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AVIATION WEEK EXECUTIVE ROUNDTABLE

FLEET READINESS ANDPERFORMANCE-BASED LOGISTICS

SUMMIT

Sponsored by

Hosted By:Gen. Gregory S.“Speedy” MartinCommander, U.S.Air Force Materiel Command

and David PaulingAsst. Dep. Under Sec. of Defense, Materiel Readiness/Maintenance Policy

Written By:Carole Rickard Hedden

April 18, 2005

Military and industry leaders met April 18 in Texas for thethird Aviation Week Executive Roundtable: Fleet Readinessand Performance-Based Logistics Summit.The summit, spon-sored by UGS, a product life-cycle management company,was hosted by U.S. Air Force Gen. Gregory S. “Speedy”Martin and David Pauling, assistant deputy under secretary ofdefense for materiel readiness and maintenance policy.

Although Air Force Gen. Martin was one of the officialhosts, the roundtable participants included representatives ofthe U.S. Navy, Marines and Army, as well as their suppliers.The participants reflected joint military cooperation and col-laboration among industry companies to achieve commongoals.

The summitwas the third in aseries of AviationWeek ExecutiveRoundtables. TimNichols of UGSsaid the conver-gence of technolo-gy and the mili-tary’s need tooperate in a jointand collaborativefashion in terms offielding, operatingand maintaining systems makes the summit a critical part ofstrategic planning.“There is a need to share information, notjust data, and to apply that information in a way that drivesdown costs, increases the speed with which systems are putinto use, and to drive savings into top-tier technology devel-opment rather than reinvention on a continuous basis,”Nichol said.“This group focused on this need.”

Pauling outlined the challenge: create a defense capabili-ty that achieves “SEMRS.” His reference was to SustainedEffective Material Readiness, defined as increasing the avail-ability of weapons systems and reducing time required toreturn a system to availability.

In real terms, Pauling wants to drive the materiel readi-ness/maintenance spend level from the current $60 billion to$48-50 billion annually and to improve the turnaround timeon system upgrade/maintenance by 30 percent. “We needyou, as an industry, to come to us with a plan to achieve this,”he said.

The common belief that reducing spending will kill theindustry was a major discussion point. Pauling noted thatsome type of return—a percentage of savings allocated asinvestment in technology “stretch” or innovation and inser-tion—must be identified to make performance improve-ments a reality. Results, not repair, become the imperative.

Gen. Martin, commander of Air Force MaterielCommand (AFMC) at Wright-Patterson AFB, took Pauling’schallenge to an operational level in his discussion of per-formance-based logistics (PBL).“Everyone uses the term, butthey all have a different view,” Martin said. “Using the termallows them to be a part of the conversation.”

Gen. Martin noted that while the expectation is results-based performance, those negotiating the contracts—on thepart of the military and from industry—had not been madefully aware of how to implement the new contracting mod-els. “There must be a clear articulation of performance goals,of metrics, of the organizational structure, of the chaininvolved in making changes … and clear identification of theincentives for suppliers to work with us.”

Gen. Martin’s presentation also underscored the impor-tance of accurate data and metrics in taking quick action—“knowing which lever” to pull to make decisions and achievethe needed result.The digital thread of a weapons system—from its contract initiation through its utilization in thefield—must provide analysis, not merely data.

DEFINING PBLPBL defines performance requirements in terms of

readiness and cycle time for maintenance/upgrades. It also

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“There must be a clear articulation of performancegoals, of metrics, of the organizational structure, ofthe chain involved in making changes … and clearidentification of the incentives for suppliers to workwith us.”

—Gen. Gregory S. “Speedy” Martin, Commander, U.S. Air Force Materiel Command

defines who the owner is, who the user is, includes metrics,identifies the organization achieving the logistical goals, anddescribes oversight methods.

PBL GOALS➢ Increase Operational Availability➢ Decrease Cost Per Unit Usage➢ Decrease Logistics Response Time➢ Increase Operational Reliability➢ Decrease Logistics Footprint➢ Avoid Obsolescence

The goal of PBL is a 10-percent reduction in annualoperating support cost by FY2011, and a 20-percent increasein equipment/system availability.

For the U.S.Air Force, the goals have been developed atthe next operational level. In terms of Air Force MaterielCommand initiatives, based on the work of AFMC underGen. Lester Lyles and by Gen. Martin, the goals are:

Aviation Week Executive Roundtable participants werechallenged to develop a contract template for performance-based logistics that defines:

➢ The appropriate level of system/subsystem/item tobe included in a performance-based contract.

➢ Establishes collaboration between end-user and sup-plier with regard to systems engineering and per-formance-based logistics.

➢ Creates incentives for the insertion of new technol-ogy, particularly on older aircraft.

➢ Ensures a role for small business, where much inno-vation and creativity takes place.

➢ Identifies the barriers to technology transfer thatenables the system approach—between companies,military branches, agencies and countries.

Among the concerns for lead system integrators orOEMs is original intent for global participation and the reali-ty of technology-transfer decision-making. Global partnerswant a meaningful role on major systems, beyond bendingmetal. However, the reality of technology-transfer decision-making creates a breach in the contracting process.Participants noted that licensing agreements need to be clar-ified as part of the process of defining PBL. Gen. Martin men-tioned that Congressional committees are reviewing tech-nology-transfer issues as part of trade considerations. Thislinks directly to previous roundtable action items to identifythe cost to the U.S.—in speed, in dollars, in affectivity and incredibility—of seeking global collaboration and then backingoff due to conflicts between U.S. diplomacy and U.S. tradestrategies.

