breakout session 1: doing business with the...
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121 North Henry StreetAlexandria, VA 22314
Tel. 703.739.9543Fax 703.739.9488
www.arsa.org2017 Legislative Day & Annual Repair Symposium
arsa.org/symposium
Breakout Session 1:Doing Business with the Military
March 17, 2017Josh Krotec, First Aviation Services
Ray Hauck, HAECO AmericasTraci Kraus, Cummins
Sarah MacLeod, ARSA (Moderator)
Doing Business with the Military
Is the Department of Defense a viable sourceof income for a small-to-medium sizedbusiness? Doing business with the governmentis not like private enterprise contractualrelationships; the former is constrained byfederal acquisition regulations (the real FARS)and other equally daunting requirements. Learnfrom companies that are doing business withthe military to determine if this is a viablerevenue-stream for your enterprise.
Description
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 1
Doing Business with the Military
Sarah MacLeod is managing member ofOFM&K and a founder and executive directorof the Aeronautical Repair Station Association.She has advocated for individuals andcompanies on international aviation safety law,policy and compliance issues for 30 years.Ms. MacLeod obtained a bachelor’s degreefrom Evergreen State College, Olympia,Washington and a law degree from CatholicUniversity of America.
About the Moderator – Sarah MacLeod
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 2
Doing Business with the Military
Josh Krotec, Senior Vice President, First Aviation ServicesRay Hauck, Senior Vice President of Military Sales, HAECO AmericasTraci Kraus, Director of Government Relations, Cummins Inc.
Moderator: Sarah MacLeod, Executive Director, ARSA
Panelist Introductions
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 3
Company OverviewAerospace Turbine Rotables, Inc., Evōlution Aerospace, Inc. & Piedmont Propulsion Systems, LLC
5© 2017 First Aviation Services Inc. Proprietary & Confidential. Do not copy or reproduce without written consent.
First Aviation Org Structure
100%100%
Wichita, KSAddison, TX
Winston-Salem, NC
100%
Wichita, KSWinston-Salem, NC
CAGE: 4PEE3CAGE: 5TJN7
CAGE: 61MZ2
SMALL BUSINESSESoperating under
NAICS Codes:• 336411
• 336412
• 336413
• 488190
• 541330
6© 2017 First Aviation Services Inc. Proprietary & Confidential. Do not copy or reproduce without written consent.
• Diverse Component MRO Capability and Experience– Landing gear systems, wheels & brakes– Hydraulic & electro-mechanical actuators– Advanced Composite Repairs– Flight control systems– Electronics– Motors & gearboxes– Panels, switches & controls– Lighting and power supplies– Hydrostatic Testing– Fire suppression systems– Oxygen Masks, Bottles & Valves– Prop & Rotor Blades: Composite & Metal– Prop & Rotor Hubs, Actuators & Governors
Repair & Overhaul
7© 2017 First Aviation Services Inc. Proprietary & Confidential. Do not copy or reproduce without written consent.
• Proprietary Engineered Solutions– Development of Repair Procedures– DMSMS solutions
• Obsolescence management / alternative sources• Out-of-Production Type Certificate management
– Upgrades & Modifications• Service Life Extension Programs (SLEP)• Supplemental Type Certs (STC)
– Government approvals:• DOD Source Approvals (SAR)• FAA PMA + FAA PAH• FAA STCs• FAA DER Repairs
– Solve legacy supply chain issues• Long leads, high costs, etc.
Engineering Support
8© 2017 First Aviation Services Inc. Proprietary & Confidential. Do not copy or reproduce without written consent.
• Our companies serve all Aviation MRO markets– Commercial Airlines
– Military / Government
– Business Aviation
Experience
HAECO Americas – A HAECO Group company.
AmericasHAECO
RAY HAUCK
SVP Military Business Development
March 2017
HAECO Americas – A HAECO Group company.
10
formerly
HAECO Americas – A HAECO Group company.
11
About HAECO Group
MarineServicesBeverages Aviation
Trading&
IndustrialProperty
GroundServices
Cargo Handling
AirlinesCatering Engineering&
Maintenance
HAECO Americas – A HAECO Group company.
12
MRO Services
Nearly 4 million labor hours per year across 3 facilities
More than 3,500 aircraft visits since 2003
GreensboroNorth Carolina
Lake CityFlorida
MaconGeorgia
HAECO Americas – A HAECO Group company.
13
MRO Services
Complete range of check services (A through HMV / PDM)
Full back shop support, including advanced composites
Modification work, engineering and related touch labor
On site liaison engineering supplemented by HAECO Cabin Solutions engineers and organization delegation authorization (ODA)
HAECO Americas – A HAECO Group company.
14
MRO Services
More than 100 winglet mods
SATCOM / IFE antenna cutouts
777 crew rest installations
737CL crown skin replacement
Extensive Modification Experience
HAECO Americas – A HAECO Group company.
