Pentagon Commission: $25B/Year Savings to Be Had

The Pentagon’s Defense Business Bureau, an advisory group designed to give private sector expertise to senior leaders, announced its global analysis of DoD practices found potential savings of about $25 billion per year, to be squeezed mostly out of logistics, procurement, property management, HR, and healthcare, in that order.

The savings presume a capacity for the military to create ongoing and cumulative productivity increases – as does the private sector, generally. While the rather top-down analysis is likely to seem far fetched to military professionals, it does starkly compare behaviors in the private sector that differ, and that have resulted in vast, cumulative efficiencies.

When it comes to specifics, speaks generally about four areas of recommendations: renegotiating contracts; cutting the workforce; IT modernization and the catch-all business process re-engineering.

DoD contractors will be interested to see the nature of the target painted on their piece of budget pie. The DDB hopes to realize $9 to $18 billion in savings per year by saving 10-25 percent of contract spending. How they hope to do that? “More rigorous” negotiations; contract aggregation for economies of scale; a push for greater productivity in labor contracts; and the elimination of gold plating requirements.

Deputy Defense Secretary Bob Work charged the DDB with producing the report back in October in an effort to gauge the scope of changes that would help modernize the whole of the defense enterprise.

The report doesn’t break too much ground in terms of tactics recommended, as previous reports have largely enumerated the various savings the DDB hopes the military will recognize.

You Can Track Your F-35s, At ALIS’ Maintenance Hub

Keeping track of…

For the last 50 years, newer fighters have been sold as requiring less maintenance than their predecessors, due to technical advances. As people like Chuck Spinney and the Congressional Research Service have documented, the reverse has been true.

That decades-long defense death spiral has finally reached a point where it’s prompting musings about the collapse of American TacAir, and European countries with their small and dwindling defense budgets are also strongly affected. If the F-35 Lightning II Joint Strike Fighter was to have any hope of becoming a commercial and operational success, it needed to change that operating cost dynamic. To do that, Lockheed Martin, BAE, and the international JSF team have turned to embedded HUMS (Health & Usage Monitoring System) diagnostics. Even that probably won’t be enough, absent integration with the Autonomic Logistics Information System (ALIS) – which an IEEE paper has described as “perhaps the most advanced and comprehensive set of diagnostic, prognostic, and health management capabilities yet to be applied to an aviation platform.”

The US Military’s International Airlift Contracts

Latest updates[?]: FY 2015 contracts - much smaller overall, and the core structure has changed.

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Every year, US Air Mobility Command at Scott Air Force Base, IL issued a slew of indefinite-delivery/ indefinite-quantity, firm-fixed-price contracts for “International Airlift Services” to various commercial carriers. The way these awards work is that each contractor submits a bid, and the US military allocates award amounts according to each bid’s scope and competitiveness.

Stand-alone articles have covered FY 2006 ($2.29 billion), FY 2007 ($2.32 billion), and FY 2008 (over $3 billion) orders, which saw a steady ramp-up in both absolute dollar amounts, and participating firms. Orders remained high through 2010, which was a boon to a recession-ravaged air transport industry, but the ebbing of hostilities has seen FY 2011 – 2012 contract totals drop by over a third.

Saudi Shopping Spree: A Hardened, Networked National Guard

Latest updates[?]: SANG becomes 1st AH-6i armed scout helicopter customer, with an initial buy of 24.

LAV-25 in combat

The Saudi Arabian National Guard is receiving a lot of investment. In July 2006, the Saudis formally tabled a multi-billion dollar request to buy LAV wheeled APCs and related equipment for its National Guard. October 2010 added a slew of added requests, covering a wide range of transport, scout, and attack helicopters. Other contracts in between and since have involved missiles, communications, and training. It all adds up to a fairly comprehensive modernization.

Who is the SANG, and why are they a globally significant institution? A must-read article in the Tribune-Libanaise explains:

USA: Fixed-Wing Transport Contracts for the Central Asian Front

C-212, hot & high

Early operations in Afghanistan and Iraq led US combat commanders to ask for transport aircraft that could use smaller runways, and land closer to zones of operations. The US Army pressed its King Air C-12s and Shorts C-23s into service, but beginning in 2004, they began supplementing those efforts with contractors. Helicopters have also been hired, but cost, speed, and carrying capacity all favor fixed-wing planes whenever possible.

