One of the keys to reducing sustainment costs and improving availability is analyzing programs costs from a life cycle perspective. Seventy percent of the life cycle costs of military equipment come during the sustainment phase. Taking the long view means considering sustainment as early as the acquisition and design stages of a platform on the theory that the earlier sustainability decisions are made in the development process, the lower the overall program costs. Such an approach was mandated in legislation passed by Congress and signed by the president in 2009. That approach is now yielding a sufficient level of data and experience to start delivering the desired results.
Considering sustainment earlier on in the process results in higher costs at the front end of systems acquisitions. Since DoD is constrained in its spending from one congressional appropriation to the next, it is difficult to make the case for increased spending in year one for savings that are not likely to appear until year five or 10. Increased technology investments in military depots could also reduce long-run costs, but funds for those investments are hard to come by in an environment in which the military is drawing down after protracted conflicts in southwest Asia and in which Congress refuses to agree to cuts that the Pentagon itself is proposing—whose savings could be plowed into sustainment—because they are not politically expedient.
All of the above represents the difficult macro-level view of the issues surrounding the trade-offs involved in developing better sustainment programs. At the micro level, there are examples of specific programs and contracts in which the U.S. military and its industry partners have implemented sustainment changes which have reduced costs and increased availability for those specific contracts and systems by taking a bigger picture approach to sustainment than has been traditional. Some of these changes have involved adapting commercial best practices to the military sustainment environment.
“Ever since the passage of the Weapons Systems Acquisition Reform Act in 2009, there has been a strong emphasis on affordability,” said David Berteau, the assistant secretary of defense for logistics and materiel readiness. “WSARA mandated putting a cap on program spending and doing a better job of estimating life cycle costs. After six years of doing this, we are starting to see some benefits in that the amount expected for sustainment costs is being matched by the amount actually being spent.”
Berteau and his team oversee sustainment from the perspective of three interrelated dynamics: policy, funding and outcomes. “Dollars drive policy more than policy drives resources,” said Berteau. “It’s what you’re spending in terms of people, money and time that says what your priorities are. Resources have to be spent to capture outcomes, and outcomes are what the system actually delivers.”
“Improved sustainment begins with a partnership between our customers, the entire defense industrial base and our congressional representatives to take a longer view in how we are designing, manufacturing and sustaining hundreds of military platforms, systems and subsystems,” said Cathie Gridley, sector vice president for business development at Northrop Grumman Technical Systems.
“Oftentimes, these systems are fielded for far longer than originally intended by engineers and the customers. Military equipment operating past its expected lifetime is a significant risk for increased sustainment costs. Obsolescence and outdated processes can cause sustainment challenges as programs carry on in the future.”
Improvement in sustainment includes three key elements, according to Lou Kratz, vice president for logistics and sustainment at Lockheed Martin Corporation. “First is a life cycle view of the platform; second is improvement in logistics processes,” he said, “and third is a business model that incentivizes equipment availability and cost reduction as opposed to a transactional model that incentivizes failure and high costs. Paying by the drink incentivizes industry to maximize costs and provides no real incentive other than to deliver what the contract asks for, which may or may not enhance the overall availability of a system. Performance-based contracts provide the appropriate incentives for industry to drive costs down.”
Program managers for older legacy platforms such as aircraft are dealing with equipment and technology which were first fielded in the 1970s. “Sustainment was built on old component-focused maintenance methodologies which boil down to fly to fail,” said Tom Beil, site operations director for Intergraph Government Solutions at Warner Robins Air Force Base. “The commercial world has understood that there are better ways to build scheduled maintenance programs.”
Reforming sustainment approaches is different for new platforms, as opposed to legacy ones, Berteau acknowledged. “It takes a long times to change the overall sustainment picture from the front end,” he said. “It takes decades for systems to get designed, developed, produced and fielded in such large quantities necessary to drive overall sustainment costs. The process for systems already fielded is less centralized and less rigorous. They are not going to milestone reviews, as is the process for acquisition decisions.”
But total cost of ownership is also a challenging factor to assess for systems not currently fielded, noted Gridley. “More incorporation of sustainment engineering at the beginning of the acquisition phase of a system, platform, subsystem or component is a good place to start,” she said. “Creating that long-term roadmap allows you to build into the entire support system the sustainment, supply chain management, and training and modernization roadmap that can be properly funded over a long-term basis.”
There are, however, added costs to front-loading the sustainment planning process. “The Army might decide to limit the number of common tools required to provide field-level repair of a system,” said Tom Edwards, a senior account manager at Leidos. “That decision will cause the developer to work downstream with suppliers to assure that all line replaceable units use common, specified fasteners. To the degree that commercial components are used, there will be costs to suppliers to produce unique variants. But the payoff on the battlefield is significant, in the form of fewer tools carried by mechanics, higher likelihood of having the tool required for the task, greater tool redundancy among mechanics, fewer tools to be produced and sustained, and fewer different types of fasteners to be produced, procured, supplied and delivered.”
