Stryker Supply and Maintenance Contractor vs Organic Logistics Support Cost Analysis

1. Stryker Supply and Maintenance Contractor vs Organic Logistics SupportCost Analysis 14 April 2004

2. Background Purpose Approach Parameters Alternatives Assumptions Cost Elements Methodology Results/ Summary Recommendation to ASARC Business Case Analysis Agenda

3. Memorandum for Secretary of the Army, Defense Acquisition Executive, 16 November 2000: “… Within nine months and before committing to organic logistics support, the Army will provide a cost effectiveness analysis of logistic support options to include full contractor support along with the Army’s recommendation for a logistic support concept. Within three months the army will provide me with a plan for developing this cost effectiveness analysis.” PM-BCT requested AMSAA perform an independent cost analysis of the logistics support options at the 22 July 2003 Stryker National/Depot Maintenance IPT meeting Background

4. Purpose • Provide an independent cost analysis for Stryker Maintenance and Supply Logistics Support Alternatives. These alternatives address Contractor and Organic logistics support for a 20 year life cycle of the following Stryker variants: • Maintenance: National Level of Stryker Unique Class IX Parts • Supply: National/Field Level of All Class IX Parts • Fire Support Vehicle- FSV • Engineer Squad Vehicle- ESV • Medical Evacuation Vehicle- MEV • Anti-tank Guided Missile Vehicle- ATGM • Infantry Carrier Vehicle- ICV • Reconnaissance Scout Vehicle- RV • Mortar Carrier- MC • Command & Control Vehicle- CV Supporting MS III Decision

5. Research Current Systems / Review Past Studies Determine Cost Elements Data Calls Develop Five Logistics Alternatives Coordinate with ATEC for COMPASS results Update IPT Members of Data Voids Estimate Costs for Each Alternative Approach

6. Estimate will be for a 20 year life cycle FY04 constant dollars The Stryker is an Army Core System Study supports 8 of 10 Stryker variants (not to include NBCRV & MGS) Fielding to 6 Brigades Five alternatives Anniston is the maintenance depot Two-Level Maintenance Concept No impact to field level requisition process Parameters

7. Logistics Alternatives

8. ORGANIC Logistics Alternative SUPPLY MAINTENANCE • Stryker Unique Reparables • Common WS Reparables Army Depot [Anniston] • Consumables Other Depots or Subcontr. DLA Item Mgmt TACOM Item Mgmt Item Mgr Initiates Maintenance Program Overhaul Only Refurbished LRU MRO MRO Unsvc. LRU Gov’t Supply Depots • ANAD Primary Depot • Depot Repairs LRU • Returns Serviceable LRU to • General Supply • Depot Overhauls Vehicle DLA at Depot Repair Parts Army Requisition Process Dir of Log Maintenance Item Mgr / NMP Directs Where to Send LRU LRU / Parts: Normal Shipping Two Level Maintenance Concept Unserviceable LRU: DOL/Depot Level Reparable FDP* FDP* Source of Supply Consumer Replacement LRU/ Parts National Field Req Parts Field Maintenance * Forward Distribution Point ASL • Initial Diagnostic Testing • Remove and Replace LRU • Unserviceable LRU sent to DOL or Depot Unit Replacement LRU/ Parts PLL Unserviceable Vehicle Six Bde Locations

9. Source of Supply Consumer CONTRACTOR Logistics Alternative SUPPLY MAINTENANCE Contractor Item Mgmt • Requirements Determination • Acquisition • Inventory Management No Army Item Mgt Army Depot Contractor Facility • Repair LRU • Overhaul Vehicle MRO Refurbished LRU LRU Vendors Contractor Facility Req GOCO Facility, Leased by GDLS Refurbished LRU Two Level Maintenance Concept LRU / Parts: Contractor Shipping Contractor Supply Service Unserviceable LRU/ DoL/ Depot Level Reparable Contractor Window Replacement LRU /Parts National Field Field Maintenance Unit Draws Parts From Contractor Req Parts Army Requisition Process Unit Level Only Unit ASL PLL • Initial Diagnostic Testing • Remove and Replace LRU • Unserviceable LRU sent to Contractor Unserviceable Vehicle Six Bde Locations

10. Source of Supply Consumer BLENDED Logistics Alternative 1 SUPPLY MAINTENANCE Contractor Facility • All Stryker Unique Parts Contractor Item Mgmt TACOM /DLA Item Mgmt • TACOM: Common • DLA: Consumables Army Depot LRU Vendors MRO MRO DLA at Depot • Refurbished LRU Returned to Assigned Item Mgr Supply Facility Contractor Facility Gov’t Supply Depots Dir of Log Maintenance • Best Mix of OLS vs CLS Based on Least Cost • Item Mgr / NMP Directs Where to Send LRU Two Level Maintenance Concept Unserviceable LRU: DoL /Depot Level Reparable LRU / Parts: Normal Shipping LRU / Parts: Contractor Shipping FDP* FDP* National Field Replacement LRU /Parts Field Maintenance • Normal Req. Process at Unit • SSA Determines Req. Routing Parts Req Replacement LRU/ Parts Army Requisition Process Unit ASL • Initial Diagnostic Testing • Remove and Replace LRU • Unserviceable LRU sent to DOL, • Depot or Contractor PLL Unserviceable Vehicle Six Bde Locations