The US military hoped that Blackwater affiliate Presidential Airways, Inc. of Moyock, NC would be able to address some of these issues, using EADS-CASA 212 and Bombardier Dash-8 transport aircraft. For a while, they did. Presidential received several contracts over the years for fixed-wing, in-theater contract transport around Afghanistan, but the fixed-wing business was bought by AAR, and their firm is no longer the only option. As of 2010, the USA began spreading fixed-wing contracts among a number of contractors. This article chronicles fixed-wing contracts from 2004 – 2014.

JPADS: Making Precision Air-Drops a Reality

Strong’s JPADS,
Afghanistan

The dilemma for airdropping supplies has always been a stark one. High-altitude airdrops often go badly astray and become useless or even counter-productive. Low-level paradrops face significant dangers from enemy fire, and reduce delivery range. Can this dilemma be broken?

The US military believed that modern technologies could allow them to break the dilemma. The idea? Use the same GPS-guidance that enables precision strikes from JDAM bombs, coupled with software that acts as a flight control system for parachutes. JPADS (the Joint Precision Air-Drop System) has been combat-tested successfully in Iraq and Afghanistan, after moving beyond the test stage in the USA… and elsewhere.

Fast Rides: HSV Spreads to Middle East

72m TSV concept

Austal has announced a $124.9 million contract for a pair of High Speed Support Vessel (HSSVs) catamarans, from “a naval customer in the Middle East…. to support naval operations, including helicopter operations, rapid deployment of military personnel and cargo, and search and rescue”.

Austal has a number of customers in the region…

High Afghan Exit Costs Force US Military to Contemplate End of Era

Yours for a low, low price

In July 2012, after protracted bargaining over American aid money, Pakistan reopened its roads – the so-called PAKGLOC in military lingo – to NATO traffic in and out of Afghanistan after their closure at the end of 2011. That is the theory at least, but the practice has left much to be desired. Pakistani customs routinely slow traffic to a crawl with clearance paperwork. Add threats of violence from local tribal strongmen, when it’s not customs on the Afghan side suddenly claiming a right to exit taxes, and you end with near-gridlock. Security concerns have led the Pentagon to stop using PAKGLOCs for outgoing traffic as of December 3/13 for an indefinite period. This has forced continued use of the Northern Distribution Network (NDN), at a much greater cost.

Faced with these prohibitive outgoing logistics, the US military has a big incentive to think hard about what it really needs to bring back for future use.

DLA Guidance: Something’s Gotta Squeeze

DLA: It’s a Blast!

This week DID’s Olivier Travers is attending WBR’s 2013 Defense Logistics event. Email me if you’d like to meet up or submit logistics themes for us to look into.

Vice Admiral Mark Harnitchek has been heading the Defense Logistics Agency (DLA) for 2 years and presented an update on the agency’s challenges and progress during WBR’s 2013 Defense Logistics conference. He candidly talked about how DoD at large, and DLA specifically, had benefited from “budget largesse” in recent years, especially with supplemental budgets (i.e. OCO / war spending) and had grown “thicker in the middle” as a result. In plain admission of the government’s shortcomings, the development of a “culture of judiciousness” to apply better judgment and save money is necessary within DLA. This is a welcome evolution in public discourse after so much hand-wringing about sequestration and befuddlement at the very idea of having to operate within financial constraints.

VADM Harnitchek was equally frank in recognizing that part of the agency’s focus will translate into margin pressure for contractors. Like other DoD senior officials, he’s broadcasting a clear signal that budget constraints are expected to stay and everyone should learn to operate within them. This should lead to increased reliance on commercial capabilities and less DoD resources, in relative terms. To that effect, fuel and food are pretty much already run “factory to foxhole” through commercial suppliers.

US Defense Logistics by the Numbers: The Cheatsheet

Aerial resupply, the hard way
click to play video

DID will cover WBR’s Defense Logistics conference on Dec. 3-5 in Alexandria, VA. The following entry gives a quick sense of the massive scale of US military logistics, for background context. It aims to provide orders of magnitude and key datapoints, rather than extremely precise and detailed data.

The US Department of Defense is well known as one of the largest organizations worldwide, with its sprawling physical footprint across the world and massive needs for storage, transportation, and distribution. How big of a logistics user and provider do they turn out to be? Let’s find out.