The Netherlands is a notable player in the multinational F-35 program, as one of only two Tier 2 program partners, and the future site of a European maintenance hub. The government is still deciding whether it will join the Joint Strike Fighter’s IOTE (Initial Operational Test & Evaluation) phase and purchase 2 aircraft. Meanwhile, what was once a slam-dunk to replace RNLAF F-16s has now become a competition of sorts involving Saab’s JAS-39NG Gripen. To this point, the Dutch have invested over EUR 850 million in the F-35’s development phases.
The financing arrangements involved are highly unusual. They have now become a subject of possible legal action, as the government insists that industry players owe it more than EUR 300 million…
On Jan 31/08, French Defence Minister Herve Morin authorized the first public-private partnership contract by the French DGA procurement agency. This kind of arrangement is becoming more common, especially in Britain, but France has lagged in adopting it. Under this arrangement, the firms Défense Conseil International and Proteus Hélicoptères will supply 36 new Eurocopter EC120 helicopters to replace the Ecole d’application de l’aviation legere de l’armee de terre’s (EAALAT, Fench Army aviation school’s) 54 SA342 Gazelle helicopters based in Dax, France. The first EC120s are planned to arrive in 2010, and the 22-year partnership contract also covers an estimated 22,000 fleet helicopter flight hours per year for pilot training.
New: EC120
The contractors will be in charge of buying, operating, servicing and repairing the EC120 helicopters, which will be the contractor’s property over the course of the contract. Pilot training itself will still be provided by the military instructors at EALAAT, which is in charge of the initial training of helicopter pilots of the French Army, Navy, Air Force and Gendarmerie. Pilots of some foreign armies are also trained at EALAAT, per international agreements. DGA release.
UPDATES
Oct 16/09: The DGA accepts the first lot of 3 EC120 NHEs for EAALAT, and the instructors begin flying the next day. DGA release [in French].
It seems like a simple, and eminently sensible change. Instead of paying for hours of service and spare parts for military platforms, and trying to forecast usage, set required reliability levels. Then implement public-private partnerships and pay defense contractors a fixed rate per year, with incentives and penalties centered around required in-service rates. Sensible? Yes, and financially attractive because it turns large portions of the maintenance budget into pre-contracted, fixed costs. Simple? No.
Minor complications include the critical importance of in-service availability as something that extends beyond a mere contract term, and the need to avoid bankrupting one’s contractors after they have accepted most of your fleet’s maintenance risk. To which one must add factors such as highly variable per-year usage rates for equipment, the lack of adequate information to make accurate forecasts on either side of the table, the importance of creating the right incentives around long-term maintenance so this is not skimped, and the need to factor maintainability into future equipment contracts in a much more integrated fashion. Each one of those aspects, taken by itself, represents a major challenge. Together, they present formidable obstacles to success.
Tornado maintenance
Faced with constrained budgets and rising maintenance costs, however, the British Ministry of Defence has spent the last several years creating exactly this kind of “future contracting for availability” through-life maintenance framework for platform after platform. The efforts of exceptional individuals like former Air Vice-Marshal Nigel Bairsto have made a tremendous difference, and so has the extensive organizational commitment of multiple MoD agencies and front-line commanders. Britain currently leads the world in this field, even as the rising curve of aging defense equipment throughout the Western world forces defense ministries and departments to confront the same issues. This Spotlight article provides an index of DID’s coverage in this area.
In May 2007 “European Air Transport Command Agreement Signed” discussed plans underway by Belgium, France, Germany, and the Netherlands to create a joint “pool” of military transport aircraft, by coordinating all 4 fleets to make their planes available to participating countries under specified conditions. Belgium, France, and Germany have all placed orders for the 35-ton capacity Airbus A400M, which is scheduled to begin production in 2009-2010.
Now Defense-Aerospace reports that Germany’s BWB procurement agency has floated a EUR 1 billion (about $1.4 billion) initial tender for outsourced through-life maintenance of their 60-plane A400M fleet – and possibly France’s 50 planes, as well…
It is said that amateurs study tactics, while professionals study logistics. Analysts study procurement, because this is where the decisions are taken that affect both the range of thinkable tactics, and the logistics infrastructure that underpins them. Hence the importance of programs like the USA’s newly-launched Defense Transportation Coordination Initiative (DTCI).
