OC-ALC Depot Partnering 24 Feb 04

1. Air Force Materiel Command Developing, Fielding, and Sustaining America’s Aerospace Force OC-ALCDepot Partnering24 Feb 04 OC-ALC/MAN DSN: 336-7096 I n t e g r i t y - S e r v i c e - E x c e l l e n c e

2. Why Partner? Organic Depot Maintenance Perspective • Perform work related to core competencies • Improved utilization of underutilized capacity • Private sector use of excess plant and equipment • Reduce cost of ownership • Reduce the cost of products or services • Leverage private sector investment • Plant and equipment recapitalization • Commercial business ventures • Speed integration of innovative repair technologies • Proven track-record for achieving efficiencies in infrastructure • Achieve capacity building growth and development through the use tailored public-private partnerships -- Improved War Fighter Support --

3. Stakeholder Objectives • Warfighter: • Ready and available weapon systems • Win war now & in the future at reduced ownership cost • Single Manager: • Acquire best value weapon systems for warfighter • Sustainment Manager: • Sustainbest value weapon systems for warfighter • ALC • Perform “work” providing knowledge, skills, abilities, and other resources supporting core logistics capabilities • Prime Contractor: • Meet the desires of all customers - reputation • Provide user with superior and reliable combat capability • Earn a reasonable profit / return for shareholders Compatible NOT Competitive

4. Partnering Considerations • Must comply with existing statutory requirements • Core • AFI 63-107 (SORAP) • 50/50 certification required • Must comply with AF approved AFMC depot strategy • Benefits to AF and OEM • Partnerships within the TRC concept only • Core competencies as designated by CITEs • Full cost recovery--compliance with financial policies in AF and DoD • Union • Risk: Cost/ Schedule/ Performance

5. Partnering Constraints • Current Partnering Approval Process • Concept approval through HQ AFMC/CC or SAF/AQ depending on dollar value of efforts • ALC/CC approval for efforts under $10M over life of partnership • Timeliness of approval process • Title 10 U.S.C. 2466 (50/50) Law • Modification made to law to allow for partnerships designated under 10 U.S.C. 2474 CITE law and where the contractor is operating at an organic CITE facility • No exclusion for partnerships where the contractor is outside the organic CITE facility • Sundown clause end of FY05 • Legal Liability • Contractor can only recover damages via the liability clause in the prime contract with the U.S. Government and not the ALC activity performing the work under the partnership • Privity of Contract issues with partnering efforts between the sub-contractor of the prime contractor

6. OC-ALC Partnering Efforts Past Partnerships: • Organic Software and Northrop Grumman B-2 Depot Maintenance Software (DMS) Partnership • Total Value $2.8M Current Partnerships: • Organic Propulsion Production and Lockheed Martin Propulsion Business Area (PBA) • F100, TF39, T56 Engines • Total Value $10.1B over 15 years • LMKAC Portion $2.7M

7. OC-ALC Partnering Efforts Current Partnering Efforts: • OC-ALC & Pratt Whitney F100 Partnership • HQ AFMC/CC approved concept to proceed with partnership (Mar 02) • DSA for FMS Engine Test Cell (Apr 02) • OC 1st engine tested in Sep 02 • GFS/S agreement for Eddy Current (Apr 02) • Eddy Current work began in Aug 02 • Leasing arrangement for Special Technologies Coating Facility in B3001 (Apr 02) • PW spray booth operational in B3001 in Oct 02 • Follow-on efforts include Management and Project IPTs to discuss future phases of the partnership • F100-229, F119 JSF

8. OC-ALC Partnering Efforts Current Partnering Efforts Continued: • C-17 Core Partnership • DSPA signed by OC-ALC/CC (Aug 02) • Working Abbreviated SORAP • Potential Core Workloads for FY03-09: • Hydraulics: 233,624 • Instruments: 75,347 • Currently working Depot Activation Funding Issues

9. OC-ALC Partnering Efforts Potential Partnering Efforts: • Organic Software and Boeing and Bomber Software Development (B-52) • Initial partnering discussions/negotiations (Apr 02) • OC-ALC and General Electric Strategic Alliance Team (SAT) Partnership • Strategic Direction Document Signed in Feb 03 for 8 Phase 1 efforts regarding F110, F108, F101 Material Support, and Technical Training • MOU signed 11 Aug 03 • OC-ALC and Standard Aero C-130J Engine Partnership (AE2100) • Strategic Direction Document currently under development

10. Partnering in a nutshell • Win for Warfighter • A weapon system—ready when he needs it • Win for Acquisition Offices • Single-point accountability to maximum extent practicable • Optimum solutions for weapon system balanced with overall Air Force objectives • Win for Prime Contractors • Utilization of existing & new organic investments • Profits / reputation associated with partnerships • Win for Air Force ALCs • Workloads that help maintain core competencies Partnering must be aWin / Win

11. Summary • OC-ALC is actively pursuing partnerships to achieve the best value support for the warfighter • Have utilized various partnering methods • Continuing to seek innovative concepts in dealing with partnering constraints • Partnering plans have been incorporated into Center Strategies • Result can provide a better level of service on a more cost effective basis • Helps to answer challenges of financial limitations in the public sector’s resources Public-Private Partnerships must combine best skills and capabilities of each, to better serve our customer

12. TEAM TINKER Questions?