C-17 Aug 04 Rtoc Forum Edh

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Col Gregg Sparks

Director, C-17 LogisticsAugust 4, 2004

Col Gregg Sparks

Director, C-17 LogisticsAugust 4, 2004

C-17 SYSTEM PROGRAM OFFICEC-17 SYSTEM PROGRAM OFFICENINETEENTH QUARTERLYNINETEENTH QUARTERLY

REDUCTION IN TOTAL OWNERSHIP COSTREDUCTION IN TOTAL OWNERSHIP COST

(RTOC) FORUM(RTOC) FORUM

C-17 SYSTEM PROGRAM OFFICEC-17 SYSTEM PROGRAM OFFICENINETEENTH QUARTERLYNINETEENTH QUARTERLY

REDUCTION IN TOTAL OWNERSHIP COSTREDUCTION IN TOTAL OWNERSHIP COST

(RTOC) FORUM(RTOC) FORUM



2

OVERVIEW

• C-17 Aircraft and its Success

• Institutionalizing RTOC in the C-17• Globemaster III Sustainment

Partnership (GSP) Contract

• Summary



3

OVERVIEW


• Institutionalizing RTOC in the C-17• Globemaster III Sustainment

Partnership (GSP) Contract

• Summary



Deliver & Sustain QualityC-17 Fleet

Improve C-17 Capabilityand Support

Lower C-17 Life Cycle Cost

Improve C-17 Readiness

C-17 SPO MISSION



COMBINES ATTRIBUTES OFSEVERAL AIRLIFTERS INTO ONE

Air Refueling

Air Refueling

GroundManeuverability

GroundManeuverability

Oversize/OutsizeCargo

Oversize/OutsizeCargo

Survivability

Survivability

Airdrop

Airdrop

Combat Offload

Combat Offload

Small Austere Airfields

Small Austere Airfields

Direct Delivery

Direct Delivery

Roll-On/Roll-Off

Roll-On/Roll-Off



OPERATION ENDURING FREEDOM (OEF)/OPERATION IRAQI FREEDOM (OIF)

Airmen from the 16th Special Operations Wing at

Hurlburt Field, Fla., offload a MH-53J Pave Low III

helicopter from a C-17A Globemaster III at an

Operation Enduring Freedom location. The C-17 can

carry nearly every type of Air Force and Army air-

transportable equipment.

SUCCESSES• Highest Operational C-17 Airdrop

• High Altitude Airdrop of 2.4MHumanitarian Rations

• First Air Land Delivery of Combat

Loaded M1A1 Main Battle Tank• First C-17 Combat Personnel Airdrop

• Opened Northern Front, Inaccessible by Land

• Largest C-17 Combat Formation Ever Flown

• Assembled a Complete Brigade in Just Under 1 Week

• Flown 214,000 hours delivering253,000 pax and 338,000 STONs(as of 30 Jun 04)



CURRENT AND FUTURE C-17BASING CONCEPT

• March AFB 0 of 8

C-17 SPOHQ AMC

WR-ALC

McChord AFB,WA48 of 44

UK

4 of 4

Altus AFB,OK 10 of 15

Charleston AFB,SC

53 of 50

Edwards AFB,CA T-1

March AFB,CA8 (Jun 05)

Travis AFB, CA13 (Jun 06)

Elmendorf AFB,

AK 8 (Apr 07)

McGuire AFB, NJ13 (Sep 04)

Dover AFB, DE13 (Jul 07)

Hickam AFB, HI

8 (Dec 05) New Bases

Existing Bases

Jackson, MS

8 of 8

As of: 30 Jun 04



AIRCRAFT DELIVERY PROFILE

12 13 8

4

16 17 11

5

15 16 15 9

6

15 15 6

MYI: P-120 delivers May 04

MYII: P-180 delivers Apr 08+42 : P-222 delivers Jan 2011



OVERVIEW


•Institutionalizing RTOC in the C-17

• Globemaster III SustainmentPartnership (GSP) Contract

• Summary



C-17 RTOC Activity Before 1999

PRODUCTION AFFORDABILITY PROGRAM

• Affordability program has become a way of life for C-17aircraft cost reductioninitiatives:1) Omnibus Investments (‘94/‘95)

