JEREMIAH PANEL
Defining the Future of the NRO for the 21st Century
Report to the Director, National Reconnaissance Office
26 AUGUST 1996

VII. INTERNAL ORGANIZATIONAL STRUCTURE

(U) The Internal Organizational Structure Working Group was chartered to provide advice and recommendations to the Jeremiah Panel on organizational structure and effectiveness. The group developed and evaluated six major sets of issues and made recommendations for organizational and functional changes to mitigate these issues. The Working Group membership is listed in Appendix VII-1

2. METHODOLOGY

(U) The Working Group collected information by means of:

- Briefings from the major NRO organizations.

- Interviews with the directors of these organizations

- Interviews with a variety of external Government executives, judged to be current or previous stakeholders in the NRO.

- The industry questionnaire developed by the Business Practices Working Group.

(U) Appendix VII-2 contains a list of those individuals interviewed. An unattributed summary of their comments appears in Appendix VII-3.

(U) The Working Group analyzed the information received in the briefings and interviews and developed a set of six issues that appeared to have to have recurring emphasis in the data and which appeared amenable to resolution by organizational change. Suggested organizational modifications were postulated and examined to determine the extent to which they mitigated the issue set. Conclusions and recommendations were then formulated and presented to the Panel for endorsement and discussion.

3. SUMMARY FINDINGS AND RECOMMENDATIONS

(U) The internal organization of the NRO is transitioning from one of separate program and agency "stovepipes" with minimal customer participation to one focused on developing a "system of systems" for national reconnaissance with integrated agency participation and improved customer support. The NRO organizational design at this time could be better matched to the future NRO mission in a new world of customers, threats, and technology.

(U) The NRO is recognized within industry and Government for superior systems engineering and system acquisition capabilities. The strength of the NRO in these crucial functions is founded on the excellence of contractor and Government work forces, streamlined work processes, and cohesive Government-industry program teams. However, the impact of cumulative changes, especially over the past five years, indicates a need to optimize the NRO organization.

(U) The NRO is now a mature organization. It is collocated for the first time and is integrating heretofore separate components into a more unified structure. Technological change is accelerating, driven by robust commercial applications and demand. The NRO now has a considerable stake in the operational maintenance (O&M) of reconnaissance systems and large sunk costs in its baseline programs. The large invested capital base makes it difficult to innovate or to introduce radical new concepts. Moreover, accessing "best of breed" technologies for NRO applications is becoming more difficult, and this is exacerbated by a constrained major contractor base. The realignment of that base through infusion of "nontraditional" NRO suppliers as well as by the transformation of major aerospace primes poses unique system development and management problems for the NRO.

(U) Finally, the NRO customer base is becoming more complex and dynamic, reflecting the new challenges to U.S. national security. Included in this changing customer focus is the steeply growing significance of the NRO's support to military operations, which is driven by the new defense missions unfolding at a rapid pace and by the advancing technical capabilities of NRO systems enabling unprecedented near real-time field support.

(U) The Panel recommends the following changes in the internal organization of the NRO:

[Word Deleted] Give technology in the NRO more visibility and stature in order to obtain maximum payoff from the NRO annual [Word Deleted] investment, to achieve more coherent coupling with industrial R&D, and to attain credibility for innovative system endeavors. Establish within the NRO a fourth directorate, Future Technology and Applications Directorate for this purpose. This organization should have a monitoring role of all NRO R&D and technology activities and an execution role for those not specific to any existing system. This directorate should also perform and foster demonstrations and test beds to encourage the growth of new concepts into mature systems. The Panel recommends promotion of the existing Office of Systems Applications to be the nucleus of this new Directorate.

(U) The Office of Plans and Analysis (P&A) is not well matched to important functions within the NRO. This office-level component should be strongly reoriented to systems engineering work across programs and be concerned with the "system of systems." This "system of systems" effort should focus on issues of cross-program compatibility and inter-program operability. As the systems become more interdependent, interfaces with the NRO communications network will become more complex. The systems engineering activities associated with these interdependencies should fall within the charter of this office. In addition, this component should continue to integrate strategic planning, development of system tools, and requirements and analysis work. Oversight of this office should be provided by the Technical Director as determined by the DNRO. The Panel recommends change to reflect this new emphasis on systems engineering: Systems Engineering, Plans and Analysis Office.

(U) Customer support is currently provided in five different components in the NRO. Given the importance of customer support, this function should be centrally managed. This central authority should also coordinate all customer support activities accomplished in other parts of the NRO. Customer participation in future system developments in the longer range will be provided through the new Systems Engineering, Plans and Analysis Office.