Government and industry ought to make the intellectual and financial investments necessary to bring about more effective sustainment processes, Edwards added. “Government must invest the intellectual talent and analytical resources necessary to identify, vet, evaluate and justify demanding requirements for sustainability as well as system performance, especially where the government seeks a performance-based contract,” he said. “Government and industry should invest in modeling, simulation, engineering and test resources necessary to assure that requirements are met during system development. Modeling and simulation are not panaceas but frequently provide insights at low cost.”
In Kratz’s experience, pushing up sustainment issues to the design and early production phases is not a huge cost driver, but can produce some significant savings. “We have seen increases of 2 to 3 percent in development costs and minor increases in the costs of low rate initial production because we are feeding back to sustainment so that we can optimize that process,” he said.
Lockheed Martin, in partnership with the Stevens Institute of Technology, developed the Systems Design and Operational Effectiveness (SDOE) model meant to address sustainment processes and systems during the design phase of a program. “This allows us to think about trade-offs between equipment performance and reliability and the inherent design and sustainment of the system on a broader scale,” said Kratz. “The primary objective is that sustainment design is tuned to provide availability at the least cost and drives improved design that ultimately reduces the sustainment costs to the platform.”
During Lockheed Martin’s early work in the design of the F-35, four of the eight critical performance parameters were related to logistics and sustainment. “We were involved in the simultaneous design of the air vehicle and the support system,” said Kratz. “This early experience allowed us to fine tune the design of the aircraft and its sustainment systems, which will allow the aircraft to achieve what its user wants from both a performance and a cost perspective.”
The government deserves much of the credit for implementing logistics process improvement along with industry, according to Kratz. “The government has worked with industry to implement lean processes in military depots and elsewhere,” he said. “The Ogden Air Logistics Complex at Hill Air Force Base dramatically reduced turnaround times on the F-22 line that we support. This resulted in huge improvements in aircraft availability and, consequently, costs.”
Similarly, the Defense Logistics Agency has been a leader driving reductions in procurement and lead times for spare parts. “The DLA has worked with industry to improve demand forecasts,” said Kratz. “This has better enabled them to buy the right equipment at reasonable costs in advance and to reduce inventory.”
This is also an increasing opportunity for DoD to learn from sustainment schemes implemented by commercial companies. “Industry has reduced life cycle costs with up-front investments in technology, process changes and taking new approaches to supply chain management,” said Berteau.
One area in which government can learn from industry is in the development of scheduled maintenance programs. “The old legacy programs tend to be component-based,” said Beil. “They look at the failure of individual parts and focus repairs on individual failures. The commercial world has been using the model of Maintenance Steering Group 3 since 1980.”
Maintenance Steering Group 3, or MSG-3, is a decision process used to determine what actions need to be accomplished to ensure the availability of physical assets when needed by the user. MSG-3 is based on historical, empirical data, which is why the methodology has proven successful on aged aircraft where there is a wealth of available knowledge and technical data.
“This is a worldwide methodology used by all commercial air carriers that is very systems-oriented,” said Beil. “Instead of looking at an actuator on a flap, it looks at the overall health of the flight control system. It is a commercial best practice, and the end result is to ensure the safety of the aircraft and to maximize reliability and availability and minimize maintenance costs.”
Intergraph Government Solutions was in charge of implementing MSG-3 on the C-5 Galaxy Jumbo Airlifter. “Since 2009, that implementation has resulted in improvements in availability of 40 percent and reliability of 28 percent,” said Beil. “Mechanical efficiency was boosted 20 percent, maintenance costs were cut by 30 percent, and maintenance flow days were cut by 20 percent. Unscheduled parts demands were reduced by 10 percent. According to Air Force data, MSG-3 is saving the Air Force $2 million per aircraft per year. When you multiply that number across the fleet, that represents significant savings.”
IGS offers standardized processes and software for implementing MSG-3. “The software cleanses and analyzes aircraft maintenance data to develop reliable data from which to perform root cause analyses and documents all MSG-3 details supporting the development of technical data and establishing effective life cycle sustainment processes.”
Leidos’ National Security Sector is involved in sustainment improvement activities across the acquisition life cycle. For example, Leidos worked as the joint logistics integrator for the Joint Program Office MRAP (mine resistant ambush protected vehicle). “We conducted extensive analysis throughout identifying sustainability improvements in supply chain, configuration management, transportation, training, reliability and protection for a fleet of 26,000 vehicles produced by seven different manufacturers,” said Edwards. “Leidos uses advanced information management techniques to rapidly collect, cleanse and process logistics relevant data into sustainability improvement insights.”