$101M Gov’t and Boeing fundsunder Omnibus Agreement

2) Affordability (‘95)$249M Gov’t funds to reduce unit costunder FPI production contract

3) Economic Order Quantity (EOQ) (‘96)$300M Gov’t funds to perform aircraft cost reductionefforts, savings factored into MYP I contract

4) Must Cost (‘99)$212M Gov’t funds with purpose of reducing futureaircraft MYP II procurement costs

5) Affordability 180 (‘01/‘02)Boeing funds to ensure 60 aircraft follow-on costtargets can be achieved

$PerUnit

Aircraft Unit

OmnibusInves

tments

Affordability‘95

EOQ

MustCost

Affordability180

‘94

‘07



Lot 8 and Beyond

Lot 8 and Beyond

Lot 9 and Beyond

Should CostBaseline Single Year

7 Year Multi-year

$208MAvg Unit Price

$268MAvg Unit Price

$229MAvg Unit Price

$178MAvg Unit Price

Warranty,Aggressive

Omnibus (PICRP)Afford 95, NEAT

Lot 8 and Beyond

Should CostBuy Profile



ADMBuy Profile

Should CostReductions

Multi-Year Reductions

Affordability 180

$163M

60 AircraftFollow-on

Must Cost

Avg Unit Price

OVERALL C-17 ACQUISITIONAIRFRAME PRICE STORY (TY$)

Should CostMigrated



C-17 RTOC Activity Before 1999

C-17 AVERAGE UNIT FLYAWAY COST

P1-P40 P41-P120 P121-P180 P181-P222

AVERAGE UNIT COST AVERAGE UNIT COST AVERAGE UNIT COST AVERAGE UNIT COST

TY$ 289.6 TY$ 204.9 TY$ 196.8 TY$ ???BY96$ 296.5 BY96$ 191.1 BY96$ 171.3 BY96$ ???

C-17 AVERAGE UNIT FLYAWAY COST

150

170

190

210

230

250

270

290

P1-P40 P41-P120 P121-P180

( $ M )

150

170

190

210

230

250

270

290

BY96$

TY$



Institutionalizing RTOC in C-17 PROJECTED RTOC SAVINGS

RTOC Approved Business Case Analyses (BCA)

BCA (TY$ M)

FY02/

Prior FY03 FY04 FY05

FY06 to

Completion

Multi-Year Procurement $390.4 $88.0 $0.0 $0.0 $0.

Follow-On MYP P121-P180 $13.5 -$133.9 $129.1 $254.9 $1,239.8Combustion Engine Exit Temp. Kit $6.3 $19.3 $26.4 $26.4 $633.

Optical Quick Access Recorder $5.2 $1.1 $1.4 $1.5 $38.Modern Int Level Test Station $4.9 $4.9 $4.9 $4.9 $98.

OBIGGS 1.1 $2.0 $9.6 $477.

Pitot Tube Probe Redesign $0.3 $0.3 $14.

MLG Improvements < .1 < .1 $3.9 $756.

Imp Position/Navigation Light < .1 $0.1 $1.

Loadmaster Printer Removal < .1 $0.2 $9.

Total Projected Savings $581.8 -$20.6 $164.1 $301.8 $3,269.2



Institutionalizing RTOC in C-17 C-17 SUPPORTABILITY MODEL

• Prioritizes Projects for the Material ImprovementProgram (MIP)

• Aircraft deficiencies are submitted from the field

• Root causes are evaluated, solutions identified

• Resources are applied to resolve the problem• Supportability Model rank orders the Deficiency Reports/MIPs

• The Model rank orders DRs/MIPs based on OSS&E, MissionCapable Rate and Real Hazard Index

• Results are presented to AMC and highest priority MIPS are

elevated to “fenced funding” category

• 52 FY04 MIP projects to raise MC rate 0.8 % providinga value of nearly $400M over the 30 year life of theprogram



Institutionalizing RTOC in C-17 RTOC O&M BASELINE

C-17 Program is improving capability andreducing O&M cost per aircraft

* FY04 is Baseline Year

$1,600

$1,650

$1,700

$1,750

$1,800

$1,850

$1,900

$1,950

$2,000

$9

$10

$11

$12

$13

$14

$15

$16

Total O&M ($M ) O&M per A/C ($M

FY04117

FY05132

FY06148

FY07163

FY08179

FY09180



OVERVIEW


• Institutionalizing RTOC in the C-17


• Summary



18

GSP OVERVIEW

GSP Introduction

New Features and Incentives

Contract Metrics

Summary



19

GSP Introduction

• Covers all the labor and material support provided by thesuccessful Flexible Sustainment Contract

