Over the past 18 months, DID has spent a fair bit of time covering Britain’s defense procurement reforms, in particular its practice of “contracting for availability” rather than spare parts or maintenance hours on a number of its key platforms. In Britain, the approach of starting at a smaller level, then expanding the scope once performance is proven and trust built, has become standard procedure in this field.

Across the pond, the USA is significantly behind Britain in this area. Fortunately, they have not ignored the model entirely. Recent changes to the contracts covering their B-2 Spirit stealth bomber fleet demonstrate that some progress is being made, even as these efforts receive $3+ billion more between now and 2014…

In January 2007, the U.S. Air Force’s Oklahoma City Air Logistics Center and Northrop Grumman came to a 1-year, $200 million agreement that changed the B-2A’s 1999 FAST maintenance contract.

Under the revised terms, original aircraft manufacturer Northrop Grumman will provide maintenance and sustainment support for the nation’s fleet of 21 B-2 stealth bombers via 3 delivery orders: Contract Depot Maintenance (CDM), Consolidated Delivery Order (CDO), and Integrated Contractor Support (ICS). What’s different is that under the new “contracting for availability” performance-based logistics approach, Northrop Grumman will be measured by its ability to meet specified combat readiness requirements for the B-2 fleet, rather than being given money for specific tasks, spare parts, or maintenance on a specified schedule. All of that now becomes the contractor’s responsibility.

The specified readiness rate was not published, but it may represent a challenge for the contractor. Introduced from 1993-2000, America’s B-2 fleet has historically had availability rates below 50% for a number of reasons. In practice, what this meant was that even with moderate usage, an average of only 6-10 stealth bombers were actually available for missions at any given time.

As was the case with Britain’s Tornados, the effort to change the B-2 bomber’s maintenance framework is happening slowly. In 2002, the Total Systems Support Partnership (TSSP) was inaugurated between Northrop Grumman and the USAF; Air Force personnel worked closely with Northrop Grumman, in order to simplify the processes used to identify and deliver consumable spare parts to the B-2 fleet, resulting in improved combat readiness at a reduced cost. The USAF’s Materials and Manufacturing Directorate also played an important role, as detailed in DID’s April 2006 article “Improvement Program Slashes B-2 Maintenance, Improves Readiness.”

The success of the TSSP program led to the B-2 program’s selection as part of a 2005 PBL pilot program conducted in 2005, and the new 1-year contract indicated a cautious but growing sense of trust and understanding between Northrop Grumman and the Air force in this area.

It’s worth noting that countries like Britain have made these availability-based contracts long-term or even “through-life-of-platform” affairs, in order to remove any incentives to skimp on work (like upgrades) whose benefits or problems may not show up for several years. The B-2 program isn’t there yet; it’s still part of a learning curve and set of test programs designed to help the American DoD understand and successfully apply this new contracting approach.

The B-2A stealth bomber may prove to be a good choice for this purpose. Britain’s experience indicates that combining maintenance and upgrades within an availability-based framework offers significant benefits, and the USAF certainly has plans to upgrade its B-2 fleet over the coming years. Like the Tornados, the B-2’s readiness record to date also shows room for improvement.

As such, the 2007 contract’s 1-year duration made the B-2 maintenance and sustainment contract an excellent bellwether for the success and adoption of availability-based contracting within the US military. So far, continuation and extension have been the rule.

The pressures driving such reform attempts certainly aren’t going away. Gary Roehrig, director of Performance-Based-Logistics for Northrop Grumman’s B-2 program, cited the fact that Air Force operations and maintenance budgets are continually under pressure as one of the factors influencing the new approach. This was certainly the case in Britain as well, where reformers like Nigel Bairsto found that they only had enough budget to keep half the Tornado interceptor/strike fleet flying under conventional maintenance contracting approaches. Under the new ATTAC framework, that’s no longer a problem. Better yet, the monies are locked in to future budgets as a fixed contractual expenditure, rather than a discretionary item.

One suspects that kind of arrangement suits the US Air force just fine.

Contracts and Key Events

Aug 26/09: Northrop Grumman Systems Corporation in Palmdale, CA received a $3.44 billion ceiling increase contract to support the B-2 weapon system. The contract in question runs until 2014, and covers all aspects of B-2 fleet maintenance and upgrades. Northrop Grumman representatives placed the contract’s new lifetime ceiling at $9.54 billion, though the government is not obliged to spend all the funds. The 702 AESG/SYK at Wright-Patterson AFB, OH manages this contract (F33657-99-D-0028). See also NGC release.

Jan 30/09: The USAF awards Northrop Grumman in Palmdale, CA $35.2 million dollars under the B-2 Flexible Acquisition and Sustainment Team (FAST) Contract, for performance based support and CY 2009 Contract Depot Maintenance. At this time the entire amount has been obligated. The 448 SCMG/PKBF at Tinker AFB, Oklahoma manages this contract (F33657-99-D-0028).

This CY 2009 order for Contract Depot Maintenance (CDM) is added because this segment is no longer using a Performance Based Logistics approach. The reason, says Northrop Grumman, involves parts from other companies that are no longer available. The government chose to remove the PBL metrics from the 2009 CDM contract to allow Northrop Grumman to focus on the things they could control directly. For the CDM orders, Northrop Grumman will work with the government under the announced $35 million deal, in order to address the parts issues through other contracts with other suppliers.

For 2009, the other 2 delivery order types related to B-2A maintenance will remain under the full performance-based contract begun in 2007: Consolidated Delivery Order work, and Integrated Contractor Support work. In these areas, Northrop Grumman has flexibility to decide on the types and quantities of hardware sustaining engineering, supply chain management, software maintenance, programmed depot maintenance, etc. that are needed to meet the USAF’s B-2 combat readiness requirements.

January 2008: Northrop Grumman confirms to DID that the 2007 contract was renewed for 2008, on similar terms.

Jan 11/07: An NGC release describes the shift to a more heavily performance-based contract, as described above: “Northrop Grumman Awarded $200 Million Contract to Implement More Efficient Way to Support B-2 Bomber: Performance-Based Logistics offers Air Force, taxpayers more ‘bang’ for the maintenance buck.”

Sept 17/99: Northrop Grumman Corp. in Pico Rivera, CA received a $2.7 billion indefinite-delivery/ indefinite-quantity contract to provide for the Flexible Acquisition and Sustainment Team (FAST) program in support of the B-2 aircraft from Sept 17/99 through Sept 16/05, with 3 add-on 3-year options for a possible total of 15 years (Sept 16/14).

This program will provide the continuing support necessary to fulfill the mission, conduct operations, and endure the combat capabilities of the B-2 aircraft. The solicitation was issued on March 31/99, and negotiations were completed on Aug 23/99. The Aeronautical Systems Center at Wright-Patterson AFB, OH is managing this contract (F33657-99-D-0028).

Additional Readings

• DID FOCUS Article – Britain’s Future Contracting for Availability Approach.

• DID (June 18/07) – Upgrading Big Stealth: B-2 Improvements Continue

• DID (Jan 2/07) – Britain Hammers Out Through-Life Support Framework for Tornado Fleet

• DID (July 13/06) – UK MoD Issues Report on Through-Life Equipment Management