R-TOC Best Practices: Competitive Product Support
Area: Competitive Product Support
Best Practice: Total Systems Sustainment Program (TSSP)
Pilot Program: F-117
Initiative: The F-117 TSSP contract was designed to reduce sustainment and support cost for the F-117 fleet with no impact to the warfighter's combat capabilities. The focus of the contract was to eliminate duplicative support infrastructures and move the non-core weapon system integrator task from the government to private industry.
The key elements of this strategy are a performance-based sustainment contract between the government and the contractor, Lockheed Martin Aeronautics (LM-Aero). Under this approach the contractor assumes responsibilities in general administration, warehousing, spares procurement, repair decisions, and sustainment engineering tasks while the government retained its core responsibilities. Performance-based metrics were developed between the warfighter, the systems program office (SPO), and the contractor where all organizations could monitor contract performance with minimal manpower. This streamlined evaluation process allowed the government to relinquish its traditional role of oversight and institutionalized a role of insight.
The contract provides incentives to reduce TOC. The contract type is a cost plus incentive fee (CPIF), with an award fee feature, which allows the contractor to receive an incentive fee if the company meets the performance metrics and is on or below target cost. The contractor would also share with the government 50/50 on any cost under-run or over-run. Measurable results fit into three different categories: personnel savings, savings due to stabilized funding, and contract under-runs.
Benefits: To date the F-117 SPO has reduced its personnel count 76%, representing an eight-year savings of $82M. Second, through concurrence by ACC, the F-117 SPO adopted a stabilized funding arrangement that guarantees the contractor negotiated funds for each of the years of the contract in exchange for an additional $80M cost savings to the warfighter up front. The cost/savings-sharing aspect of the TSSP contract has motivated the contractor to implement several process improvements that have yielded cost under-runs in each of the first two years of this contract. These under-runs have given ACC and program management the flexibility to address unforeseen internal funding deficiencies.
ACC's portion of the underrun was $3.9M in FY99, $6.05M in FY00, $4.6M in FY01, and $6.0M FY02. These savings are reinvested in other R-TOC initiatives (such as the engine sustainment program) by the SPO subject to direction from ACC.
Area: Competitive Product Support
Best Practice: Contractor Logistics Support
Pilot Program: Integrated Target Acquisition System (ITAS)
Initiative: The principal element of the ITAS R-TOC approach is Contractor Logistics Support (CLS). The objective of the CLS contract is to improve system availability while reducing support costs. It is a fixed price contract with performance adjustment based on operational readiness (OR) rates of supported units. The initial contract covered the transition period from FY00-01, and a five-year follow-on contract was signed in December 01. A contingency option to the contract has also been exercised. The contractor is incentivized to reduce reliability and maintainability costs and provide continuous technology refreshment.
Under the contract, the contractor provides supply of parts, serves as item manager for ITAS-peculiar parts, depot repairs, and configuration management (CM) below the performance specification (line replacement unit) level. (The government provides CM above the line replaceable unit (LRU) level.) The $16M estimated cost for a technical data package was considered prohibitive, so the government has not purchased data. The primary incentive in the contract is for OR rate; a minimum requirement of 90% is established, with incentives for exceeding this rate and cost penalties for falling short.
The Program Manager's decision to rely on CLS was made following a Level of Repair Analysis (LORA) performed using the COMPASS model. Cost analyses of various options supported using CLS. There was no requirement for an A-76 study because there was no existing legacy support structure (organic depot, personnel, spares inventory). No organic depot is assigned to the ITAS, though the soldier still provides support at the unit level.
Benefits: Over the life of the system, the CLS concept is estimated to incur $300M in cost avoidances. Design improvements such as built-in test/built-in test equipment (BIT/BITE) and modular design have improved accessibility and reduced the need for organizational test equipment and special tools. The CLS contract also incentivizes the contractor toward 100% OR rates; the contractor has been able to maintain a 100% OR rate even during contingency operations.
Area: Competitive Product Support
Best Practice: Team Armor Partnership
Pilot Program: Abrams Tank System
Initiative: Team Armor Partnership (TAP) is a government industry partnership at Ft. Hood to provide improved logistics support through direct delivery of unique LRUs and subsystem repairable units (SRUs) for the M1A2 and M1A2 System Enhancement Program (SEP). It is a partnership between PM Abrams, TACOM, and GDLS. Under the agreement, GDLS is the depot level repair facility for M1A2 unique support, and M1A2 unique spares and repairs are provided by direct ship, EC/EDI methods. DLA awarded a long term contract with DVD provisions, which expanded coverage to include DLA-managed parts as well, in April 2001. The concept has been applied at the National Training Center and Ft. Polk, and has expanded to include the Wolverine (a mobile bridge system mounted on an M1A2 chassis) and Bradley vehicles. Future plans call for expanding the concept to other Army facilities and potentially to include FMS customers.
