Program Executive Office Ammunition 11-13 May 2004 Presented By: Mr. Matthew T. Zimmerman Associate PEO Ammunition – Industrial Base Presented To: NDIA Small Arms Symposium

PEO Ammo MISSION Develop and Procure Conventional and Leap-Ahead Munitions Combat Power to Warfighters GOALS Field Precision Munitions & Smart Weapons Improve and Sustain the Conventional Stockpile Satisfy the Customer, Achieve Excellence Grow World-Class People and Teams Our vision is to get conventional and leap-ahead combat power in the hands of warfighters Our goals are stated simply enough. The top two priorities are to get….. Precision-Guided Munitions into the Inventory, and to improve… Conventional Munitions

Systems - Indirect Fire PEO Ammo Organization PEO Ammunition BG Paul Izzo PEO Mr. Kevin Fahey DPEO Industrial Base Mr. Matt Zimmerman APEO Industrial Base Washington, D.C. Liaison Team Close Combat Systems Mr. Jim Sutton PM Combat Ammo Systems - Indirect Fire COL Nate Sledge PM Maneuver Ammo System - Direct Fire Mr. Bill Sanville PM Joint Services COL Jeff Gwilliam PM Networked Munitions/ Munitions / Countermine Demolitions / Non-Lethal Medium & Small Caliber DEMIL Mortars Excalibur Large Caliber

PEO Ammo Main Objectives Unify & Integrate Ammunition Management Under One Single Chain of Command…by Consolidating Responsibility and Resource Management in the PEO Develop a Unified Munitions Acquisition Strategy Integrate Requirements…Training, War Reserve, & Modernization Include SMCA Mission By Munition Family Identify and Optimize Key Business Processes Develop and Implement an Industrial Base Strategy (Organic and Commercial) Common Themes From PNNL Study, GAO Study, and Rand Study Authority and Accountability… For Meeting Full Military Requirement For all Ammo Families

Where We Are Today Single Manager for Conventional Ammunition (SMCA) ASA(ALT) Named SMCA – 8 Jan 2003 PEO Ammunition Named SMCA Executor – 16 Apr 2003 Section 806 Authority Assigned 16 April 2003 SMCA Charter in Service Review All FY04 Service Funding Goes thru PEO Ammunition PM’s are Engaging Other Services Formed SMCA Acquisition Council Completed Executive 6 Sigma Black Belt Program Implementing Ammo Enterprise Metrics – Covering All SMCA Functional Areas All Major Issues Resolved Moving Forward With Execution Measuring Improvements

Single Manager for Conventional Ammunition (SMCA) DOD D5160.65 DOD I5160.68 SMCA Key Objective: Achieve the Highest Possible Degree of Efficiency and Effectiveness Acquiring Conventional Ammunition SMCA Functions: RDTE Production Base Acquisition Supply & Maintenance Demilitarization

Ammunition Enterprise Definition The Ammunition Enterprise is the integration of people, infra-structure and processes required for ammunition life cycle management to support the warfighter. JMC-PEO Ammo - ARDEC

RDA FY 04 PEO Ammo Budget Total Total: $1,799.6M (12%) (3%) (39%) (14%) (32%) Source: FY05 PB PM Combat Ammunition Systems Artillery Ammunition Artillery Fuze Mortar PM Maneuver Ammunition Systems Large Caliber Medium Caliber Small Caliber RDTE $184,067 WTCV $10,027 OPA $39,224 Ammo $339,633 RDTE $26,521 Ammo $670,148 PM Close Combat Systems Mines, Countermines & Demolition PM Joint Services PEO Industrial Base Demil RDTE $133,615 OPA $17,884 Ammo $108,881 RDTE $30,937 Ammo $181,626 PEO Ammo RDTE $31,595 Ammo $25,446

