Flexible Design Approach to Fleet Management

Abstract

This thesis proposes an actionable implementation plan for the Coast Guard to manage their small boat fleet acquisition. It features a contract process to extend boat service life and reduce acquisition and operating costs.

Today, the increased pace of fielding of new technologies necessitates rapid generational shifts to keep ahead of component equipment obsolescence. The Coast Guard has not been able to keep up with these requirements, and by 2024, 40% of boat classes will be required to operate well beyond their planned service lives.

This thesis used Flexibility in Engineering Design (FED) to analyze ways to implement the Coast Guard’s ten-year strategic plan to improve fleet efficiency and performance. FED shows great promise for improving portfolio management for vehicles, aircraft, ships, and facilities. In essence, FED recognizes the role of uncertainty in current fleet challenges and accepts that uncertainty cannot be avoided. FED addresses uncertainty proactively by building in options as insurance against risks.

The analysis was based on insights provided by many subject matter experts and extensive archival research into the complex institutional environment and performance of the Coast Guard boat acquisition system. A Pareto Analysis was used to explore over 400 concepts of likely fleet design features. The results indicated that planned boat service life was the design attribute that most significantly impacts system performance in terms of cost, mission execution, and risk. Based on this result, the FED analysis was focused on flexible strategies to extend service life. Two categories of flexibility were studied: flexibility “on” acquisition programs through contract options to purchase data/build rights; and flexibility “in” project through incorporating flexible design attributes into future boat classes.

The FED analysis recommends a plan that could save $33 million over 30 years per class acquisition. The plan calls for including a contract option to future boat acquisitions which allows the Coast Guard the right but not the obligation to buy full data rights up to five years after delivery of the first hull of a new class of boats. The ability to rapidly ramp up production to replace hulls as needed allows the Coast Guard to plan for service life elongation. Even if never used, buying the right to build the current generation is akin to buying an insurance policy. It allows the Coast Guard to relax the conservative 10-year service life policy and adopt a longer service life that more closely aligns with experts’ expectation of the service lives boats can achieve.

The thesis proposes an implementation plan to achieve the recommended results of the FED analysis. This plan is tailored to iteratively phase flexibility options into targeted classes and projected to enable the reduction of boat obsolescence, operational churn loss, and long-term program cost at a minimal upfront cost.