Tornado maintenance
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In October 2005, a DID article noted that a pair of contracts to maintain Britain’s Tornado fleet of Tornado GR4 strike aircraft and Tornado F3 interceptors was an interim step on the way to a more comprehensive agreement. That agreement arrived as a GBP 947 million (currently about $1.85 billion) award to BAE Systems in December 2006 for “depth support” of Britain’s Tornado fleet.

Under ATTAC (Availability Transformation: Tornado Aircraft Contract), BAE will take over depot-level support and maintenance for the RAF’s Tornado fleet, with the responsibility of ensuring that enough Tornado jets are available fly rather than being paid for selling spare parts. This “future contracting for availability” approach is a major departure from traditional military and commercial practice; but it has been proven on a smaller scale within the UK’s Tornado fleet, and a number of other platforms are already operating under these types of contracts in Britain. BAE hopes to achieve the required availability levels using a combination of embedded diagnostics, rear-echelon repair process improvements, and what BAE executive and former Air Vice-Marshall Steve Nicoll referred to as the “Dirk Gently approach” to problem diagnosis and maintenance during the September 2006 TFD Group Conference.

DID explains what Nicoll meant, and discusses the ATTAC contract in more detail. These arrangements have since won rare praise from Britain’s auditors, and recently took home a UK Project of the Year award…

ATTAC Explained: Program Structure and Plans

Tornado GR4s
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ATTAC brings together all aspects of Tornado fleet support and will be undertaken at RAF Marham in Norfolk, one of the main Tornado operating bases and the maintenance hub for the RAF’s Tornado GR4 fleet. Although much of the maintenance will be carried out by BAE workers at RAF Marham, the contract will also sustain around 100 jobs at BAE’s Warton manufacturing and maintenance facility centered around ongoing upgrades.

Phase 1 of ATTAC will see some previous contracts rolled into the program, including the Augmented Logistic Support (ALS), F3 Radar (AI24), Secondary Power System (SPS) and Structures, and Combined Maintenance and Upgrade (CMU) contracts. These will be combined into Phase 1 of ATTAC, together with a number of additional elements including logistic support to avionics, general systems and airframe structures.

Some of these programs have already begun proving our the concepts behind ATTAC. For instance, BAE says the CMU contract that DID covered in October 2005 has already reduced traditional maintenance man-hours by 50%; likewise, the secondary power system pilot program has come in 23% below historical maintenance costs during its run to date.

ATTAC will also be combined with the Capability Development and Sustainment Service (CDSS), which covers the process of inserting new capability upgrades into the aircraft throughout its service life. Hence the connection with jobs in Warton, UK. BAE has already found that combining maintenance and upgrade efforts results in substantial time and manpower savings, and combining ATTAC with CDSS simply continues this trend.

The overall ATTAC Phase 1 contract will have an initial service delivery by mid 2007, and is expected to be fully in place by the end of 2007. The UK Ministry of Defence plans to award the ATTAC Phase 2 contract by the end of December 2007; this final element will deliver deliver a series of ‘supplemental’ contracts covering remaining avionics and general systems requirements plus engineering support services.

BAE believes ATTAC is potentially worth in the region of GBP 1.5 billion (currently about $2.9 billion). The UK MoD and BAE both claim that this program will save up to GBP 510 million (currently about $1 billion) over the first 10 years of the contract.

Contracts & Key Events

GR4 w. LITENING
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Jan 14/08: The UK MoD announces a GBP 200 million Capability Upgrade Strategy (Pilot) program for the Tornado GR4 fleet, which will be implemented via the ATTAC framework. See “UK Tornados Getting GBP 200M CUS-P Upgrades.”

Nov 5/07: BAE announces that the Availability Transformation: Tornado Aircraft Contract (ATTAC) has won the UK Project of the Year award from the Association for Project Management (APM). BAE Systems’ Tornado managing director and joint Integrated Project Team (IPT) leader Steve Millward comments:

“ATTAC represents a new way of working and reflects the principles set out in the UK’s DISDefence Industrial Strategy). It is a relationship in which both BAE Systems and the UK MoD have transformed their processes and behaviours in order to reflect the move to a new business model, risk profile, roles and responsibilities.”

The magnitude of the win is underscored by the runner-up: Britain’s newly-launched Astute Class nuclear submarines, which have justifiably been described as being more complex than the Space Shuttle. BAE Systems release.

July 17/07: Britain’s National Audit Office looks into the Tornado support contracts and their results – and is impressed. The MOD has saved GBP 1.3 billion while reducing manpower and maintaining or improving Tornado availability levels, thereby reducing the cost per flying hour by 51%. For the full report and key statistics, see “2007: Britain’s NAO Reviews RAF’s New Maintenance Approach”.

Dec 22/06: The GBP 947 ATTAC contract for through-life Tornado support is signed by BAE and the UK MoD. UK MoD: “New Tornado contract will save GBP 510m” | BAE Systems: “BAE Systems Welcomes GBP 947m Vote Of Confidence On UK Air Support.”

BAE and the “Dirk Gently Approach”

In his presentation to the TFD 2006 conference in Monterey, California, former British Air Vice Marshal and current BAE Director of Military Aircraft System Support Steve Nicoll discussed his take on the 3 approaches to logistics.