• In addition to covering all the requirements of the previousFlex Contract, the new GSP Contract:

– Doubles the number of supported bases (5 to 10 MOBs)

– Supports 30% more aircraft (covers 185 C-17s)

– Includes support for three new customers (ANG, AFR, and PACAF)

– Expands an already successful depot strategy

– Incorporates new innovations for engineering and supply practices(MIP, PBL…)

– Guarantees of increased fleet availability in yearly increments

– Increases the standard for issue effectiveness – Increased TSSR responsibility for contingency and Depot planning

– Growing logistics partnership

Builds upon a successful history of superior contract supportBuilds upon a successful history of superior contract supportBuilds upon a successful history of superior contract supportBuilds upon a successful history of superior contract support



20

GSP Introduction (Cont)

• 5-year Contract valued at $4.94B

• Contract Type – FFP/AF (65%) includes P&W engine subcontract and agreed

upon labor hours – CPIF (35%) includes inter-department Boeing hours and all

material support – procurement and component repair – T&M efforts include MIP, UK safety investigations and O&A

• Boeing Investment in Air Logistics Centers – $62M, primarily in form of capital equipment

– Invest in all 3 ALCs at no increased price to sustainmentcontract – Supplement to the $94M AF investments in ALCs

• Contract signed 22 Jul 04



21

FFP New Featuresand Incentives

• The award fee - 5% of FFP pool

• The profit rate is 13%

• Customer satisfaction has an increased emphasis

– Two Award Fee metrics

- Non-empirical: 15% Customer Satisfaction

- Empirical: 85% Aircraft Availability

• Twice a year feedback and award fee determination

– Mid Year pool is 35% (70% of 50%) – End Year Award fee pool is the remaining 65% plus any

unawarded pool from the mid year review

User influence & increased performanceUser influence & increased performanceUser influence & increased performanceUser influence & increased performance



22

Other Featuresand Incentives

• Opportunity for faster execution of T&M and Class II

requirements – Attempting to bake in a ceiling for MIP and UK airworthiness – Without RFP, Boeing can submit cost volumes for class II

changes

• Hub and Spoke support to USAF bases to reducepersonnel footprint

• Expanded Total System Support Responsibilities – More latitude to respond to USAF contingency

- RSP and HPMSK spares kits support

- More Field Teams – More Site Activation program management – Recurring Enroute and BASC spares procurement planning – More Latitude for Engineering and supply cost saving initiatives



23

Six contract performance metrics

Continuously raised benchmark levels

Boeing granted TSSR while committing to performance guarantees

GSP isPerformance Based Logistics

Support To UK and USAF Users Is ParamountSupport To UK and USAF Users Is ParamountSupport To UK and USAF Users Is ParamountSupport To UK and USAF Users Is Paramount

Boeing’s TSSR role includes C-17 item management and depot-

level repair of C-17 airframe and sub-components



24

GSP Summary

• Contract signed 22 Jul 04• Builds on a successful sustainment contract history by

adding more requirements, more incentives, moreresponsibility, and more performance

• More user feedback and influence on award fee• Challenges will require constant user feedback and agile

contract processes



25


• Institutionalizing RTOC in the C-17


• Summary

OVERVIEW



26

SUMMARY

C-17 SPO achieving itsmission

• Deliver & Sustain QualityC-17 Fleet

• Improve C-17 Capabilityand Support

• Lower C-17 Life Cycle Cost

• Improve C-17 ReadinessMarines from the 26th Marine Expeditionary Unit

line up to board a C-17A Globemaster III at anoperating location in support of Operation

