The Replicator Numbers Game

The Replicator Numbers Game – Can DOD & Defense Innovation Unit (DIU) solve the complicated math problem needed to realize Replicator success?

DoD will face a difficult math problem on Replicator. The available budget, system quantities needed, and resulting unit cost cannot adequately position warfighters with the solutions, capabilities, or technology needed for the future fight. This is particularly true when considering the unique mission needs of INDOPACOM, which is the COCOM Replicator is particularly designed to address. Replicator aims to deliver “thousands” of attritable drones to warfighters within 18 – 24 months, without adding to overall defense funding or standing up new programs. The goals are aggressive but are they attainable?

One way in which BCE’s global A&D leaders are evaluating the Replicator initiative is with a focus on three quantitative variables that will be critical to its success in the next 18-24 months:

[1] Budget: The total value of various funding streams that can be deployed to Replicator initiatives.

• Deputy Defense Secretary Kathleen Hicks has noted that no new budget line items will be established to fund Replicator, stating, “those following Replicator should not look for a budget line item, but rather should track the total cost of programs being accelerated using the new decision process to ensure systems cross the ‘valley of death’ from development to mass production.” In addition, Hicks quoted a Pentagon estimate that suggests “the area of attritable autonomy will cover less than .05% of the defense budget.”

[2] Quantity: The number of attritable drones Replicator aims to field to adequately project force and meet mission needs.

• Projections remain vague, with Hicks quoted as initially targeting “thousands”. The DOD will need to continue assessing mission needs to inform quantity requirements.

[3] Unit Cost: The average unit cost for Replicator drones.

• Unit costs have not been shared but can be estimated based upon projected quantities and estimated budgets.? Additionally, Hicks has stated that Replicator drones will be “attritable capabilities, platforms that are unmanned and built affordably, allowing commanders to tolerate a higher degree of risk in employing them”.

To put this math problem into context, BCE has run the numbers using the best available assumptions for each key variable to estimate the expected average unit cost for each Replicator.

Note: This high-level analysis provides directional unit cost estimates based upon available information.? Additional assessment of specific requirements by mission area, domain, geography, application, and required capabilities will be needed to refine estimates.

[1] Budget: $421M

• Assumes .05% of the proposed total FY2024 defense budget of ~$842B
• Note: Additional funding from FY2025 and FY2026 expected to contribute additional dollars

[2] Quantity: 2,500 (low-end) – 5,000 (high-end)

• Assumes the lower end of Hicks’ target quantity of “thousands”

[3] Unit Cost: ~$84,200 - $210,500

• Calculated using the assumptions outlined above

While the production of attritable drones with unit prices in the range of $84K to $210K is certainly feasible, the DOD will need to make calculated tradeoffs in capability to hit its aggressive quantity targets. However, by sacrificing capability for quantity, the DOD will necessarily limit the missions Replicator drones can address.?

The DOD is clearly motivated to work quickly and deliver the thousands of drones it has pledged to warfighters.? However, speed and quantity should not be the only objectives of this initiative.? For Replicator to truly enhance our national defense and global deterrence capabilities, the DOD must ensure that capability is not forgotten in the rush for numbers and speed.? To do so, the DOD must work with the warfighters themselves and with industry to identify the missions that Replicator drones will serve.? Only then will the DOD be able to accurately project the capabilities needed on each system.

Additionally, the DOD should consider deploying a portion of DIU’s ~$1B in potential 2024 funding to contribute to Replicator. This DIU contribution would not only help to finance Replicator, but also demonstrate DIU’s commitment to the Replicator initiative, sending a strong signal to industry that Replicator is real, and industry should invest to participate. ?

“There is a clause in the appropriations bill for DIU which allows DIU to make a hedge or disruption portfolio for >$1B. Conceivably, you could get that money and use part of it for Replicator. If DIU is able to connect those dots, then it will be a very different ball game. In my opinion, DIU either fails on this one or they succeed. If they fail on this then they it raises questions on whether DIU should exist in its current form.” – Clint Hinote

The DOD, and DIU in particular, have their work cut out for them over the next 18-24 months. They have set an aggressive agenda and now must get to the hard work of execution. BCE’s Global A&D team will continue to monitor DOD’s progress against its objectives and advise our clients on how to navigate the uncertainty and opportunity that Replicator brings.?

Craig Belanger,?Joe Giandomenico,?Anirudh Suneel,?Ben Osterholtz,?Robyn Pirie,?Mark Kipphut,?Kristin Robertson,?Aaron Prupas,?Scott Bethel,?Martin J. Bowling,?Richard Mascolo, PMP, CISSP,?Jim Walker,?Tony Cothron,?Dennis Carroll,?Doug Reep,?Jerry Spruill