1 Air Force Materiel Command I n t e g r i t y - S e r v i c e - E x c e l l e n c e Developing, Fielding, and Sustaining America’s Aerospace Force OC-ALC/MAN DSN: OC-ALC Depot Partnering 24 Feb 04

2 Why Partner? Organic Depot Maintenance Perspective Perform work related to core competencies Improved utilization of underutilized capacity –Private sector use of excess plant and equipment Reduce cost of ownership Reduce the cost of products or services Leverage private sector investment –Plant and equipment recapitalization –Commercial business ventures –Speed integration of innovative repair technologies Proven track-record for achieving efficiencies in infrastructure Achieve capacity building growth and development through the use tailored public-private partnerships -- Improved War Fighter Support --

3 Stakeholder Objectives Warfighter: –Ready and available weapon systems –Win war now & in the future at reduced ownership cost Single Manager: –Acquire best value weapon systems for warfighter Sustainment Manager: –Sustain best value weapon systems for warfighter ALC –Perform “work” providing knowledge, skills, abilities, and other resources supporting core logistics capabilities Prime Contractor: –Meet the desires of all customers - reputation –Provide user with superior and reliable combat capability –Earn a reasonable profit / return for shareholders

4 Partnering Considerations Must comply with existing statutory requirements –Core –AFI (SORAP) –50/50 certification required –Must comply with AF approved AFMC depot strategy Benefits to AF and OEM Partnerships within the TRC concept only –Core competencies as designated by CITEs Full cost recovery--compliance with financial policies in AF and DoD Union Risk: Cost/ Schedule/ Performance

5 Partnering Constraints Current Partnering Approval Process –Concept approval through HQ AFMC/CC or SAF/AQ depending on dollar value of efforts ALC/CC approval for efforts under $10M over life of partnership –Timeliness of approval process Title 10 U.S.C (50/50) Law –Modification made to law to allow for partnerships designated under 10 U.S.C CITE law and where the contractor is operating at an organic CITE facility No exclusion for partnerships where the contractor is outside the organic CITE facility Sundown clause end of FY05 Legal Liability –Contractor can only recover damages via the liability clause in the prime contract with the U.S. Government and not the ALC activity performing the work under the partnership Privity of Contract issues with partnering efforts between the sub-contractor of the prime contractor

6 OC-ALC Partnering Efforts Past Partnerships : Organic Software and Northrop Grumman B-2 Depot Maintenance Software (DMS) Partnership –Total Value $2.8M Current Partnerships : Organic Propulsion Production and Lockheed Martin Propulsion Business Area (PBA) –F100, TF39, T56 Engines –Total Value $10.1B over 15 years LMKAC Portion $2.7M

7 OC-ALC Partnering Efforts Current Partnering Efforts: OC-ALC & Pratt Whitney F100 Partnership –HQ AFMC/CC approved concept to proceed with partnership (Mar 02) –DSA for FMS Engine Test Cell (Apr 02) OC 1 st engine tested in Sep 02 –GFS/S agreement for Eddy Current (Apr 02) Eddy Current work began in Aug 02 –Leasing arrangement for Special Technologies Coating Facility in B3001 (Apr 02) PW spray booth operational in B3001 in Oct 02 –Follow-on efforts include Management and Project IPTs to discuss future phases of the partnership F , F119 JSF

8 OC-ALC Partnering Efforts Current Partnering Efforts Continued: C-17 Core Partnership –DSPA signed by OC-ALC/CC (Aug 02) –Working Abbreviated SORAP –Potential Core Workloads for FY03-09: Hydraulics: 233,624 Instruments: 75,347 –Currently working Depot Activation Funding Issues

9 OC-ALC Partnering Efforts Potential Partnering Efforts: Organic Software and Boeing and Bomber Software Development (B-52) –Initial partnering discussions/negotiations (Apr 02) OC-ALC and General Electric Strategic Alliance Team (SAT) Partnership –Strategic Direction Document Signed in Feb 03 for 8 Phase 1 efforts regarding F110, F108, F101 Material Support, and Technical Training –MOU signed 11 Aug 03 OC-ALC and Standard Aero C-130J Engine Partnership (AE2100) –Strategic Direction Document currently under development

10 Partnering must be a Win / Win Partnering in a nutshell Win for Warfighter –A weapon system—ready when he needs it Win for Acquisition Offices –Single-point accountability to maximum extent practicable –Optimum solutions for weapon system balanced with overall Air Force objectives Win for Prime Contractors –Utilization of existing & new organic investments –Profits / reputation associated with partnerships Win for Air Force ALCs –Workloads that help maintain core competencies

11 Summary OC-ALC is actively pursuing partnerships to achieve the best value support for the warfighter –Have utilized various partnering methods –Continuing to seek innovative concepts in dealing with partnering constraints Partnering plans have been incorporated into Center Strategies –Result can provide a better level of service on a more cost effective basis –Helps to answer challenges of financial limitations in the public sector’s resources Public-Private Partnerships must combine best skills and capabilities of each, to better serve our customer

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