15
MRO Services
Current Programs United Airlines
UPS
Alaska Airlines
JetBlue Airways
U.S. Air Force (KC-10)
Precision Aviation
Air Canada
PSA
Endeavor
Airframe Services CustomersRecently Completed Programs American Airlines
Southwest Airlines
U.S. Coast Guard (HC-130H)
Icelandair
United Express (all operators; cabin modification on CRJ700 fleet)
Cummins
Cummins delivers power through our
products
17
Engine PowerSystems Components Distribution
Four unitscomplementary business
18
Engine Business
19
Light-Duty Automotive & RV
Heavy-Duty Truck
Medium-Duty Truck & Bus
1 M+Engines made
in 2015
49–675 hpBroad range of products
Construction & Agriculture
Power Systems
20
* For diesel
Mining RailMarinePower Generation Oil and Gas
Up to 5,500 hp*
Power ranges Engine>15L
PowerEquipment
PowerComponents
PowerEquipment
4
Key technologiesFor meeting
global emission standards
Components
Emission Solutions
Electronics Fuel Systems
Turbo TechnologiesFiltration
$5.2 BSales in 2015
Integrated business segments
Fuel Systems | Emission SolutionsTurbo Technologies | Filtration
21
Distribution
Provide service and support
through our extensive global distributor and dealer network of
factory trained technicians
Provide trainingto dealers and employees to ensure the customer sees one Cummins
when interacting with our company
Provide solutions for customers, leveraging the full
range of Cummins products in more than 20 application segments
120Global
distributors
22
Cummins delivers power through our
network
23
Global presence
Countriesand territories
190+
Develop, design and manufacture products on
6continents
Employeesworldwide
55,000
24
U.S. 61%
Europe/Middle East 13%
Mexico/Latin America 6%
China 7%
Asia Pacific 8%
India 3% Africa 2%
61%U.S.
39%Outside U.S.
2015 Global Sales
25
Global partnerships
26
Military business and government relations
We provide: Army and Air Force gen sets; tank engines, Navy and Coast Guard vessel engines, parts, etc.We work closely with Congress to create and fund
opportunities.– Focus on relevant committees and Congressional
representatives.– Oversight can be helpful if having trouble
27
Doing Business with the Military
• YES! It’s a LOT of potential income…
• DOD contracts tens of billions in aircraftMRO services annually; >$10.5B ofaircraft “depot” maintenance, alone:
Is DOD a Viable Source of Income for SMEs?
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 28
DOD Aircraft Depot Maintenance Budget($ millions) 2015 2016 2017In-House $4,649.2 $5,147.1 $5,397.7Outsourced $8,062.4 $9,469.8 $10,506.7
Doing Business with the Military
• US government is the largest owner of FAA-certificatedaircraft.
Not just DOD…All Executive Agencies: DOT(FAA), DOJ, DOC, DHS, etc!!
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 29
Doing Business with the Military
• Federal agencies must report aircraft usagethrough the Government ServicesAdministration.
• Although not the focus of this session, don’tforget local governments own and operateaircraft—– Law enforcement– Search and rescue– Aerial surveys
• See NBAA report that includes state and localgovernment usage; google your state!
Governmental Use of Aircraft
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 30
Doing Business with the Military
• “Throw normal business logic out the window”
• DOD’s (and other agencies) acquisitions are governed by strict procedures—– Federal Acquisition Regulations (“FAR”)– Defense Federal Acquisition Regulation
Supplement (“DFARS”)
It Ain’t Like Private Contractual Relationships
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 31
Doing Business with the Military
• Upwards of ~80% of aircraft sustainmentcontracts can be sole sourced
Competitive Advantage to the “OEM”
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 32
Doing Business with the Military
• End Result: “OEM”-centric RFPs
Conflict in Rules v. Reality; Loopholes Exploited
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 33
Rules / Requirements Reality / Loopholes
• Government has unlimited rights in and to maintenance technical data (e.g., AMM, CMMs, etc.).
• Government did not ask for (and therefore never received) the data.
• Government negotiated some other, more restrictive level of rights.
• Government writes its RFP to require compliance with “OEM” data (e.g, CMM)
• Government cannot (or will not) provide CMMs to otherwise capable bidders.
• Government (DOD, DHS, etc.) has sole authority to determine airworthiness or capabilities.
• Government writes RFP to require all bidders to be “OEM”-licensed or “approved”.
• DOD policy prefers to maintain FAA-certification where applicable.
• DOD often requires DOD source approval for DER repairs, etc.
Doing Business with the Military
• Proactively find and meet the program officersand engineers who manage weapon systems ofyour interest– Pitch your company’s unique value or solution
long before an RFP is drafted.– Apply for Source Approval (SAR) in advance,
if needed.• Attend Industry Days, schedule 1-on-1s and
respond to RFIs
Success = Getting Involved Early and Often
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 34
Otherwise, the RFP will NOT be structured to evaluate/value your unique offering
Doing Business with the Military
• Are you interested in a city, county, stateor federal contract?
• Local and federal legislators are interestedin spending money wisely—help them by:– Introducing your company (develop a
company profile).– Inviting them to visit your facility.
• ARSA has templates for these activities!
Legislative Activity Helps Here Also
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 35
Doing Business with the Military
• ARSA helps educate government customersabout the benefits of working with any and allpart 145 repair stations– Large, existing U.S. industrial base of 145s.– Majority of 145s are small to medium – sized
businesses (SMEs).– All 145s have U.S. government certificates to
perform MRO functions.• ARSA members need to actively participate in all
government processes to obtain a fair share!
ARSA Activity
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 36
Doing Business with the Military
• Josh Krotec’s involvement with congresshelped create a committee to studyoperations, maintenance, installation andtraining (OMIT) information versus“original production” information.– Panel mainly large and active “OEMs”– ARSA provided information to help the DOD
panelists understand the civilian approach:http://arsa.org/wp-content/uploads/2017/03/ARSACommentstoDODPanel-20161212.pdfhttp://arsa.org/wp-content/uploads/2017/03/7b-ARSAtoDOD813Panel-20170130.pdf
ARSA’s Latest Involvement
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 37
Doing Business with the Military
Questions?
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 38
Doing Business with the Military
121 North Henry StreetAlexandria, VA 22314
Tel. 703.739.9543Fax 703.299.0254
arsa@arsa.org
2017 Legislative Day & Annual Repair Symposiumarsa.org/symposium
March 17, 2017 Copyright © 2017 Obadal, Filler, MacLeod & Klein, P.L.C. 703 299 0784 • http://potomac-law.com 39
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