At present, the US Department of Defense’s shippers in the continental US (CONUS) are handled by individual depots, bases, and other locations. Each location independently selects the transportation modes, level of service, and transportation providers they need, and so multiple information systems are employed to execute and manage shipment activity. There is no centralized planning, coordination, or control. The system works, because each shipment is managed. Is it as efficient as it could be? No.
Hence DTCI, which is focused on increasing operational effectiveness, while simultaneously obtaining efficiencies by reducing cycle times, and using best practices such as increased consolidations / load optimization and modal conversions. The premise is for DoD to competitively award a long-term contract with a world-class transportation coordinator/coordinator(s) that will help it achieve these goals, leveraging current commercial capabilities and proven practices save up to 20% as it manages, consolidates, and optimizes freight movements. In the business world, this growing trend is called 3rd Party Logistics (3PL).
The DTCI contract has a multiple phased implementation approach – which DID describes below in our Spotlight article, along with the program’s history & issues faced, the recent announcement of a winning team, the known competitors, and a collection of useful reference resources…
As part of the USA’s BRAC(Base Realignment and Closing) 2005 process, recommendations were handed down to the US Defense Logistics Agency to privatize a series of product commodities, and eliminate the government’s wholesale stock in key areas. The DLA manages logistics on behalf of all US military branches, and federal civilian agencies as well. These Commodity Management Privatization (CMP) activities would have to take place within a framework of public-private partnership, with goals that included improved delivery, improved management, and lower cost of ownership. It is just one component of the DLA’s Transformation Roadmap.
Small business qualifier Haas TCM of West Chester, PA now has two major wins under this process. One is a $2 billion privatization contract. The other is a major subcontracting role in a $6.2 billion privatization contract…
The Australian government announced that May 1, 2007 marked the Defence Materiel Organisation (DMO) marks a new phase of their long term, strategic relationship with Tenix Defence and Saab Systems to support the ANZAC class frigates and shore facilities. The contract is an Alliance agreement of 9 years duration with an option extension for 6 years. The order includes modernization of the ships’ combat management system and fire control system.
Based on the Meko A200 design, 10 ANZAC frigates are in service in Australia (8) and New Zealand (2). The work was ordered through ANZAC Ship Integrated Material Support (ANZAC IMS) Program Alliance, which consists of Saab, Tenix Defence, and the Australian Defence Material Organisation and has serviced these ships since 1990. Tenix built all 10 ships at their dockyard at Williamstown, Victoria, Australia; while Saab is the designer for the combat system software.
The order will mean development work in both Sweden and Australia; the initial value of the contract to Saab alone is A$ 104 million (currently about $86.3 million), and further orders can be expected during the course of the agreement.
BAE Systems and VT Group’s 50/50 joint venture Flagship Training has enhanced its contract with the UK Royal Navy, extending its contract that has Flagship Training designing, planning and assisting with the delivery and assessment of a range of training courses. The extension expands the scope of training delivery and adds another 21 months to the agreement, stretching it to 2013 subject to performance. As part of the new contract, Flagship will deliver 900 naval and maritime training courses at naval training establishments throughout the south, from HMS Collingwood in Fareham to HMS Raleigh in Cornwall.
Superior Graphite Co. in Chicago, IL received a $6.1 million technology investment agreement with cost-share contract to establish a domestic manufacturing base capable of supplying the DoD with silicon carbide powder. SiC is used as a key substrate for higher-performance, higher-expense Gallium Arsenide semiconductors. It is also a common component in ceramic vehicle armor and some body armors (some US body armors use boron carbide instead, which is lighter but highly toxic to manufacture; China is a major source of supply).
At this time, $3.1 million has been obligated. Solicitations began August 2006, negotiations were complete Jan. 2007, and work will be complete in June 2009. The Air Force Research Laboratory at Wright-Patterson Air Force Base, OH issued the contract (FA8650-07-2-5308).
British efforts to move toward a new way of supporting their aircraft have involved through-life umbrella maintenance contracts based on availability rather than hours or spares. It is a model that Britain is using for several weapons platforms, and with the recent B-2 bomber contract it is even beginning to take hold in the USA.
In recent days, the UK MoD and BAE Systems have taken a pair of steps to extend that model. One step is a recent GBP 74 million contract (currently about $145 million) that introduces the concept to Britain’s fleet of 131 Hawk T Mk.1 trainer aircraft.