11. Source of Supply Consumer BLENDED Logistics Alternative 2 SUPPLY MAINTENANCE Contractor Item Mgmt TACOM /DLA Item Mgmt • TACOM: Common • DLA: Consumables • All Stryker Unique Parts Army Depot Contractor Facility MRO MRO Refurbished LRU LRU Vendors Contractor Facility Gov’t Supply Depots Stryker Unique Refurbished LRU Two Level Maintenance Concept Unserviceable LRU/ DoL/ Depot Level Reparable LRU / Parts: Normal Shipping LRU / Parts: Contractor Shipping Contractor Window FDP* National Field Replacement LRU /Parts Field Maintenance • Normal Req. Process at Unit • SSA Determines Req. Routing Parts Req Replacement LRU/ Parts Unit Army Requisition Process • Initial Diagnostic Testing • Remove and Replace LRU • Unserviceable LRU sent to Contractor ASL PLL Unserviceable Vehicle Six Bde Locations

12. Source of Supply Consumer BLENDED Logistics Alternative 3 SUPPLY MAINTENANCE • Stryker Unique Reparables • Common WS Reparables Contractor Facility • Consumables Army Depot DLA Item Mgmt TACOM Item Mgmt LRU Vendors Item Mgr Initiates Maintenance Program MRO MRO DLA at Depot • Refurbished LRU Returned to Assigned Item Mgr Supply Facility Gov’t Supply Depots Repair Parts Dir of Log Maintenance • Best Mix of Organic vs CLS • Based on Least Cost • Item Mgr / NMP Directs Where to Send LRU Army Requisition Process Two Level Maintenance Concept LRU / Parts: Normal Shipping Unserviceable LRU: DOL /Depot Level Reparable FDP* FDP* Replacement LRU /Parts National Field Field Maintenance Req Parts Replacement LRU/ Parts Unit ASL PLL • Initial Diagnostic Testing • Remove and Replace LRU • Unserviceable LRU sent to DOL, • Depot or Contractor Unserviceable Vehicle Six Bde Locations

13. Supply National and Field Level costs Considering all Stryker consumable and reparable parts Target Operational Availability is 90% FDP at each of five brigade locations Maintenance National level costs only Field Level performs remove and replace only Considering Stryker unique parts only One set of test/repair equipment for DoL’s All overhaul will be at ANAD DoL at each of five brigade locations; repair expertise not site specific Assumptions - General • Maintenance and Supply • Parts Data as of 10 September 2003 • Provisioning Master Record Data as of 30 September 2003 • Used ATEC COMPASS Outputs • Full fielding at year one of analysis

14. Contractor Perform vehicle overhaul at existing GDLS/ANAD facilities Lease Auburn, Washington supply facility Need to develop in-house repair capability; reliance on sub-vendors would diminish FDP personnel costs included in surcharge Organic No change to current organic processes No building facilitization required Must buy unique repair equipment Must buy NMWRs/TPS FDP requires no additional personnel Assumptions – Alternatives • Blended • Level of Repair mix based on ATEC COMPASS output

15. Maintenance Training of Maintainers Depot DOL Contractor Component Repair Facilitization Building Equipment Develop NMWR/TPS Transportation of Reparable Parts Overhaul End Item Labor Materials Overhead Supply Item Management Major Secondary Initial Provisioning Spares Sustainment Parts Transportation of Materiel Supply Operations Storage Receipt/ Issue Facilitization Forward Distribution Point Cost Elements

16. Selected Essential-item Stock for Availability MEthod (SESAME): Multi-echelon, multi-indenture inventory model that determines the optimal range and depth of spares and repair parts to meet an optimal performance target Used to estimate the initial provisioning spares SESAME Life Cycle Cost (SESLCC) Uses the SESAME initial issue stock lists, projections of depot repair pipeline requirements, unit and end item deployment schedules, and input part reliability and maintenance data to determine both discounted and non-discounted expected life cycle spares and repair costs for an end item Used to estimate yearly consumption (sustainment) of Class IX parts over the 20 year life cycle Computerized Optimization Model for Predicting and Analyzing Support Structures (COMPASS): Optimizes maintenance policy based on cost and availability Used to estimate the cost of repair and number of maintainers for training Analogy: Examine the costs of like-systems to estimate Stryker costs Used to estimate costs when system data was not available Automated Cost Estimating Integrated Tools (ACEIT): Integrated tool suite for estimating cost Used to combine all cost elements and compute a 20 year life-cycle cost with inflation adjustments Methodology

17. Results: All Alternatives 20 Year Costs in Millions; FY04 Constant Dollars *Sustainment Parts and Initial Provisioning contain surcharges Recommended Booz Allen Hamilton examine in the Business Case Analysis the low component repair cost relative to sustainment costs

18. Summary 20 Year Costs in Millions FY04 Constant Dollars PM-BCT Recommendation to ASARC/ DAB The Blended Maintenance and Organic Supply Alternative (Blended #3) Offers the Least Cost Solution Based on Preliminary Cost Data and Assumptions

19. PM-BCT Recommendation to ASARC PM-BCT Charts PM-BCT Assessment of the possible impact of refined data costs: PM-BCT Way Ahead

20. Business Case Analysis • Tasking from the AAE, Mr. Bolton, out of the ASARC meeting • Purpose to expand the scope to the entire Stryker Brigade to include all C4ISR equipment, current systems, and Stryker vehicles • Booz Allen Hamilton contracted to conduct AMSAA Purpose Statement: • Provide an independent cost analysis for Stryker Maintenance and Supply Logistics Support Alternatives. • Maintenance: National Level, Stryker Unique Class IX Parts • Supply: National/Field Level of All Class IX Parts • Submitted to PM-BCT 21 Nov 03 Booz Allen Hamilton Purpose Statement: • Determine the right mix of organic and contractor logistics support required to achieve and sustain a high state of SBCT equipment readiness • Include “heavy metal” & digital systems” • Include roles and responsibilities of ASAALT, AMC, IMA and MTOE units • Include “factory-to-foxhole” • Present to senior leaders May 04 • AMSAA Role: • Support BAH Business Case Analysis • Brief initial analysis to BAH • Supply data upon request • Attend update meetings