Air Force Partnering with Industry May 2004 Developing, Fielding, and Sustaining America’s Aerospace Force Air Force Materiel Command

What are Air Logistics Centers? Oklahoma City ALC Tinker AFB OK Oklahoma City ALC Tinker AFB OK Warner Robins ALC Robins AFB GA Warner Robins ALC Robins AFB GA Ogden ALC Hill AFB UT Ogden ALC Hill AFB UT Highly industrialized complexes focused on providing world class, comprehensive “one- stop” product support, depot-level maintenance and repair, and supply chain management of all current and future USAF air and space systems

Depot Maintenance Organic Scope of Operations FY03 Budget of $6.4B –22,008 Personnel (End of Nov 02, Includes Military) ALCs Repair/ Major Overhaul 3 Aircraft Per Day Complete 13 Engines & Modules Daily (3,300 PY) ALCs Turn Out 1,328 Components Per Day

1.7M Units 760K Units 61% 9% (Other) 1% 3% 26% 25 ALC Supply Chain Management Organizations Organic & Contract Depots DEPOT Supply Scope of Business AIR FORCE ARMY NAVY FMS $3.3B Repair $1.4B Buy 157,000 Line Items 1% Manufacturers Source: FY03 sales data came from Keystone. TRANSCOM 4% Other federal agencies, aircraft and missile procurement 5% Net Sales $5.76 Billion

“Depots must be revitalized, transformed, world class…” - AF Depot Strategy Depot Maintenance Strategy

AF Depot Maintenance Competencies Landing Gear Engines Avionics/ Software Weapons/ Munitions Land Based Strategic Missile Systems Repair Capabilities Strategic Airlift/Refueling A/C Bomber Aircraft Fighter Aircraft C4ISR Aircraft Strategic Land-based Missile Key Processes Airframe Overhaul and Repair Engines Software Development Landing Gear Hydraulic Systems Avionics/Electronics Oxygen Systems SLBM Overhaul Repair Weapons & Air Munitions Airframe Repair We must transform our culture and business practices to stay competitive! More responsive – Less cost - Superior quality Enablers Oxygen Systems Hydraulic Systems Process improvements Infrastructure improvements Effective financial processes Partnering

Cardinal goal: enhanced warfighter support Important considerations: –Improved readiness –Affordability –Technology transfer and sustainment –Mutual benefit AFMC Partnering Philosophy Partnerships are: Focused on the cardinal goal Long term—lifecycle sustainment vehicle Program (e.g., F/A-22) dependent, Technology (e.g., composites, software) tied, or Workload independent (e.g., education, redevelopment) Not mere contracts—multipartite and flexible Crafted on a common business plan Operated through diverse implementation agreements with a variety of business instruments History: Common law Historic GFE/GFS effort ’95 BRAC teaming 10 USC 2474

AFMC Partnership Structure System X Partnership Partnership Agreement Direct Sales IA Strategic Sourcing IA Process Improvement IA Work Share IA Engineering IA Facilities & Equipment IA

Where we are today—FY03 Summary: – –29 active depot maintenance partnerships Workshare—13 Teaming—1 – –$4.5B estimated life cycle revenue – –1.5 million core capability hours 50 new partnerships under development – –Growth across weapon systems and commodities Demographics Direct Sales—13 Lease—2

FY 2002, Public-Private Business Arrangements – –Change to 10 USC 2563(c)(1)(B) permits claims for damages caused by Government poor contract performance Proposal: FY 2005-Depot Partnering – –Repeal of the sunset clause for the partnering exemption from 50-50, 10 USC 2474(f) Key Legislative Changes

Current Partnership Examples Northrop Grumman –B-2 Composites (Direct Sales) –Missiles: ATE rehost, update GPS, Propellant System Rocket Engine (Workshare) –J-STARS (Workshare) Alliant Techsystems –F-22 composite parts (Direct Sales) –Aerospace x-ray (In-kind use transaction) Lockheed Martin –F-16 FCC - Italy (Workshare & Direct Sales) –F-16 block 40 & 50 software, avionics (Workshare) –LANTIRN (Workshare) –F/A-22 sustainment (Various) Innovation & Excellence

Current Partnership Examples Boeing –C-17 landing gear, power systems, hydraulics, avionics (Direct Sales) Triumph Air Repair –C-17 APU (Various) Goodrich –F-16, F-15, KC-135 and C-17 landing gear (Various) Northwest Machine & Manufacture –Complementary expertise for surge and other DoD work (Various) Honeywell –Auxiliary Power Units / Electronics (Various) Utah System of Higher Education –Cooperative tech & prof training/ education Legend: Executing work IA in place Developing IAs

Overall Product Support – –C-17 – –F/A-22 – –F-35 Specific Industrial Base Integration – –Centers of Industrial and Technical Excellence Key Growth Areas

Defining “True Partnership” Meet Title 10 & Best Value Establish within RFP Assign clear responsibilities Develop depot technical data Enable private investment Use existing policies Involve OEMs Key Issues Current State Desired State Variability

Share risk & responsibilities Maximize collaboration -teaming Share best practices Infuse technology Enable best value solution Recognize depots have improved How Industry Can Help

High visibility, fast pace, new territory Opportunities often require a tailored approach Intelligent partnering can result in cost effective support within statute, policy, and strategies Summary