Air Force Partnering with Industry

May 2004

Developing, Fielding, and Sustaining America’s Aerospace Force

Air Force Materiel Command

What are Air Logistics Centers?What are Air Logistics Centers?

Oklahoma City ALCTinker AFB OK

Oklahoma City ALCTinker AFB OK

Warner Robins ALCRobins AFB GA

Warner Robins ALCRobins AFB GA

Ogden ALCHill AFB UTOgden ALCHill AFB UT

Highly industrialized complexes focused on providing world class, comprehensive “one-

stop” product support, depot-level maintenance and repair, and supply chain management of all current and future USAF air and space systems

Depot MaintenanceOrganic Scope of Operations

• FY03 Budget of $6.4B– 22,008 Personnel (End of Nov 02, Includes Military)

• ALCs Repair/ Major Overhaul 3 Aircraft Per Day

• Complete 13 Engines & Modules Daily (3,300 PY)

• ALCs Turn Out 1,328 Components Per Day

1.7M Units760K Units

61%

9% (Other)

1%3%26%

25 ALC Supply Chain Management Organizations

Organic & Contract Depots

DEPOTDEPOT

Supply Scope of Business

AIR FORCEAIR FORCE ARMYARMY NAVYNAVY FMSFMS

$3.3B Repair $1.4B Buy

157,000 Line Items

1%

Manufacturers

Source: FY03 sales data came from Keystone.

TRANSCOM 4%Other federal agencies,

aircraft and missile procurement 5%

Net Sales$5.76 Billion

“Depots must be revitalized, transformed, world class…” - AF Depot Strategy

Depot Maintenance Strategy

AF Depot Maintenance CompetenciesAF Depot Maintenance Competencies

Landing Gear

Engines

Avionics/Software

Weapons/Munitions

Land Based Strategic Missile

Systems

Repair Capabilities

• Strategic Airlift/Refueling A/C• Bomber Aircraft• Fighter Aircraft• C4ISR Aircraft• Strategic Land-based Missile

Key Processes • Airframe Overhaul and Repair • Engines • Software Development• Landing Gear• Hydraulic Systems• Avionics/Electronics • Oxygen Systems • SLBM Overhaul Repair• Weapons & Air Munitions

Airframe Repair

We must transform our culture and business practices to stay competitive!More responsive – Less cost - Superior quality

Enablers

Oxygen Systems

HydraulicSystems

Process improvementsInfrastructure improvementsEffective financial processes

Partnering

• Cardinal goal: enhanced warfighter support• Important considerations:

– Improved readiness– Affordability– Technology transfer and sustainment– Mutual benefit

AFMC Partnering Philosophy

Partnerships are:Focused on the cardinal goalLong term—lifecycle sustainment vehicleProgram (e.g., F/A-22) dependent,Technology (e.g., composites, software) tied, or Workload independent (e.g., education, redevelopment)Not mere contracts—multipartite and flexibleCrafted on a common business planOperated through diverse implementation agreements with a variety of business instruments

History: Common law Historic GFE/GFS effort ’95 BRAC teaming 10 USC 2474

AFMC Partnership StructureAFMC Partnership Structure

System X Partnership

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• Where we are today—FY03 Summary:– 29 active depot maintenance partnerships

• Workshare—13 • Teaming—1

– $4.5B estimated life cycle revenue– 1.5 million core capability hours

• 50 new partnerships under development– Growth across weapon systems and commodities

Demographics

• Direct Sales—13• Lease—2

• FY 2002, Public-Private Business Arrangements– Change to 10 USC 2563(c)(1)(B) permits claims for

damages caused by Government poor contract performance

• Proposal: FY 2005-Depot Partnering – Repeal of the sunset clause for the partnering

exemption from 50-50, 10 USC 2474(f)

Key Legislative Changes

Current Partnership Examples

Current Partnership Examples

• Northrop Grumman– B-2 Composites (Direct Sales)

– Missiles: ATE rehost, update GPS, Propellant System Rocket Engine (Workshare)

– J-STARS (Workshare)

• Alliant Techsystems– F-22 composite parts (Direct Sales)

– Aerospace x-ray (In-kind use transaction)

• Lockheed Martin – F-16 FCC - Italy (Workshare & Direct Sales)

– F-16 block 40 & 50 software, avionics (Workshare)

– LANTIRN (Workshare)

– F/A-22 sustainment (Various)Innovation & Excellence

Current Partnership Examples

Current Partnership Examples

• Boeing– C-17 landing gear, power systems, hydraulics, avionics (Direct Sales)

• Triumph Air Repair– C-17 APU (Various)

• Goodrich– F-16, F-15, KC-135 and C-17 landing gear (Various)

• Northwest Machine & Manufacture– Complementary expertise for surge and other DoD work (Various)

• Honeywell– Auxiliary Power Units / Electronics (Various)

• Utah System of Higher Education

– Cooperative tech & prof training/ education

Legend:

Executing work

IA in place

Developing IAs

• Overall Product Support– C-17– F/A-22– F-35

• Specific Industrial Base Integration – Centers of Industrial and Technical Excellence

Key Growth Areas

• Defining “True Partnership”• Meet Title 10 & Best Value• Establish within RFP• Assign clear responsibilities• Develop depot technical data• Enable private investment• Use existing policies• Involve OEMs

Key Issues

Current StateCurrent StateCurrent StateCurrent State Desired StateDesired StateDesired StateDesired StateVariabilityVariability

• Share risk & responsibilities• Maximize collaboration -teaming• Share best practices• Infuse technology• Enable best value solution• Recognize depots have improved

How Industry Can Help

We must transform our culture and business practices to stay competitive!More responsive – Less cost - Superior quality

• High visibility, fast pace, new territory

• Opportunities often require a tailored approach

• Intelligent partnering can result in cost effective support within statute, policy, and strategies

Summary