AC-130U Spooky Program
The acquisition program for this new gunship evolved from a Congressional mandate in the mid-1980s to revitalize the special operations force capabilties. In 1987, North American Rockwell began to modify the C-130 Hercules airframe, manufactured by the Lockheed Martin Aeronautics Company, for the AC-130 gunship. Following the contract award to Rockwell in July 1987, the aircraft was first flown on 20 December 1990.
In the 1980s, the AC-130U Gunship Program Office, in what turned out to be a pioneering effort, developed its own warranty cost-benefit analysis methodology. The strengths of this in-house effort include the analysis' grounding in life cycle cost theory, involvement of functional area experts in its development and validation, and the foresight with which it was crafted. Its shortcomings include its failure to capture many of the relevant costs associated with the weapon system warranty, artificially-constraining assumptions, and a reliance on ultimately unobtainable data. The AC-130U Gunship warranty analysis effort highlights many of the shortcomings that characterize the few existing tools: a requirement for non-existent data, the inherent difficulty in forecasting future costs, the difficulty of translating physical performance measures into terms of dollars and cents, and the specialized nature of available tools.
In FY92 procurement funding was increased to provide the 13th aircraft to replace the AC-130H lost during Desert Storm. Upon completing an exhaustive flight test program at Air Force Flight Test Center from 1991 to 1994 the first aircraft was delivered to AFSOC on July 1, 1994. Boeing’s contract included: concurrent development, aircraft production, flight test, and delivery. All aircraft had been delivered and the program transitioned to the sustainment phase. A competitive contract for sustainment was awarded in July 1998.
The program office refocused its efforts on major modifications, mission area requirements, and operations and support. Besides streamlining their own efforts, the office shifted more of the workload to the prime contractor and other Air Force organizations. The program office used a Statement of Objectives for all new proposalas, eliminated all unnecessary material in the Request for Proposals (RFP) and pursued an electronic RFP process with Rockwell. Additionally, numerous test activites were transferred to the Special Operations Force's test unit at Hurlburt Field, FL and more quality control actions were assigned to the DPRO.
In January 1996, the U.S. Special Operations Command (USSOCOM) Acquisition Executive approved an acquisition strategy to conduct a testbed effort of a portion of the AC-130U Gunship Trainer. The testbed effort would be conducted by the Army Simulation, Training, and Instrumentation Command (STRICOM) and would be followed by full and open competition for procurement of a full-up trainer. Research, Development, Test, and Evaluation (RDT&E) and Production costs for the AC-130U Gunship Trainer were estimated at $71.5 million from March 1996 through November 2000. The planned acquisition strategy for the trainer may circumvent full and open competition. Because operational requirements were adequately defined, the need for a prototype or testbed effort was not justified. The funding profile was not appropriate for the planned acquisition strategy.
The Air Force, the Department of Justice, and The Boeing Company entered into a mediated settlement agreement with the assistance of an Armed Services Board of Contract Appeals (ASBCA) judge acting as a third-party neutral to settle the AC-130U Gunship Litigation. This major weapon system in litigation at the Court of Federal Claims was settled in 1998 through a structured negotiation Alternative Dispute Resolution (ADR) process. The parties resolved contract claims and disputes valued at $785 million that had been unresolved for more than 10 years. The claims and disputes related to the contract awarded by the Department of the Air Force in 1987 for the design, development, integration, test, and production of 13 AC-130U Gunship aircraft. A structured process was used to analyze the claims; focus on cost, schedule, and performance issues; and isolate the matters in dispute. This is one of the largest contract claims ever resolved through an alternative dispute resolution process.
Alternative Dispute Resolution (ADR) refers to a variety of streamlined resolution techniques designed to resolve issues in controversy more efficiently when the normal negotiation process fails. FAR 33.201 defines ADR as "...any type of procedure or combination of procedures voluntarily used to resolve issues in controversy. These procedures may include, but are not limited to, conciliation, facilitation, mediation, fact-finding, mini-trials, arbitration and the use of ombudsmen."
Although disputed matters between the parties had remained unresolved for over ten years, and had been the subject of intense litigation for three years preceding the ADR attempt, the government team, consisting of the Air Force and the Justice Department, was able, with the assistance of Judge Martin Harty of the Armed Services Board of Contract Appeals serving as an independent third party mediator, to work with Boeing throughout a six-month structured settlement process, to ultimately bring the matter to resolution with a settlement of all claims on the contract. Resolution of this dispute also required the work of dozens of people on both sides working full time over a six-month period. An extensive support structure which was needed to sort through the nearly 11 million pages of information used in the above ADR. The Government team alone consisted of 150 people with an annual budget of $10 million. Noteworthy was the leadership exhibited by Air Force Brigadier General Frank Anderson, which was absolutely essential to the successful resolution of this matter.