FY04 PEO Ammo Funding ($M) Total=$1,799.6M Industrial Base Total=$131.22M PAA Total= $109M RDTE ($406.7M) RDTE $22.22 IF $32.35 WP MOD (plus-up) $24.30 Procurement 1,392.9M IF (Plus Up) $25.31 ARMS (Plus Up) $7.00 The left pie chart shows our overall FY04 PAA and RDTE funding. The dotted line sections represent the percentage of our funding dedicated for industrial base projects. The chart on the right provides a break-out of our specific industrial base funding which totals approximately $140M ($118M PAA Activity 2; $22M RDTE). Our $22M RDTE funding funds our Life Cycle Pilot Process program having the goal to improve product affordability and mitigate manufacturing deficiencies by prototyping advanced manufacturing techniques for transfer to Industry. The Production Base Program consists of Industrial Facilities (IF), Maintenance of Inactive Facilities (MIF), Lay-away of Industrial Facilities (LIF) and Armament Retooling and Manufacturing Support (ARMS) programs. Industrial Facilities (IF) : Corrects environmental and infrastructure deficiencies Replaces obsolete or worn production equipment Maintenance of Industrial Facilities (MIF) Maintains laid-away production equipment and facilities Lay-away of Industrial Facilities (LIF) (EP2000): Preserves and stores production equipment and facilities for future use or disposal. Armament Retooling & Manufacturing Support (ARMS) Funding to permit commercial use of Army Ammo Plants and equipment to reduce cost of ownership, reduce product cost and retain workforce skill sets WP MOD: The $24M is a congressional plus-up to complete the construction of a new White Phosphorous Load, Assemble and Pack production line at Pine Bluff Arsenal (for Artillery and Mortar rounds). IF Plus-Ups: $14M Small Cal, $3.5M Med Cal Links, $3M Riverbank AAP Flex Manufacturing, $3.5M Flex LAP line for Modern Munitions (Kansas), $1.5M Arsenal Support Program Initiative (Pine Bluff) MIF $5.8 LIF $9.7 ARMS $4.57 IF=Industrial Facilities MIF= Maintenance of Industrial Facilities LIF= Layaway of Industrial Facilities ARMS= Armament Retooling & Manufacturing Support (ARMS) WP MOD= White Phosphorous Modernization Production Base Support Program Source: FY05 PB

Section 806 Summary Procurement Approach Distributions Public Law 105-261, Procurement of Conventional Ammunition Permits SMCA to Restrict Procurements to Sources within NTIB FY03 Procurements FY04 Procurements 19 39 21 42 $1274.7M $205.2M $421.3M $2430.4M 64 10 40 52 $223.9M $860M $321.4M $26.2M FY03 Sec 806s Army 34 $1689.7M USN 61 $435.1M USMC 3 $19.4M USAF 14 $2187.4M TOTAL 112 $4331.6M FY04 Sec 806s Army 98 $377.4M USN 17 $24.3M USMC 24 $19.9M USAF 27 $1009.9M TOTAL 166 $1431.5M PEO Ammo Delegated Section 806 Authority Nov 02 Competition Limited to the NTIB Full and Open Sole Source Small Business Set Aside

Small Arms Ammo Production History Years 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010 500 1000 1500 2000 2500 KOREA 1950-1953 VIETNAM 1966-1975 WWII 1941-1945 Multiple MFGs Remington Arms Olin ATK 12 Plants 3 2 1 Plant USA Millions of Rounds

Requirement Increases (Produced at Lake City) Unknowns associated with live fire training and OIF Supplemental Increased requirements due to Chief of Staff training surge Source: Integrated Conventional Ammunition Procurement Plan FY04 Draft Execution Price List Quantity

Small Cal Ammo Scenarios POM FUNDING (ALL SERVICES) DESIRED SURGE CAPABILITY GOAL ALL SERVICES LCAAP CAPACITY ALT. SOURCE UNFUNDED REQUIREMENTS What is monthly Velocity?