(1) The Forrest Gump approach is based on the movies famous line that “My momma always said, ‘Life was like a box of chocolates. You never know what you’re gonna get.’ ” It can be rephrased more briefly as “stuff happens,” and links to a well tried, 2,000 year-old military philosophy: because stuff happens, take lots of spares etc. with you.

(2) Then there’s the Scotty approach, based on the famous Star Trek engineer. Steve Nicoll steps away from Scotty’s memorable talent for improvisation, and uses him as a stand-in for the classic Newtonian engineering approach where knowing initial conditions well enough lets you predict what will happen next. In short, a linear investigation/ statistical approach.

(3) Then there’s Dirk Gently of “Dirk Gently’s Hoslistic Detective Agency.” This is more of a systems approach that believes everything to be interconnected.

Tornado F3 ADV
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As a concrete example, Nicoll discussed the Tornado F3 Radar contract noted above. BAE held the availability-based contract, but they do not make the radars or service them. They just manage the contracts to keep them in service. Unfortunately, shortly after the contract had been signed the radar was performing significantly below the expected mean-time between failure levels. Worse, frequent “no fault found” results in response to problems made the real issue something of a mystery.

Nicoll noted that all three of his logistics approaches could be seen in the BAE/RAF response to these issues.

The standard Forrest Gump “stuff happens, have spares” approach simply kept swapping out key components, in order to keep the aircraft in service. This didn’t always fix the problem, but it often did and when it was successful, the aircraft could fly again. The downside is that this approach was very costly to BAE under the new framework.

The “Scotty approach” was to look at the distribution curve (which appeared normal), look deeper to note that a couple of components were responsible for more incidents than one would expect, and begin quality audits of certain supplier tiers in response.

The “Dirk Gently approach” was to talk to front-line maintenance people, ask what they were doing in response to the problem, and look at how this might relate to the other components of the radar system. By looking at the pattern, BAE and RAF personnel eventually deduced that the problem was a frequent connector fault between 2 components – a diagnosis that explains the previous “no fault found” results in component by component testing, and also explains why swapping in one of the connected components often appeared to fix the problem. With the real problem found, solutions were put in place that were far less expensive in terms of time and meteriel; in response, aircraft availability rates rose.

Here endeth the lesson. Almost.

DID would note here that the “Dirk Gently approach” is not new, and has been used in many military/ logistics situations before. Nevertheless, the process of turning the “Dirk Gently approach” into an organizational competency backing long-term maintenance contracts creates a competitively-significant industry capability. It is also worthwhile to note that many of the changes embedded in the new contracting approach contributed significantly to this success:

• The contractor is being paid for availability, and given full management responsibility that is tied to clear metrics and financial penalties as well as rewards. This takes the incentive away from the traditional “sell them spares” approach, and creates new incentives for the contractor to be curious, invest in diagnostics and related competencies, and look for the most dollar-efficient solutions.

• Because of the contract’s nature and the contractor’s natural business priorities, the resulting focus is also different from a “service-managed, contractor as supplier only” situation. A public bureaucracy does not feel financial pressures in the same way, and so the result is usually either an accepted cut in readiness, or an approach of keep the aircraft flying and finding the extra money in the service budget.

• The partnership approach between the contractor and service personnel combined the depth/process knowledge of the contractor with the front-line expertise of the maintenance personnel. In most military contract arrangements, these assets are more divided. This partnership also places the locus of action within a more flexible culture than most public sector/military bodies possess – though it should be remembered that cooperation from front-line commanders plays an indispensable role in successes like this one.

The successful approach described in Steve Nicoll’s story is certainly available for use by militaries around the world in any situation, at any time. Nothing prevents it… except the incentive patterns embedded in traditional contractual and service evaluation arrangements, and their associated metrics for success.

By changing the incentive patterns and successfully adapting to them, the UK Ministry of Defense and BAE Systems significantly improved the odds of success stories like the one you’ve just read. They also created enough confidence in the capabilities and performance of all parties to make the larger ATTAC framework described in this article a realistic option.

Additional Readings & Sources

• DID FOCUS Article – Britain’s Future Contracting for Availability Approach. Includes links to all DID articles dealing with the larger program, which reaches far beyond the Tornado fleet.

• BAE Systems – Case Study: ATTAC (Availability Transformation: Tornado Aircraft Contract)

• Rolls Royce (March 22/07) – BAE Systems and Rolls-Royce to strengthen customer service. The MoU includes a Tornado Future Support Charter.

• DID (March 20/07) – Whirlwind Efforts Add Litening to Tornados. This work was outside the scope of ATTAC, as it was an urgent operational requirement.

• The Times of London (Dec 23/06) – BAE emerges from the political storm with MoD Tornado contract

• Blackpool Today (Dec 22/06) – Jobs Joy After Tornado Deal

• The Engineer Online (Dec 22/06) – ATTAC contract for BAE Systems

• DID (Oct 20/05) – GBP 315M Tornado Maintenance Contracts Pave Way for “Future Contracting for Availability”

• BAE Systems (Aug 3/04) – DLO Awards BAE Systems GBP 76M Tornado Support contract. Note its chronicle of the initial acquisition reform process for the Tornado fleet, whose first contract was issued in June 2001.