(U) A high-level advisory board should be established to provide the DNRO objective program review and assure the promotion of competitive technologies and systems development in the NRO. The board should be broadly represented by nationally recognized contributors from industry, academia, and independent research organizations. The board should be attached directly to the DNRO's office.

(U) A new Finance and Administration Office should be established to consolidate the ROM, MS&O, and major staff functions under the direction of the Chief Financial Officer.

(U) A recommended organization chart which incorporates these changes is included in Appendix VII-4.

(U) These five recommendations are designed to permit expeditious action on the major internal organizational issues surfaced during this review. They involve a minimum of dislocation and almost no impact on the NRO business core--the SIGINT, IMINT, and COMM Directorates. They may be viewed as the lowest organizational option that would have an effect justifying the changes. The question remains whether enough impetus is given to advanced technologies, the opportunity to innovate is sufficiently improved, customer support is coherently provided, and a structure to deliver a satellite reconnaissance "system of systems" is established.

(U) Finally, it is recommended that the DNRO establish an on-going activity to develop a more extensive reorganization with the goal of enabling optimization of investment in total system engineering and development, and new systems innovation and acquisition. This new organization would also be designed to reduce real or apparent conflicts between acquisition and operations. It should also focus all near-real-time operations support, improve SMO, and enable easier networking and economies of scale.

Issue 1: (U) Do there appear to be inefficiencies and shortcomings in the system engineering processes, especially those addressing cross-program/cross-discipline interfaces?

Findings: (U) A recurring theme that the Panel heard from outside the NRO was that it was in danger of losing its cutting edge excellence in systems engineering. Within the NRO the Panel heard a fervent refutation of this charge. The Panel examined systems engineering practices and policies and drew the following conclusions: There are no top-down, NRO-wide practices or policies for the conduct of systems engineering. In one sense this is good, in as much as each of the program offices has developed internal practices closely aligned to and responsive to its programs. A shortcoming of this approach, however, is its inconsistency with the new consolidated structure of the NRO example communications support is now in the Communications Directorate vice the Imagery Directorate. It is also inconsistent with the NRO's public statements about providing greater capability at reduced cost by operating a synergistic "system of systems." Both of these changes imply increased complexity of interfaces and more complex bureaucratic processes for resolving interface issues. These "fact of life" changes will be exacerbated in the future as the NRO moves further toward integrated its programs and emphasizing its military support role.

(U) This is an area where cautious change is in order. The internal systems engineering activities of the program offices continue to produce results which are good to excellent. Any top-level systems engineering function introduced should not supplant or disrupt the program-level activities but supplement them in order to tie together the NRO "system of systems."

(U) In 1989, P&A was originally chartered to have top-level systems engineering. In 1992, there was a brief attempt to address this responsibility when a NRO Systems Engineering Office was formed. It lasted only a short time and dissolved after its director was promoted to run the Imagery Directorate. Subsequently, the systems engineering function was reestablished in P&A but has not been executed with much vigor.

(U) The Panel felt strongly that while the need for a top level systems engineering function is just now emerging and is not well understood internally, it is time for the DNRO to reemphasize this function.

Recommendations: (U) Recommend the NRO establish a top-level systems engineering function. This function would provide the DNRO with top-down systems engineering expertise to address cross-organizational, "system of systems" engineering issues the function would address integration issues and provide NRO standards or building codes to facilitate inter-system integrations

(U) The systems engineer would also serve as the NRO-level Architectural Authority. The office would be responsible for NRO top-level systems integration and for establishing architectural standards or "building codes" and focus on capabilities across entire space architecture. In this sense, the Architectural Authority would be the lead NRO strategic planner. The position would also be the primary NRO interface for coordinating with DUSD(Space) and the DoD Space Architect.

Issue 2: (U) Is the NRO customer support program coherent, cohesive, and related to NRO's mission and vision?

Findings: (U) Previous to collocation of the three NRO program components and the headquarters element, customer relations were pursued separately in each. One of the principal functions of PEA was to provide much improved customer/user visibility and participation in the evolution of NRO programs. Today, vestiges of prior customer service units exist along with PEA and the new Operations Support Office. The relationships among DDMS, DSPO,and OSO are not clearly stated and thus not well understood outside the NRO. Directive 14 assigns responsibility for all "customer and user support to the DDMS"; OSO purports to serve all users on operational interfaces.

