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PRESENTATION TO: NAVY BEST VALUE ANALYSIS SEMINAR NAVAIR ASSESSMENT OF ORGANIC VS. COMMERCIAL REPAIR

PRESENTATION TO: NAVY BEST VALUE ANALYSIS SEMINAR NAVAIR ASSESSMENT OF ORGANIC VS. COMMERCIAL REPAIR. MESSRS. ROSS HAINES, DOUG MONIN AND TODD MELLON NAVAL AIR SYSTEMS COMMAND 30 MAY 2001. OUTLINE. NAVAIR RESPONSIBILITIES ORGANIZATION DEPOT LEVEL ACTIVITIES LOCATIONS TITLE 10 CONSTRAINTS

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PRESENTATION TO: NAVY BEST VALUE ANALYSIS SEMINAR NAVAIR ASSESSMENT OF ORGANIC VS. COMMERCIAL REPAIR

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  1. PRESENTATION TO:NAVY BEST VALUE ANALYSIS SEMINARNAVAIR ASSESSMENT OF ORGANIC VS. COMMERCIAL REPAIR MESSRS. ROSS HAINES, DOUG MONIN AND TODD MELLON NAVAL AIR SYSTEMS COMMAND 30 MAY 2001

  2. OUTLINE • NAVAIR • RESPONSIBILITIES • ORGANIZATION • DEPOT LEVEL ACTIVITIES • LOCATIONS • TITLE 10 CONSTRAINTS • TEAMING/PARTNERING • BEST VALUE ANALYSIS • SUCCESS STORIES • FIRST • GILS • APU

  3. NAVAIR CORE PROCESSES…. . . . WE EXECUTE (ON BEHALF OF THE USER) PERFORM ACQUISITION MANAGEMENT FOR THE DEVELOPMENT, PRODUCTION, AND IN-SERVICE SUPPORT OF AIRCRAFT AND WEAPONS SYSTEMS TEST AND EVALUATE AIRCRAFT, WEAPONS AND INTEGRATED SYSTEMS PROVIDE FOR THE REPAIR AND/OR MODIFICATION OF AIRCRAFT, ENGINES, SYSTEMS AND COMPONENTS PROVIDE FOR IN-SERVICE ENGINEERING AND LOGISTICS SUPPORT CONDUCT EFFORTS FOCUSED ON THE ADVANCEMENT OF TECHNOLOGY, RESEARCH AND DEVELOPMENT AND DELIVERY OF SOFTWARE / HARDWARE PRODUCTS ACQUISITION MANAGEMENT TEST AND EVALUATION REPAIR / MODIFICATION IN-SERVICE ENGINEERING TECHNOLOGY, R&D, HW/SW PRODUCTS

  4. NAVAL AVIATION SYSTEMS TEAM REPORTING RELATIONSHIPS NAVY ACQUISITION EXECUTIVE ASN(RD&A) CNO CHIEF OF NAVAL OPERATIONS NAVSUP PEO(A) RADM S. ENEWOLD AIR ASW, ASSAULT & SPECIAL MISSION PROGRAMS NAVAIR HQ VADM J. DYER NAVAL AIR SYSTEMS COMMAND HEADQUARTERS NAVICP RADM M. FINLEY NAVAL AVIATION INVENTORY CONTROL POINT OPERATING AGREEMENT PEO(W) RADM J. CHENEVEY CRUISE MISSILES PROJECT & UAV JOINT PROJECT NAVAIR WARFARE CENTERS NAVAIR DEPOTS RDML HEILMAN PEO(T) RADM J. GODWIN TACTICAL AIRCRAFT PROGRAMS NAVAL AIR SYSTEMS COMMAND SLIDE UPDATE 5SEP97 PEO(JSF) MGEN M. HOUGH JOINT STRIKE FIGHTER SUPPORT RELATIONSHIPS

