagle 2002 achieved a major
milestone when the Essex (LHD-2) amphibious ready group, including
minesweepers and an ashore mobile MCC station, achived a worldwide
collaborative network link with Laurel, Maryland, using Iridium satellite
telephones. back to article
  17. See Schneider, "Scuttled by the Process," p. 3. back to article
  18. Schneider, "Scuttled by the Process," p. E01-2. back to article
  19. RAdm. William Holland, USN (Ret.), "Subs Slip Through Net," U.S. Naval
Institute Proceedings, June 1998, pp. 28-30. back to article
  20. Christian B. Sheehy, "Data Selectivity Vital to Operational Picture,"
Signal Magazine 2001, May 2001. back to article
  21. Rumsfeld, "DoD Acquisition and Logistics Excellence Week
Kickoff‹Bureaucracy to Battlefield." back to article

Captain Pierce is Deputy Chief of Staff for Amphibious Forces, Seventh
Fleet. He holds doctorate and master's degrees from the John F. Kennedy
School of Government, Harvard University. He commanded the USS Whidbey
Island (LSD-41) and was speechwriter for Chief of Naval Operations Admiral
Jeremy M. Boorda.

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