(U) In reality, customer support is not well organized and the NRO customer set is poorly defined. The recent Joint CIA-DoD IG Draft Inspection Report on the NRO cites inconsistency in informing CIA, DIA and NSA about changes in NRO programs. It also cites a conflict between NRO Directives 7 and 14 which, while more apparent than real, nevertheless highlights a lack of clarity in this area. As a result, some national customers sense a continuing decrease in their understanding and involvement in NRO programs evolution which are largely driven by product improvements for those very customers.

Recommendations: (U) Recommend the NRO develop a customer support process to provide more coherent, cohesive support to all its customers. The process would call for centralized management, planning, and oversight along with centralized operations. The central office would focus on issues and services affecting a wide variety of customers. Further recommend management and oversight responsibility for customer support be centralized with responsibility for executions among the Directorates and Offices.

Issue 3: (U) Is the NRO still on the leading edge of technology?

Findings: [Word Deleted] The annual NRO budget for research and technology is almost [Word Deleted] . It is centrally planned and decentrally executed by the three directorates and Office of Systems Applications. There is, however, no group in the top level organization chart with Technology or Research in its title. This is not a semantic question. The Panel perceived too much rigidity in the bottom-up build process for R&D. There is a lack of R&D investment strategy at the top and a concomitant lack of accountability for determining coherent return on investment. Opportunities for joint ventures with industry may be lost since industry has little insight into the NRO's overall technology activities.

(U) The decentralized execution of R&D into a number of distinct activities makes it difficult for industry to coordinate its Independent Research and Development (IR&D) investments. Characteristically, significant new NRO technical endeavors are initiated and funded by Congress.

Recommendations: (U) Recommend the NRO increase its emphasis on research and development activities. Steps taken to vest central management of R&D in OSA are good but incomplete. R&D should be a Directorate-level activity at the NRO--accorded the same organizational level and importance as the other major business areas (SIGINT, IMINT, and COMM).

Issue 4: (U) Does the NRO still have the ability to innovate advanced reconnaissance systems?

Findings: (U) The perceived lack of innovation in the NRO today derives from several sources. First, the NRO is a mature organization. It has a large investment in satellite assets and a steadily growing O&M account. Changes to or evolution of reconnaissance systems are largely requirements driven. These factors tend to squeeze available funding as well as limit opportunities for NRO people to conceive and nurture new approaches.

(U) Second, the pace of development of some important commercial technologies tends to inhibit the timely infusion of new technologies. NRO staff cannot keep current, especially if nontraditional" NRO contractors are the source of the new technology. Moreover, the constrained NRO industrial base, even if vertically integrated, is no match for the broad range of technology advances.

(U) Third, the NRO currently lacks the leadership of and corporate commitment to innovation as a corporate value. This absence is crucial in a maturing organization with an innate bias against innovation. As previously noted, Congress now initiates significant new activities in the NRO.

Recommendations: (U) Recommend the NRO place increased emphasis on fostering innovation and the use of commercial technologies. Steps to improve the NRO's posture regarding innovation include:

- (U)Emphasize innovation in all NRO office-level functions and with industry.

- (U) Raise NRO-level innovation responsibilities to the same organizational level as IMINT, SIGINT and COMM.

- (U) Establish a NRO Senior Advisory Board to assist the DNRO in focusing commercial technologies and innovation most germane to space intelligence collection and dissemination.

- (U) improve NRO ties with national, defense, and commercial technology laboratories.

Findings: (U) The role and mission of P&A were determined in the late 1980s and early 1990s. They were largely influenced by the desire to moderate the corrosive competition between Programs A, B, and C. One of their primary functions was to police the program "baseline contracts" between the DNRO and the program managers. This was instituted as a damping influence on the entrepreneurial practices of the programs as they vied with one another for money and constituencies. The need for vigorous enforcement of these contracts has probably abated with the breakup of A, B, and C and realignment into noncompetitive product lines.

(U) Overlap and ambiguity were observed in the areas related to advanced systems and policy support. The cases of advanced imaging (where P&A took the lead) and foreign space systems policy (where OSA leads) staffing are too examples. P&A's role in architecture is judged to be uneven across the disciplines. While they have played a strong role in IMINT, they are less involved in SIGINT.

(U) The original expectation that P&A would be co-equal to the program offices and exert great leverage on them has never been realized. As a result, one original objective--to have the overarching systems engineering function reside in a P&A--has never occurred.

Recommendations: / Recommend the charter of the P&A organization by reemphasizing from the highest levels to focus on "system of systems" engineering along with current responsibilities. Suggest oversight of this office be placed under the Technical Director with a name change to Office of Systems Engineering, Plans, and Analysis.

