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Research Questions

  1. How does the Navy currently develop, test, and field upgrades to the Aegis weapon system, and how will that process change under the IWS business model?
  2. What are the effects of new modernization and fielding rates on the technical infrastructure and capabilities of the Aegis fleet?
  3. What modernization rate under the IWS business model should be recommended to the Navy to balance fleet capability, risk, and cost?

Aegis is a highly integrated U.S. Navy combat system with anti-air warfare, ballistic missile defense, surface, subsurface, and strike roles that is currently operating on 84 ships. To reduce the costs of maintaining the system, and to take advantage of rapidly evolving commercial computing technology, the Navy is moving Aegis toward open-architecture software, a common source code library, and commercial, off-the-shelf processors. As it moves forward in implementing its integrated weapon system (IWS) model for the development, integration, and testing of upgrades to the Aegis weapon system, the Navy must consider the impact of this plan on Aegis facilities, personnel, and timelines. Of particular concern are the effects of new modernization and fielding rates on the technical infrastructure of the Aegis fleet. This report examines the potential benefits of the IWS model and the challenges associated with the transition from the Navy's legacy model for Aegis acquisition and development. It examines the pace of upgrades to both hardware and software and the speed with which they spread throughout the fleet. Finally, it proposes an upgrade schedule that offsets software (advanced capability builds) and hardware (technology insertions) to maximize the Navy's benefit from commercial industry's technology replacement cycle and ensure value for fixed development and testing budgets.

Key Findings

The integrated weapon system (IWS) Business Model Has Many Potential Benefits

  • The model periodically distributes capability upgrades to both new and in-service ships using concurrent development and sequential integration and testing.
  • The model improves the efficiency of weapon system development and support by using modern software engineering processes that enable continuous development.
  • The model fosters competition by allowing the Navy to seek bids from multiple commercial vendors for developing individual components of the weapon system software.
  • The model allows the Navy to leverage points of overlap in capability development across weapon systems.

But Also Carries Several Sources of Risk

  • The switch to a completely new business model may entail unanticipated difficulties.
  • The vested interests of stakeholders in the legacy process may make implementing a new business model more difficult.
  • The complexity of managing the common source library adds risk.
  • Programs may compete for limited resources.
  • The Aegis fleet may be exposed to new risks as a result of funding instability.


  • Field advanced capability build (ACB) and technology insertion (TI) upgrades on a four-year schedule, as proposed in the current integrated weapon system plan, installing every ACB and TI upgrade on every Aegis ship over each four-year period, and offsetting the ACB and TI upgrades by two years.
  • The Navy should expect a uniquely complex fielding experience, proceed slowly when implementing this plan, and be prepared to derive lessons learned as it fields periodic upgrades to modernized ships and develops these upgrades from a common source library.

The research described in this report was prepared for the U.S. Navy. The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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