Small Caliber Ammunition .50 Cal: A large number of soldiers commented that the M2 machine gun is “…the best weapon in the Army” They successfully engaged and destroyed targets (light armor, buildings and personnel) between 50-2000 meters without experiencing any major malfunctions or breakages on the weapon system 7.62mm: Coax machine gun and loader machine gun were most widely used weapons for tanks Ammunition and weapon systems performed very well 5.56mm: Most soldiers considered M16 weapon series to be very accurate regardless of the version or sighting system One sniper team spotter employed his M16A4 (equipped with a high powered scope) against targets at 600 and 800 meters with first round hits in each case

Industrial Base Strategic Plan 7 Overarching Strategies 30 Tactical Strategies Single Manager for Conventional Ammunition (SMCA) Industrial Base Strategic Plan: 2015 Volume A 3 November 2003 Program Executive Office Ammunition SFAE-AMO Picatinny Arsenal, NJ 07806-5000 Strategic Goals: 1. Transform to Meet Current and Future Requirements 2. Modernize Utilized Manufacturing Capacity 3. Balance Industrial Base & Acquisition Management Risk 4. Operate Efficiently and Effectively 5. Incentivize Industry to Reinvest in Capital Equipment and Processes Sample Overarching Strategies: A key product from our Industrial Base IPT is our ammunition Industrial Base Strategic Plan. The Plan is a dynamic document that represents our goals and tactics to position the industrial base to respond to current and future requirements. We will continue to use 6 Sigma principals and update the plan annually due to the dynamics of global events and the upcoming BRAC. (Hand out plan). Its initiatives and strategies provide the underpinnings for optimizing acquisition planning and decision making that affect the preparedness of the ammunition production base. Strategic Goals: Transform to Meet Current and Future Requirements > strategies focus on change management principals to increase overall operating efficiencies while mitigating costs associated with Underutilized Capacity and antiquated infrastructure. 2. Modernize Utilized Manufacturing Capacity> strategies focus on planning resources to improve existing manufacturing equipment (organic and commercial) and implementing Science Based Production disciplines. Science Based Production disciplines will ensure we understand the manufacturing process to avoid another small caliber links situation; i.e., the production line is moved but the process is not under control nor fully understood, thus resulting in problems 3. Balance Industrial Base & Acquisition Management Risk > strategies focus on managing by ammo families and synchronizing procurements to avoid surge spikes while sustaining required capabilities. We will also balance the need to pay more for a product in order to sustain the capability. 4. Operate Efficiently and Effectively> strategies focus on deploying 6 Sigma and Lean methodologies across industrial base operations. 5. Incentivize Industry to Reinvest in Capital Equipment and Processes> strategies focus on ways to encourage private investment into the production base. One strategy is to incorporate into acquisition contracts government matching of private investment for improving a production capabilities. 1. Acquisitions Will Determine and Posture the Production Base. 2. Acquisitions and Investments Will be Synchronized to Assure Required Manufacturing Capabilities Remain Available. 3. Opportunities for Greater Joint Service Activity Will be Identified and Implemented. Outlines Goals and Tactics to Shape the Industrial Base

GOCO Production Base Outlook FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Chamberlain BRAC05 Scranton Norris Riverbank Valentec Louisiana FY03 Radford ATK FY99 Lake City Kansas Facilities-Jul 24 Principal Strategy: Lone Star 1-Align Facility Use Contracts w/ BRAC05 Day & Zimmermann MTI Miss. 2-Pursue Feasibility and Overall Business Case for Sell, Long Term Lease, and/or Capability Consolidation (Pending BRAC Outcome) Milan General Dynamics American Ordnance Iowa BAE Syst OSI Holston = Contract term expires Facilities-Jun 23 = Decision or actionable point

Summary – The Ammunition Enterprise is … Supporting Current Operations/Planning Future Improving Ammunition Life-Cycle Practices Focused, Well-Trained Workforce Leveraging World Class Capabilities & Technologies Vital to the development of products for the Future Joint Force