MRAP development and sustainment systems benefited from insights gained earlier from the development of the Marine Corps’ light amphibious vehicle and the Army’s Stryker. “Although MRAPs were produced in an extremely compressed acquisition cycle, they benefited from sustainability insights derived from decades of prior military experience,” said Edwards.
Leidos also operates the Technical Assistance for Repairables Processing (TARP), a large secondary item retrograde program for the Navy and the Marine Crops. “In over seven years of intense operational tempo, between 2005 and 2011, Leidos has helped the Marine Corps move over 249,000 ground equipment depot-level repairables worth over $1.4 billion, saving over $60 million in costs with an average transportation time of only five and a half days,” said Edwards. “Leidos’ provides the Marine Corps with over 99.5 percent accuracy in tracking and proof of delivery for these critical items, and Marine Corps operating forces have avoided an estimated $70 million in lost and damaged carcass charges.”
Edwards believes that modeling and simulation hold great promise in providing cost-effective sustainability insights early, including virtual prototyping, and throughout the acquisition life cycle. “That, coupled with emerging big data methods, will make complex data analysis more feasible,” he said. “Big data capabilities will allow military logisticians to take real-time intelligence and apply it to current and specific logistics operations.”
The chances that the Department of Defense will be able to overhaul its sustainment regime have much to do with the understanding of the importance of this mission by higher-level DoD and congressional policymakers. “Military systems program mangers are facing a big squeeze of shrinking budgets along with pressure to extend the life cycles of aging platforms,” said Beil. “They are required to preserve, if not increase, system readiness, so they are caught between a rock and a hard spot. Decisions to move forward with programs like MSG-3 hinge on leadership recognizing the need to change.”
“It’s going to be difficult to convince Congress to appropriate funds today that will create future savings, especially if we return to sequestration-level funding,” said Berteau. “Another element of uncertainty is the refusal of Congress over the last couple of years to offset areas where the Pentagon already proposed to cut spending and put those funds toward other things, like maintenance and sustainment.” Over the last two budget cycles, DoD has proposed to reduce the rates of increases for military pay and benefits. The fiscal situation is exacerbated by the fact that today’s military equipment is more strained than at other historical drawdown phases. “Our inventory of assets are older, they are used more, and we have fewer of them” than during other comparable historical periods, said Berteau. “Equipment that is used more tends to require more maintenance and more downtime. It is harder to find parts for older platforms and people to repair them.
“On the other hand,” Berteau continued, “technology allows us to internally track the performance of systems and get to them before they break down. So there are two dynamics working at cross purposes: The need is higher because of the age of the systems and the opportunities to target expenditures are greater than they have ever been.”
How does Berteau think Congress will handle the issue? “I’m a little more worried than I am optimistic,” he said.
Covers Combat Age-Old Foe
As they focus on minimizing the life cycle costs of platforms and systems, one of the more promising targets for military managers is equipment corrosion, which represents the largest avoidable cost—$23 billion a year—to DoD.
The problem is an age-old enemy of the Navy, since moisture is the most significant driver of environmental corrosion. But it also affects the full range of military operations, which rely on huge stocks of bulky, expensive equipment that would be cost-prohibitive to store inside fixed structures.
Fortunately, advances in protective technology are offering significant returns on investment by reducing environmental degradation, thus leading to reduced costs for maintenance and replacement parts.
One prominent player in protective systems is Shield Technologies Corporation (STC), which offers a range of products called Envelop Protective Covers. Developed with the help of a Navy small business innovation grant about a decade ago, the products are deployed throughout the Navy, as well as in many parts of the other services. The Army recently acquired the covers for its stock of howitzers, for example.
“It’s the only 100 percent waterproof but breathable cover that incorporates a vapor corrosion inhibitor to actively fight corrosion. That’s really what makes us unique,” explained Mike Dupasquier, STC’s chief operating officer.
“The military has done various studies, and those have shown that Envelop will reduce environmental degradation and corrosion by 95 percent compared to previous maintenance methods, which vary from covers to plain tarps and other things. Our product protects from moisture, water intrusion, UV, sand, heat, impact and corrosion, which was specifically why it was developed,” he continued.
The cost of the covers represents pennies to the dollar compared to repair costs that otherwise would be needed, Dupasquier added. “The return on investment for the howitzer product was fully four to one. This is just the cost of one cover, but doesn’t include the lifespan over the entire life of the system, since presumably the military will have it longer than just one cover. If you factor in savings from extending equipment life, you’re talking 250 or 300 to one.” ♦