Benefits: Besides improving reliability and maintainability, this Partnership also reduces cycle time, increases readiness, reduces surcharges, and provides a simpler, retail-style supply system. For the DLA contract, benefits include reduction of lead time averages from 320 to 15 days and reduced government inventory.
Area: Competitive Product Support
Best Practice: Life Cycle Support Study
Pilot Program: Comanche
Initiative: Like many other developmental systems, the Comanche program office has launched a life cycle support study. The study will
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Determine and document Source of Repair and Core Logistics for all repairable items
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Include economical and analytical tradeoffs using "Best Value" of support between the organizations available and capable of performing the support
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Consider several other areas of support, including training support, technical publications, and supply support.
Phase One of the Life Cycle Support cost benefits analysis (Study) began in January 2001 and was completed in February 2002. Phase two of the study will cover Post Deployment Software Support (PDSS) and started in February 2002. Study teams have been formed to look at depot repair, supply management, publications, and training. The Army-approved COMPASS model is being used in these analyses.
Partnerships between Government and Industry will be formed to optimize each area of support requirements and to comply with OSD/Army guidance as well as US Laws. For example, organic (Government) depots and the original aircraft manufacturer are included in trades to determine which organization would provide the best overall value for depot level repair and overhaul (some combination of both will likely result). Organic depots will accomplish repair and overhaul on items where they provide best value in addition to all items identified as "Core." Similarly, the Original Equipment Manufacturer (OEM) will accomplish maintenance on items where they prove to be best value. Other areas traded include supply support, distribution, technical publications, training support, and others. "User Level" maintenance has not be considered for analysis under the study as it will be accomplished by the soldier. Operator and Maintainer Training will continue to be performed by the Training and Doctrine Command and also will not be analyzed.
Benefits: The results of the study, when completely analyzed and approved, will allow the Comanche Project Manager to tailor the weapon system life-cycle support program into a progressive, benchmark support system. Comanche aircraft support will be modeled after the best available support systems and will implement continuous improvements. A combination of Government and industry support will be utilized to accomplish support goals. The support system requires that reliability and performance improvements be accomplished through the blocking strategy and by technology insertion via Modernization Through Spares initiatives. Support improvements will be accomplished by process improvements following metric indicators that require increased Return On Investments and reduction in O&S costs.
Area: Competitive Product Support
Best Practice: Soldier Focused Logistics
Pilot Program: CH-47
Initiative: Cargo Helicopters is in the planning stage of a PBL initiative, termed Soldier Focused Logistics (SFL). When fully operational, SFL will:
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Improve quality and availability of spare repair parts to soldiers on the flightline
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Reduce dependency of field units on the historically under-funded Army Working Capital Fund (AWCF)
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Guarantee delivery and performance of spare components and repair parts
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Provide "forward looking" analysis tools and information systems for fleet management at all levels.
Benefits: SFL will relieve operational units of the burden to manage the financial aspects and minimize the complex record keeping required for Army Aviation Maintenance Management. This will be accomplished via the development and integration of revised maintenance processes, existing asset and information management technologies, and a centralized fleet management program. In short, SFL will allow unit commanders and their maintainers to concentrate on readiness and mission accomplishment without the restraints and concerns associated with the present system.
Area: Competitive Product Support
Best Practice: PBL Activities
Pilot Program: H-60
Initiative: The H-60 team is an active component of the team effort on four PBL initiatives. They are:
AN/AAS-44(V) Forward-Looking InfraRed (FLIR): An initiative with Raytheon Systems (McKinney, Texas) (in concert with Naval Aviation Depot [NADEP] Jacksonville through a commercial services agreement) covers the three major components of the system (hand control unit, turret unit and electronic unit). Award of the contract is anticipated shortly.
SH-60B Avionics: Signed in May 2002, this 42 national item identification number (NIIN) contract with Lockheed Martin Systems Integration has completed its five-month asset lay-in period. The first formal Performance Review Board was held in January 2003.
Dynamic Components: Also known as PBL-14, this initiative with Sikorsky contains 14 items. Significant improvements realized recently in Sikorsky's capacity/capability at its overhaul and repair facility have greatly improved the government's confidence.
Tip to Tail: A 1300+ NIIN initiative with the Maritime Helicopter Support Company (MHSCo) (joint venture teaming between Sikorsky and Lockheed Martin) is also under development. It includes the items covered by the Avionics and Dynamic Component contracts as well as nearly every other Navy-peculiar H-60 item. Confidence is high on both sides (government and contractor) that this complex program can come to fruition. Recent success with the Dynamic Component contract and a refreshed focus within the government has led to recently revised contract award date of mid-late May or early June 2003. Risk identification and feasibility analysis by the program office continues which will require several adjustments to the contractor's proposal and the government's Business Case Analysis (BCA).