  5. FOCUSING THE INDUSTRIAL ENTERPRISE • NOT JUST THE NADEPS….ONE COHESIVE INDUSTRIAL TEAM • ORGANIC NAVY • INTER-SERVICE • COMMERCIAL INTERSERVICE FLEET ORGANIC NAVY COMMERCIAL ONLY ONE REASON TO EXIST…FLEET SUPPORT! BDS 03/06/01

  6. MAJOR INDUSTRIAL ACTIVITIES

  7. DEPOT LEGISLATIONUNITED STATES CODE TITLE 10 Sec 2460 Definition of depot-level maintenance and repair • DLM • Reporting Sec 2461 Commercial or Industrial type functions: Required studies and reports before conversion to contractor performance Sec 2464 Core Logistics Capabilities • CORE Sec 2466 Limitations on the performance of depot-level maintenance of material • 50/50 Sec 2469 Contracts to perform workloads previously performed by depot-level activities of the DoD: requirement of competition • $3 mil Sec 2469a Use of competitive procedures in contracting for performance of depot-level maintenance and repair workloads formerly performed at certain military installations • Procedures Sec 2470 DLM, authority to compete for other Fed agency workload • Authority Sec 2472 Management of depot employees • End strength Sec 2208 Working capital funds • Public/ • Private Partnering Sec 2471 Persons outside the DoD: Lease of excess depot-level equipment and facilities by Sec 2474 Centers of industrial and technical excellence: Designation; Public-private partnerships Sec 2553 Articles and services of industrial facilities: Sale to persons outside the DoD Sec 2667 Leases: non-excess property of military depts. • BRAC Sec 2687 Base closures and realignments

  8. STATUTORY REQUIREMENTS • TITLE 10, SECTION 2464 REQUIRES: • PERFORMANCE OF CORE LOGISTICS WORKLOAD AT GOVERNMENT OWNED/OPERATED FACILITIES. • ORGANIC CAPABILITY NLT 4 YEARS AFTER IOC. • REPORT TO CONGRESS FOR PROPOSED PRIME VENDOR CONTRACTS: • DESCRIBING COMPETITIVE PROCEDURES TO BE USED • ANALYSIS OF COSTS & BENEFITS • INTENT TO CONFORM WITH SECTION 2466 (50/50 LAW) • MEASURES TAKEN TO ENSURE THAT CONTRACT DOES NOT VIOLATE SECTION 2464 (CORE LOGISTICS CAPABILITY)

  9. OTHER LAWS THAT AFFECT PARTNERING AT PUBLIC DEPOTS • SECTION 2466: • MANAGE BY WORKLOADS/FUNDING NOT CIVILIAN STAFFING • LIMIT DEPOT MAINTENANCE CONTRACTING BY NON-GOVERNMENT PERSONNEL TO 50% OF FUNDING • SECTION 2469: • APPLIES TO WORKLOAD VALUED AT $3M OR MORE • PUBLIC/PRIVATE COMPETITION TO MOVE TO PRIVATE SECTOR • MERIT-BASED PROCEDURES TO MOVE TO OTHER PUBLIC DEPOTS

  10. NO CORE CONCEPT “APPROPRIATE SITE AT BEST VALUE” BUSINESS DECISION MILITARY DECISION COMMERCIAL ITEM? CORE PUBLIC NO PLATFORM REQUIRED FOR WAR ? NON-CORE YES YES NO BEST VALUE? YES PRIVATE

  11. REDUCE TOC SEEK WAIVERS PBL/DVD/VPV/IPV/ALS/TLS CORE 50/50 $3M DEPOT MAINTENANCE CHALLENGE TITLE 10 ACQUISITION REFORM