Enduring Freedom



Backup



28

DR Reporting Timeliness

TCTO Processing

Provisioning

SparesStockage Effictiveness

MICAPServices

Engine RFI

ROR TAT MXSchedEffectiveness

Foundation Metrics

NMCB DEPOT

PROGRAM MGMTCOST

TRADE OFFS

SPARESMGMT COST

Cost As An Independent VariableCost As An Independent Variable

TransitionMetrics

SUSTAININGENGINEERINGCOST

MAINTENANCECOST

Cost Per

Flying Hour

OPS / MX Performance Cost Performance

AWP

AIRFRAMECOST

ENGINE COST

POS COST

RSPCOST

ACICOST

PAINT/DEPAINT COST

MOD COST

TECH ORDERCOST

SUPPORTEQUIPMENT COST

ProposalsforNon-TransitionedSpares

SupportLevelsof the MRSP& IRSP Changesto Newor ExistingTOs

ED for TO UpdateEDfor NMCM Aircraft

Fleet ConfigMgmt Status

SkyhookResponse

Engine RFI

MXSchedEffectiveness

Technical Order Timeliness

NMCS O&I SkyhookResponse

Fleet ConfigMgmt Status

Engineering Disposition

FY 01-05 Metrics

Cost Control

Engine RFI

Supply Support MXSchedEffectiveness

FleetConfigMgmtS tatus

FleetFleetAvailabilityAvailability

FlyingHours Achievable

ForwardSup ply Location

Issue Effectiveness

MICAPServices

Depot Scheduling

• Globemaster Sustainment Aircraft Availability (GSAA) – health of the fleet

• Depot Maintenance Scheduling Effect

– depot level maintenance

• Flying Hours Achievable (FHA) – wartime preparedness

• Issue Effectiveness

–

peacetime and wartime supply support

• MICAP Service Effectiveness

–

critical parts shortages

• Customer Satisfaction

Contract Compliance

Metrics Strategy

A few hard hitting Metrics part of long term strategyA few hard hitting Metrics part of long term strategyA few hard hitting Metrics part of long term strategyA few hard hitting Metrics part of long term strategy

CP N F t



29

CP New Featuresand Incentives

• Incentivizes costs control from the negotiated target cost using a 70/30

share ratio

• Should Boeing demonstrate a cost savings of 14% in FY04 and FY05, theCPIF contract converts to FFP in FY07 and FY08 at a lower cost togovernment ($134M) and higher profit to Boeing (13% with 5% award fee)

Incentivizes Cost Control per flying hour and BASC EventsIncentivizes Cost Control per flying hour and BASC EventsIncentivizes Cost Control per flying hour and BASC EventsIncentivizes Cost Control per flying hour and BASC Events

$1,326

$1,572

$1,781

$-

$50

$100

$150

$200

$250

COST($M)

F E E

(

FEE $215.36 $141.48 $78.60

$1,326 $1,572 $1,781

Low Cost Estimate (LCE) $ 1,325M 15.65% cost underrun

High Cost Estimate (HCE) $ 1,781M 13.32% cost overrun

Target Fee 9.0% Target cost

Max Fee 13.7% 15.65% cost underrun or less

Min Fee 5.0% 13.32% cost overrun or more



98 99 00 01 02 03 05 06

14014042424242 5454 6666 7575 9292 109109 125125 156156

07 0804 09

??180180171171

Sustainment Timeline

Contractor assumes

responsibility,risk, and higher

performancerequirements

Incrementaltransition of government

responsibilities

ContractAward

Travis

Transition Proof of Concept Implementation

Assess-ment

We Are Here

McChord

ContractAward

Contractor continues TotalSystem Support Responsibility, meets

more challenging requirements per ORDobjective and partners with the ALCs

FY04-11 Contract Award(FY09-11 Unpriced Options)

JacksonMcGuire

MarchHickam Elmendorf

Dover

Number of AircraftNumber of Aircraft



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GSP Relationships

GSP Contract

BOEINGBOEING

TSSR

C-17 PROGRAMC-17 PROGRAM

• Program Management• Asset Repair • Depot Maintenance• Technical Orders• Support Equipment• Supply Management• Sustaining Engineering• Engine Management

• Program Management• Asset Repair • Depot Maintenance• Technical Orders• Support Equipment• Supply Management• Sustaining Engineering• Engine Management

Boeing / VendorsBoeing / VendorsALCsALCs

SubcontractsDirect Sales Partnering

Agreement

DSPA signed/coordinated with AFMC/CC Nov 02

C-17 Aug 04 Rtoc Forum Edh

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