THE OUTCOMESSix tables of participants addressed the components of

establishing a meaningful PBL approach.Table leaders includ-ed David Pauling; Russ Sparks, vice president of militaryengine programs for GE Aircraft Engines; John Phillips, vicepresident of military support programs, The Home Depot;Tom Burbage, vice president and general manager of JointStrike Fighter integration, Lockheed Martin Aeronautics;David Nagy, vice president and IPT leader, NorthropGrumman; Charles T.“Tony” Robertson, vice president of AirForce systems support, Boeing Integrated Defense Systems;and Tim Nichols, UGS.

One function of the discussion groups was to establishshared concern for common goals: participants quicklyarrived at a common understanding and shared views:

➢ PBL implies wider consideration than that of prod-uct/system alone—partnering, international collabo-ration, ability to change mission, ability to insert newtechnology, etc.—during the contract phase.

➢ The military or agency “owner” of a contract needsto determine its level—system, sub-system or item.

➢ Metrics must influence results vs. repairs to includemodeling to determine the cause-and-effect impactto metrics.

➢ A new method of assuring small business develop-

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Depot

Maintenance

Transformation

• 25% decrease in

flow days

• 100% on-time

delivery

• 10% decrease in

costs

• 20% increase in

aircraft availability

Purchasing and

Supply Chain

Management

• 50% drop insourcing cycletime

• 20% increase insupply materielavailability

• 20% decrease inpurchase andrepair dollars

Product Support

Campaign (draft)

• 10% decrease inlife-cycle costs

• Projected actuallife-cycle costswithin 10% ofbid

• 20% increase inweapon systemavailability

ment/share of work is needed—instead of percent-age, perhaps flow-through of actual dollars.

➢ Industry needs to move to managing a weapons sys-tem as a business vs. selling parts.

➢ Technology refresh/upgrades need to be included inlong-term planning as part of the incentive to movetoward managing systems instead of merely provid-ing parts.

➢ There is a need to recognize that some items do notfit the PBL model in a cost-effective manner, andthose instances need to be identified.

As part of the Aviation Week Executive Roundtableprocess, participants also identified action items to enablethese changes.These include:

➢ JSF lessons learned on PBL contract model formu-lated and shared (Tom Burbage).

➢ The U.S.Army will do a reverse scenario to deter-

mine PBL impact to legacy aviation systems such asM-TADS/PNVS on the AH-64 helicopter (KevinRees, John Lund).

➢ Northrop Grumman Integrated Systems will identifya program for the reverse scenario (David Nagy).

➢ Boeing is to evaluate a reverse scenario for the C-17legacy system (Tony Robertson).

➢ Need to reach out to small business to determinewhether PBL fits at the piece-part level (to beassigned).

➢ Build the PBL concept into Defense Acquisition pol-icy/education and parallel programs in industry (JohnPhillips).

➢ Establish a knowledge management system to trackmeaningful data on PBL contracts to enable decision-making, risk management and improve readinesscapability (Tim Nichols).

UGS is a 5,000-strong, global team whose driving visionis to work collaboratively with our clients to createenterprise solutions that enable them to transform theirprocess of innovation and, in doing so, begin to capturethe value of product life-cycle management (PLM).

PLM is an increasingly important and visible enter-prise business strategy through which organizationsdigitally manage a product's complete lifecycle—all theway from its concept to its retirement—and gain high-er business value from that product as a result.

UGS is the PLM global leader in the aerospace anddefense industry with its portfolio of software solu-tions, including Teamcenter applications, which com-bine product knowledge and configuration manage-ment experience with MRO planning, execution andmanagement to greatly reduce MRO costs and cycletime. Teamcenter, as the standard PLM tool in manymilitary and commercial programs, extends that prod-uct knowledge into the support phase of the lifecyclefor the OEM, lead system integrator or operator ofcomplex aerospace and defense assets.

Through the rich heritage of companies that cametogether to form UGS, the company’s pioneering solu-tions have been helping customers accelerate time tomarket, improve quality and increase revenue foralmost four decades.With nearly four million licensedseats of its technology in use and 42,000 clients world-wide, UGS is a proven leader in both market experi-ence and PLM solution development. In fact, UGS tech-nology manages or creates more than 40 percent ofthe world's 3-D data. www.ugs.com

UGS

The Aviation Week Executive Roundtables are aninvitation-only forum in which hands-on programexecutives meet to address issues common to tech-nology development and industry effectiveness as itapplies to space exploration, defense, security andcommercial air transport.

The roundtables are an outgrowth of the AviationWeek Advisory Panels.The executives on these panelsinitially called for action planning surrounding severalcritical issues:

• Industry interoperability.• Technology transfer/sharing.• System lifecycle management.• Development of future program leaders.• Redefining engineering performance to fit new

engineering task models.From the work of these individuals, Aviation Week

has held three Executive Roundtables. The first twowere held to gain shared understanding of issues andheld in conjunction with the Aerospace & DefensePrograms Conference.The Toulouse World AerospaceSymposium site was used to develop action plans toaddress the critical issues.

The third roundtable was developed from thesemeetings, to define and move forward the definition ofperformance-based logistics in support of weaponssystems readiness.

AVIATION WEEK EXECUTIVEROUNDTABLES

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