  12. AND COMMERCIAL VS ORGANIC REPAIR PARTNERSHIP (TOTAL LOGISTICS SUPPORT) WAREHOUSING WARRANTIES TRANSPORTATION REQUIREMENTS DETERMINATION ENGINEERING/ TECH SERVICES + CONFIGURATION CONTROL VS. CONSUMABLE PIECE PARTS COMMERCIAL REPAIR ORGANIC REPAIR REPAIR/OVERHAUL/ REPLACE DECISIONS SERIAL NUMBER TRACKING OBSOLESCENCE MGMT • COOPERATIVE GUARANTEED AVAILABILITY • COMPETITIVE • ADVERSARIAL TECHNOLOGY INSERTION • RESULTS: • LOWER RESPONSE TIME • IMPROVED RELIABILITY • LOWER COST OF OWNERSHIP

  13. BACK-UP

  14. TITLE 10 USC CHAPTER 146 SECTION 2460 DEPOT LEVEL DEFINITION MAINTENANCE OR REPAIR REQUIRING OVERHAUL, UPGRADING, OR REBUILDING TESTING AND RECLAMATION OF EQUIPMENT REGARDLESS OF LOCATION SECTION 2461 REPORTING REQUIREMENT DELINEATES THE PARAMETERS OF THE REPORT AND WHEN TO SUBMIT TO CONGRESS VIA SECNAV. SECTION 2464 CORE LOGISTICS REQUIRES IDENTIFICATION AND MAINTENANCE OF A CORE LOGISTICS CAPABILITY & ASSOCIATED FACILITIES. REQUIRES ESTABLISHMENT OF AN ORGANIC DEPOT MAINTENANCE CAPABILITY NLT FOUR YEARS AFTER IOC. PROHIBITS NON-GOVERNMENT PERFORMANCE OF CORE WORKLOAD. AUTHORIZES SECDEF WAIVER WITH CONGRESSIONAL NOTICE.

  15. TITLE 10 USC CHAPTER 146 SECTION 2466 50/50 PUBLIC/PRIVATE MANAGE BY WORKLOADS / FUNDING NOT NON-GOVERNMENT WORK CIVILIAN STAFFING LIMIT DEPOT MAINTENANCE CONTRACTING BY NON-GOVERNMENT PERSONNEL TO 50% OF FUNDING SERVICE SECRETARIES MAY WAIVE WITH CONGRESSIONAL NOTICE SECTION 2469 $3M RULE PUBLIC/PRIVATE COMPETITION TO MOVE $3M WORTH OF DEPOT MAINTENANCE WORKLOAD FROM ORGANIC TO COMMERCIAL; “MERIT BASED” ANALYSIS FOR ORGANIC TO ORGANIC SECTION 2474 PARTNERING DESIGNATES EACH DEPOT-LEVEL ACTIVITY AND TECHNICAL EXCELLENCE IN RECOGNIZED CORE COMPETENCIES ENABLES PUBLIC-PRIVATE PARTNERSHIPS TO MAXIMIZE CAPACITY UTILIZATION

  16. WHAT CORE IS --DUSD(L) DEFINITION “The capability maintained within organic Defense Depots to meet readiness and sustainability requirements of the weapons systems that support the JCS contingency scenario(s). Core exists to minimizeoperational risks and to guarantee required readiness for these weapons systems. Core depot maintenance capabilities will comprise only the minimum facilities, equipment and skilled personnel necessary to ensure a ready and controlled source of required technical competence. Depot maintenance for the designated weapon systems will be primary workloads assigned to DoD Depots to support Core depot maintenance capabilities