Benefits: Benefits include reduced wait time, reduced inventory, requirements, and reduce O&S costs.
Area: Competitive Product Support
Best Practice: HIMARS Product Support Strategy
Pilot Program: Precision Fires Rocket and Missile Systems (PFRMS)
Initiative: As presently constituted, the Precision Fires Pilot Program includes legacy MLRS systems as well as the developmental HIMARS (a wheeled, as opposed to tracked, MLRS launcher). HIMARS, the original focus of this Pilot Program, has a Long Term Logistics Support IPT, which has explored various logistics support issues and developed a proposed HIMARS concept.
The proposed HIMARS product support concept represents a significant evolution from the original M270 MLRS launch vehicle (which provided for essentially all support tasks (initial provisioning, inventory management, war reserve stock, repair and overhaul, depot maintenance, etc.) to be performed or managed by organic sources and the current M270A1 (which retains most functions with the government but provides responsibility for inventory management, repair, status monitoring, database management, and a few other tasks to contractors). The proposed HIMARS management plan assigns most tasks to contractors and retains government responsibility for program management, initial provisioning, sustainment engineering, supply support oversight, and other oversight functions.
Benefits: The HIMARS product support concept was designed to be 100 percent compliant with existing guidelines, such as DoD acquisition regulations, limitations on contractors on the battlefield, and rules about core depot maintenance requirements. The new system is designed to reduce reparable costs by nearly half compared to the systems it is replacing. No change will be visible to the field units; they will interact exactly the same way with the supply and maintenance systems.
Area: Competitive Product Support
Best Practice: Life Cycle Management Program
Pilot Program: Guardrail/Common Sensor (GR/CS)
Initiative: The Life Cycle Management Program is an outgrowth of the discussions between the Guardrail/Common Sensor (GR/CS) program office and other stakeholders. Initial attempts by the program office to discuss development of a Guardrail-specific working capital fund for priority sustainment efforts, TOC reduction initiatives, and enhancements were not successful, but the various stakeholders were willing to discuss development of a methodology to prioritize work efforts among stakeholders. A GR/CS Life-Cycle Management Program IPT has been formed, which represents all the GR/CS stakeholders, including PM Aerial Common Sensor (ACS), CECOM, Forces Command (FORSCOM), Intelligence and Security Command (INSCOM), US Army, Europe (USAREUR), and the Directorate of Combat Developments (DCD). The objectives of the effort are to identify performance measures for primary mission equipment and ground station equipment, establish priorities for sustainment and modernization of all GR/CS systems, reduce duplicative efforts, and maintain visibility into the financial status of priority efforts. In other efforts under the PBL initiative, MOAs have been developed between the major using commands (FORSCOM, INSCOM, USAREUR) and the program office, and efforts are being made to develop performance agreements with all support providers.
Benefits: Anticipated benefits include more focused use of scarce O&S funds and more balanced consideration by the program office and users of near-term performance objectives and longer-term system improvement plans.
Area: Competitive Product Support
Best Practice: Combined Life Time Support (CLTS)
Pilot Program: F-16
Initiative: Combined Life Time Support (CLTS) is an F-16 program initiative to designed to provide an alternative approach to system sustainment. Prior to the implementation of CLTS, program sustainment costs were increasing because of the need for complex and frequent changes, the expense of requiring the OEM to maintain design and maintenance data, and the difficulty of maintaining and changing support equipment. The increasing frequency of DMS problems was imposing a large workload on Air Force personnel and the system's integrated software architecture meant that small changes could cause very large expenses.
Under CLTS, the contractor is responsible for proactive DMS management; a longterm FFP contract provides the contractor with the incentive and the opportunity to choose economical DMS fixes and incorporate R&M improvements. The contractor determines the timing and approach to DMS prevention and resolution and is required to resolve DMS before it impacts sustainment. The contractor is given CM control to support DMS changes.
Government and the contractor share material management responsibilities. The depot provides a single POC for users/customers, prioirity shipping instructions to the contractor; follow on spares approval, and management actions for parts shortages. The contractor is responsible for equipment repair, DMS management and total system performance, and maintenance of a systems maintenance database.
The contractor is required to accomplish repairs in accordance with performance based specifications and must guarantee 30-day turn-around time on repairs. Repairs and DMS fixes must also provide equal or better performance. The contractor is incentivized to improve reliability.
Benefits: The CLTS initiative has significant benefits for both government and the contractor. From the government's viewpoint, benefits include keeping the "core" workload organic, achieving systems sustainment "at a known cost," guaranteed repairs, DMS resolution, and opportunity to partner with the contractor. Benefits to the contractor include an enhanced business opportunity, support of a company product line, an opportunity to promote design changes and increased reliability, and an opportunity to partner with the government.