Issue 6: (U) Is the current NRO internal organization well matched to the future?

Findings: (U) The NRO organization experienced significant change in 1989 and again in 1992 to address issues such as internal competition, connection to intelligence customers and military operators, and the need for cost-effective integrated architectures. Those reorganizations succeeded in addressing and resolving the issues, and today the NRO is a mature organization, structured in parallel to its principal customer base, collocated in a central facility with integrated program offices, and largely rid of destructive internal competition.

(U) But the environment continues to change in ways which demand review of the appropriateness of the current organizational structure. The dominance of large, expensive, ongoing programs, each of which carries a long operations and maintenance (O&M) tail, limits the flexibility to pursue new ideas. The customer base continues to grow with the SMO needs ever expanding. Integration of heretofore separate programs into an integrated "system of systems" has become, perhaps, the most critical task of all.

(U) The environmental changes give rise to six distinct organizational issues that the Panel identified as impediments to accomplishing the 21st Century NRO mission:

-(U) Lack of a clear organizational focus for large-scale systems engineering for integration of components into the "system of systems."

- (U) Dispersion of customer support interfaces throughout many elements of the NRO.

- (U) NRO is no longer universally accepted as being at the leading edge of technology.

- (U) Organizational champions for innovation are either nonexistent or lacking influence.

- (U) Increased staff and processes slow decision making.

- (U) The role of the Plans and Analysis (P&A) Office is unclear in the wake of the 1992 reorganization when integrated SIGINT, IMINT, and COMM planning went to the new Directorates.

Recommendation: (U) Consider reorganizing the NRO to focus on improving the following functions:

- (U) Customer support

- (U) "System of systems" developmental engineering

- (U) Research and development

- (U) Innovation and technology application

- (U) Streamlined administrative management

(U) A notional reorganization can be found in Appendix VII-4. This structure, if implemented, would address many of the concerns noted by the Panel report and posture the NRO to accomplish its primary responsibilities in the 21st Century.

APPENDIX VII-2
INTERNAL ORGANIZATIONAL STRUCTURE WORKING GROUP SENIOR INTERVIEWEES

Mr. Leo Hazelwood

Several staff members of the House and Senate Select Committees on Intelligence

APPENDIX VII-3

(U) SUMMARY OF COMMENTS FROM EXTERNAL INTERVIEWEES

GENERAL AND UNIVERSAL THEMES

- (U) NRO not structured to encourage or develop technology breakthroughs.

- (U) Technology efforts are fragmented leading, to suppression of new ideas.

- (U) Systems engineering, while growing in strength, is still absent.

- (U) NRO has become bureaucratic.

- (U) The NRO needs to become more of a team player with the military forces. Future conflicts will mandate the inclusion of NRO systems/products in the commander's tool kit. NRO should begin now to establish a more cooperative "team player" spirit.

- (U) The NRO should establish a top-level scientific advisory panel. This group should be selected from the best technical minds in the country. They would provide insight to the DNRO on technical realism and where he should "test the envelope" with high-risk technical ventures.

- (U) NRO is now a mature organization refining what it does best, polishing the programs, and progressing incrementally. Radical new ideas face formidable hurdles.

- (U) The NRO lacks a balanced and systematic program to take maximum advantage of commercial technology and focus NR0 resources where commercial technology is inferior or nonexistent.

- (U) the NRO needs a closer relationship to the military operators joint exercises.

- (U) NRO needs to work architectural issues at a higher level. Not only within collection disciplines but across other functional areas as well.

- (U) NRO needs to emphasize external interface definition rather than internal program trades.

COMMENTS FROM HOUSE AND SENATE INTELLIGENCE COMMITTEE STAFFS

- (U) The NRO is valuable and is not broken, but some things need correcting. (both)

- (U) The NRO should get its management house in order. (Senate)

- (U) The NRO needs a new mission statement and effective financial, personnel, and acquisition procedures. (Senate)

- (U) The NRO must decide whether to remain a hybrid organization or become a solely DoD organization. We prefer the hybrid model. (Senate)

- (U) The NRO should remain in operations but not take over launch functions now done by the Air Force. (Senate)

- (U) The NRO has lost its edge and become dull and bureaucratic.(House)

- (U) The NRO focuses too much on operations. (House)

- (U) The current NRO organization is protective of the present and detrimental to new technology development. (House)

- (U) The NRO needs to look to the future (repeatedly stressed).(House)