  17. Enclosure (1) Gather / refresh data, conduct core analysis, (10USC2464) then conduct best value analysis as required. Would mixed ISOR exceed (10USC2466) best value? capability Anticipate above-core commercial Which ISOR required? workload? Is core strategy would be (13) ISOR? 50% (10) (11) (12) Yes Yes No Organic (9) No No Yes (10USC2469) organically? Equipment currently postured Mixed O O (16o) Yes No Organic process. Begin DMI (7) Yes (10USC2466) commercial ISOR commercial SOR? under mixed or Would Navy exceed 50% best value? organically? Which ISOR Equipment currently strategy would be postured (14) (15) (10USC2469) (16m) No No Mixed indicated? Organic workload (17o) move Develop/procure commercial data. Commercial No AIR-6.4.2 identify coordinating NADEP for ISOR data development. Yes Yes Input ISOR decision logistics processes and acquisition to applicable documentation. (6) (8) indicated? Organic workload move (17m) (10USC2469) organically? Equipment currently (16c) postured No No (10USC2469) Workload exceeds $3M? (31) (18o) No Yes preliminary core provide results. AIR-6.1.1.4 analysis and perform Yes (10USC2464) funding profile Update PPBS Yes (10USC2469) Workload exceeds $3M? (18m) No (5) ISOR approval letter for new or changed strategy. (10USC2469) (30) Workload exceeds $3M? (18c) No analysis. Conduct merit based Yes ROM/ budget establish wedge for stand-up. depot PMO (19o) (29) Yes ISOR previously decided (4) merit based &/or public/ competition. analysis Conduct private . Yes per Ref (b). JG-DM/IPMB conflicts resolve No Yes; portion Merit to a new ISOR? (20o) private/ public competition. Conduct options for pre-priced commercial contract data. PMO (19m) (28) (19c) No (3) Merit to workload (20m) moving ? No; new Yes No Yes Continue established organic ISOR decided for this ISOR previously equipment? (2) concur? Does MISMO (27) E N (32) Initiate new 100% organic ISOR strategy. Initiate 100% commercial ISOR strategy. Competition results? (20c) Continue established organic ISOR. Commercial Implement ISOR decision; monitor implementation appropriate mixed commercial ISOR strategy. Initiate organic/ equipment requiring coordination on ISOR decision. PMO begin (21) Organic Organic Continue process. DMI Est’d New E N (25) (23) (22) (24) (26) (1)

  18. PERFORMANCE BASED LOGISTICS Definition: A single supplier provides material to meet a customer’s requirements without the intervention of, or need for organic inventory managers or intervening storage, material handling, and transportation systems while providing increased product availability, reliability, technology insertion, and obsolescence management at a lower total cost to the Fleet Customer and the Navy. General business approach: • The PBL must provide the fleet with increased reliability and/or availability at the same or a reduced cost

  19. PBL BACKGROUND PBL Supplier Roles Configuration Control Warehousing Transportation Requirements Determination Guaranteed Availability Serial Number Tracking Engineering/Tech Services Consumable Piece Parts Obsolescence Management Technology Insertion Repair/Overhaul/Replace Decision Warranties Reegineering the Supply Chain Results Lower Response Time Improved Reliability Lower Cost of Ownership

