safety . integrity. diversity. success.for customers, communities and employees

Munitions Executive SummitHal Yoh, Chairman and CEOHal Yoh, Chairman and CEO

Day & ZimmermannDay & Zimmermann

Phoenix, Arizona8 February 2006

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The differencebetween asoldiersoldier and atouristtourist…

Image Source: Courtesy U.S. Army by Petty Officer 1st Class Alan D. Monyelle

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Without ammo the soldiersoldier is a just a touristtourist

Courtesy of LTG(R) Roy Beauchamp

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Three Key QuestionsAre we

Sustaining the munitions base?

Modernizing the munitions base?

Caring for the current stockpile?

… in a manner that ensures our soldierssoldiers will not be tourists tourists in the future?

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Sustaining Sustaining the Basethe Base

Specialized industrial skills & capabilities are essential

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Sustaining the BaseWhy Are We Concerned?

Munitions base not considered in budgetingNo coordination of service munitions budgetsServices increasingly procure own ammunition

Original intent of SMCA has erodedLoss of CAWF contributed to erosion

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Sustaining the BaseThese circumstances led to …Episodic demands for specific products

Skilled workers released then hired backProduction lines must be re-qualifiedQuality and responsiveness sufferedCapital investments difficult

Multiple solicitations from differentprocurement organizations for same product

Leads to a roller coaster environment for industryLeads to a roller coaster environment for industry

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Sustaining the BaseRecommendationsRecommendations

Level procurementsCoordinate service ammo budgetsRestore SMCA procurement authorityMaximize multi-year procurements

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Modernizing Modernizing the Basethe Base

GoalVariable rate flexible production

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Modernizing the BaseNot A High DoD Priority

MANTECH does not compete well for fundingBRAC has inhibited investment

Result?Growing dependence on single sources and foreign suppliers

Makes current base less robust and potentially less responsive

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Examples of Sole Source/Foreign ItemsLinks for small and medium caliber

Cotton Linters for combustable cartridge cases

Grenade Bodies for submunitions

Lead Azide

Black Powder

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Modernizing the BaseWhy Is Industry Concerned?

Army has modernization strategy, but funding constraints may prevent implementationNo disciplined process for modernizing privately-owned base Uncertain requirements calls for comprehensive Surge PlanningRobust MANTECH is essential necessary equipment and processes

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Modernizing the BaseRecommendationsRecommendations

MANTECH requires Senior Command Emphasis to compete for fundingInvolve industry in Surge PlanningModernization must include both government-owned and private capabilitiesReliable, steady funding

Ammo Procurement Surcharge?Significant Tax Credits?Provide Matching Funds?

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Caring Caring forfor InventoryInventory

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Current InventoryWhat the next war is fought with

Most ammo has a shelf life

Imperative to know condition of stockpile because it influences procurement decisions!

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Current InventoryAmmunition Management — Budget Line that funds care of stockpile is historic bill payerAmmunition Management funded from O&M Appropriation, not Ammo Procurement Appropriation

Safety/Security InventoryReceipt/Issue SurveillanceRe-warehousing Maintenance

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Current InventoryLearn from history

Ammunition Management funding at historiclow level 1989-1992

Stockpile study in 1993 found:Physical Survey – 15%15% accuracy rateLot Inspections – 51K51K Lot backlog (190K Lots Total In Storage)Large Cal Ammo Tests – 43%43% past dueLot Substitution – 63%63% of shipments

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Current InventoryOMA UNDERFUNDING LEADS TO

False sense of security

Deferral of essential procurements

Shipment denials

Inefficient outload

Stockpile deterioration

INCREASED RISK!!

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Current InventoryRecommendations

Adopt key metrics from 1993 Study to Command Readiness Reviews

Avoid returning to “Bad Old Days” –Fund Ammo O&M as fully as budgets allow

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SummaryThree Key Issues — Sustaining the Base,Modernizing the base and Caring for inventory

Best addressed by Government & Industry Cooperation

ICAP

MIBTF