breakout session 1: doing business with the...

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)

http://arsa.org/

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


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


http://potomac-law.com/attorneys/sarah-macleod/

http://potomac-law.com/

http://arsa.org/


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


http://firstaviation.com/

http://haeco.aero/content/about-haeco-americas.html

http://www.cummins.com/

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


• 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


• 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


• 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


10

formerly


11

About HAECO Group

MarineServicesBeverages Aviation

Trading&

IndustrialProperty

GroundServices

Cargo Handling

AirlinesCatering Engineering&

Maintenance


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


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)


14

MRO Services

More than 100 winglet mods

SATCOM / IFE antenna cutouts

777 crew rest installations

737CL crown skin replacement

Extensive Modification Experience


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

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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

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• 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?


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


• US government is the largest owner of FAA-certificatedaircraft.

Not just DOD…All Executive Agencies: DOT(FAA), DOJ, DOC, DHS, etc!!



• 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


https://www.gsa.gov/portal/content/104076

https://www.nbaa.org/business-aviation/NEXA-Report-Part-3-2012.pdf


• “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



• Upwards of ~80% of aircraft sustainmentcontracts can be sole sourced

Competitive Advantage to the “OEM”



• End Result: “OEM”-centric RFPs

Conflict in Rules v. Reality; Loopholes Exploited


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.


• 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


Otherwise, the RFP will NOT be structured to evaluate/value your unique offering


• 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


http://arsa.org/legislative/get-involved/


• 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



• 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


http://arsa.org/wp-content/uploads/2017/03/ARSACommentstoDODPanel-20161212.pdf

http://arsa.org/wp-content/uploads/2017/03/7b-ARSAtoDOD813Panel-20170130.pdf


Questions?



121 North Henry StreetAlexandria, VA 22314

Tel. 703.739.9543Fax 703.299.0254

[email protected]

2017 Legislative Day & Annual Repair Symposiumarsa.org/symposium


mailto:[email protected]

breakout session 1: doing business with the...

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