  20. Aviation Performance Based Logistics Initiatives Awarded IWSTPBLEAD H-53 HNVS FLIR Oct-01 H-53 Rescue Houst FY02 H-53 Main Blades FY02 H-53 MRH Damper FY02 S-3 OK-497/645 Oct--01 S-3 AYK-23 Feb-02 S-3 Flight Computer Jul-02 S-3 Actuator FY02 S-3 Flight Servos FY02 F/A-18C/D Ailerons FY02/03 F/A-18C/D AMAD FY02/03 F/A-18C/D ECS Valve FY02/03 F/A-18C/D Actuators FY02/03 F/A-18C/D Fuel Cells FY02/03 F/A-18C/D LEF Servo FY02/03 F/A-18C/D TEF Servo FY02/03 AV-8B HUD Dec-01 AV8B GTS FY02/03 AV8B GINA FY02/03 AV8B LST FY02/03 AV8B NAVFLIR FY02/03 F-14 ADAC FY02 F-14 IRSTS FY02 F-14 CCTVS FY02 F-14 ASQ-197 FY02 F-14 Wheels/Brakes FY02/03 E-2C Improved IFF Jun-02 E-2C MFCDU Jul-02 E-2C APS-138 Jul-02 E-2C PTID GTWT FY02 E-2C ESM Nov-02 E-2C NP2000 Prop Nov-02 E-2C VCS Nov-02 E-2C AN/ALR-73 FY03 V-22 APU FY02/03 V-22 Aircraft FY03 Engines F404 Portal FY02 Engines F402 DECU FY02/03 Engines F402 Thermocouple FY02/03 Engines F404 A/B Control FY02/03 Engines F404-402 Fuel Control FY02/03 Engines T404-400 Fuel Control FY02/03 Engines T58 Fuel Control FY02/03 Engines T64 Fuel Control FY02/03 Engines T64-416A Control FY02/03 Engines T64-419 Control FY02/03 Engines TF34 Fuel Control FY02/03 SE Bomb Hoist FY02/03 SE CV Air Starter FY02/03 SE AWM-103 ARM T/S FY02/03 SE JETI FY02/03 EA-6B MRU Oct-01 EA-6B ASW-40/41 FY02/03 EA-6B Band 7/8 Mod FY02/03 EA-6B Band 9/10 Xmtr FY02/03 EA-6B USQ-113 FY02/03 EA-6B ICAP III Upgrade FY02/03 EA-6B Low Band Xmtr FY02/03 EA-6B ASN-123 FY02/03 IWSTPBLEAD F/A-18C/D FIRST Apr-01 F/A-18C/D SMUG Apr-01 F/A-18C/D APU Sep-01 F/A-18C/D HUD/DDI Sep-01 F/A-18C/D GCU Sep-01 F/A-18C/D CVRS (Plus) Sep-01 F-14 DFCS Mar-01 F-14 FMC Jul-01 F-14 APG-71 Aug-01 F-14 HUD Sep-01 E-2C GRIIM RepR Mar-01 P-3 LG Piece Parts Mar-01 P-3 EP-3J Mod Mar-01 P-3 APS-137B Sep-01 H-1/H-46 Attitude Indicator Jul-01 H-1/H-46 H-1 Generator Aug-01 H-1/H-46 H-1 THCDP Aug-01 H-3 Comm. Bit and Piece Apr-01 H-53 Sale of A/C Parts Jun-01 H-53 10-item PBL Jun-01 H-60 AVIONICS Apr-01 H-60 H-60 FLIR Apr-01 H-60 17 Item PBL Jul-01 V-22 DEU Jun- 01 V-22 DMS Jun- 01 V-22 Flat Panel Jun- 01 V-22 Swashplate Jul-01 IWSTPBLEAD H-60 Tip To Tail PBL Dec-01 Common ALQ-126B FY02 Common GPWS FY02 Common AMC&D FY02 Common ARC-159 FY02 Common ARC-182 FY02 Common ARA-63 FY02 Common ASH-39 FY02 Common ASN-139 FY02 P-3 Landing Gear Nov-01 P-3 AIP Nov-01 P-3 BMUP Nov-01 P-3 ARC-161 Dec-01 P-3 EDC Dec-01 P-3 IRDS FY02 P-3 MAD FY03 P-3 APG-66 FY03 P-3 AFM FY03 P-3 Prop FY03 H-1/H-46 UH-`1N FLIR Oct-01 H-1 Starter Feb-02 AH-1W Gearbox FY02/03 H-1 FLIR FY02/03 H-46 APU FY02 H-46 Gideon FY02 H-1 ICU-800 FY02 H-46 ECCS FY02/03 Award IWSTPBLDate F-18 ARF Pre-96 Common RINU Sep-96 H-46 AHRS Sep-97 P-3 SSIP Oct-97 SE CASS Dec-97 Engines T-700 Sep-98 Common SCADC Sep-98 T-2 Cockpit Mar-99 H-60 Damper Mar-99 Common NGS Jul-99 F-18/F-14/AV-8B SMS Sep-99 Common ALR-67(v)3 Oct-99 EA-6B EFIS Dec-99 SE Deval AHE Dec-99 SE Legacy GSE Feb-00 SE CASS CSP May 00 Multiple APU's May-00 SE ITT May-00 SE QEC Jun-00 SE Cryo Jun-00 V-22 NAVFLIR Jun-00 SE CRATE Jun-00 SE Gas Detector Jun-00 SE Helping Hand Jun-00 H-53 Main Rotor Head Jul-00 H-53 Main Gear Box Jul-01 H-2 A/C Parts Aug-00 E-2 EMDU Aug-00 F-18 CVRS Sep-00 Common ARC-210 Sep-00 F-14 LANTIRN Sep-00 SE Helping Hand Plus Oct-00 V-22 A/C DLRs Jan-01 SE EWSE Jan-01 SE EOTS Jan-01 EA-6B Main Wheels Feb-01 Common Tires Feb-01 SE Crash Cranes Feb-01 E-2 APS-145 Feb-01 Pending FY02 and Out Pending FY01 IWSTPBLEAD Common ASN-50 May-01 Common PRC-149 Jun-01 Common TCAS Jun-01 Common ALE-50A Aug-01 Common APR-39A v2 Sep-01 Common TAMMAC-DMC Sep-01 Common TAMMAC-AMU Sep-01 Engines J52 Turbine Vanes Apr-01 SE IFFITTS Mar-01 SE RSTS PBL Sep-01 SE H1 8500C Sep-01 S-3/C130 Windshields Mar-01 S-3/C130 Electron Tubes May-01 C130 C-130 APU Jul-01

  21. PBL - THE STRAIGHT SCOOP... • What PBL is... • Reengineering of the supply system. • PBL is a means to improved component reliability. • PBL is a means to improve supply responsiveness. • PBL is a means to reduce supply chain management costs. • PBL is a means to reduce obsolescence risks. • PBL is transparent to our fleet customers. • What PBL is not… • PBL does not mean a system will go O-D. • PBL is not a means to remove workload from organic repair depots. • PBL does not mean that we give carte blanche configuration management authority to a commercial supplier. • PBL does not create a parallel supply system. Improved Readiness at Reduced Costs!

  22. PBL DEFINITIONS • PBL-Mini-Stock Point (PBL-MSP). Navy owns the inventory…contractor receives, stores, issues, and may also repair, the material… “MSP-Plus” includes a negotiated level of requirements determination (MIN/MAX). • PBL-Organic (PBL-O). An arrangement with an organic activity (normally via MOA) to procure, repair, stock and issue material. • PBL-Commercial (PBL-C). An arrangement where commercial items are supplied by a contractor. Customer requisitions are automatically routed through ITIMP directly to the contractor as a delivery order. • PBL-Partnership (PBL-P). An arrangement between a contractor and Navy such that the Navy performs a portion of support required by and for the contractor. For example, the contractor may sub-contract the Navy to perform maintenance support at an organic depot. This can be highly beneficial when addressing Core maintenance issues, in that the Navy is able to retain Core capability while acting as a “sub” to the contractor. • “Full” PBL. A contractual arrangement where the contractor manages (and may also own) the inventory, determines stockage levels, typically repairs NRFI material, and is required to meet specific performance metrics. Requisitions still flow through ICP, and ICP pays the contractor for performance but bills customers traditionally. Reliability improvements, technology insertion and reduced obsolescence may be some of the inherent benefits of a Full PBL. The contractor usually is given Class II ECP authority and in some cases may also have configuration control. Additionally, Logistics Engineering Change Proposal (LECP) arrangements will be considered a subset of this category if they contain supply support clauses that fall under the definition noted above. • Total Logistics Support. A most robust form of PBL (typically referred to as Contractor Logistics Support (CLS)), where the contractor manages most or all facets of logistic support (i.e. ILS elements), including inventory levels, maintenance philosophy, training manuals, PHS&T, full configuration control, support equipment, etc.

  23. 50/50 PIE CHARTFY00 (ALL NAVY) 54.9% 45.1%

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