1. Sustained Materiel Readiness David Pauling, ADUSD (MR&MP) APEX 21 THE WARFIGHTER NEEDS………… AVAILABLE, TECHNICALLY SUPERIOR WEAPON SYSTEMS THAT ENABLE – SUCCESSFUL COMPLETION OF THE MISSION RETURN HOME SAFELY

2. Aligning Strategies & Goals The President’s Management Agenda (PMA) SECDEF - Transformation and Joint Warfighting  DoD Transformational Planning Guidance  FY 2005 Top 10 Priorities  Balanced Score Card / Risk Management Framework 1.Acquisition Excellence with Integrity 2.Logistics: Integrated and Efficient 3.Systems Integration & Engineering for Mission Success 4.Technology Dominance 5.Resources Rationalized 6.Industrial Base Strengthened 7.Motivated, Agile Workforce AT&L Seven Goals Support PMA and SECDEF “…dedicated to ensuring that the resources entrusted to the federal government are well managed and wisely used. We owe that to the American people.”

3. USD (AT&L) Seven Goals  Acquisition Excellence with Integrity  Logistics: Integrated and Efficient  Systems Integration & Engineering for Mission Success  Technology Dominance  Resources Rationalized  Industrial Base Strengthened  Motivated, Agile Workforce Leadership and Goal Alignment SECDEF Top 10 Priorities 1.Successfully Pursue the Global War on Terrorism 2.Strengthen Combined/Joint Warfighting Capabilities 3.Transform the Joint Force 4.Optimize Intelligence Capabilities 5.Counter Proliferation of WMD 6.Improve Force Manning 7.New Concepts of Global Engagement 8.Homeland Security 9.Streamline DoD Processes 10.Reorganize DoD and USG to Deal with Pre-War Opportunities and Post-War Responsibilities Goal Alignment Leadership Alignment

4. Our Goals Will Transform Defense Acquisition, Technology & Logistics End-to-End AT&L Goal 6–Industrial Base Sustainment AT&L Goal 7–Motivated, Agile Workforce AT&L Goal 5–Resources Rationalized AT&L Goal 4–Technology Dominance Goal 4–Technology Dominance AT&L Goal 3–Systems Engineering Philosophy Restored AT&L Goal 2 Logistics: Integrated and Efficient AT&L Goal 1–Acquisition Excellence with Integrity AT&L Goal 6–Industrial Base Sustainment AT&L Goal 7–Motivated, Agile Workforce AT&L Goal 5–Resources Rationalized AT&L Goal 4–Technology Dominance Goal 4–Technology Dominance AT&L Goal 3– Systems Integration & Engineering for Mission Success AT&L Goal 2 Logistics -- Integrated and Efficient AT&L Goal 1–Acquisition Excellence with Integrity

5. AT&L Goal 1: Acquisition Excellence with Integrity Bring Joint Capabilities Perspective to Acquisition -Conduct Senior Leadership Reviews for each Functional Capability Area (FCA) - Map all programs with FCAs -Re-structure PDM to Enforce Results of Senior Leadership Reviews in the Resource Process -Transition from “System Focused” to Capabilities-Based DAES Reviews Increase Accuracy and Credibility of Cost Estimates Shorten Acquisition Cycle Time -Increase use of evolutionary acquisition including spiral development -Maximize use of mature and commercial technology -Expand use of technology demonstrations (ACTD/ATD) - enter acquisition process “closer to production”. Battlespace Awareness Command & Control Focused Logistics Force Application Force Protection Five Functional Capability Areas (FCA) Supporting Objectives

6. AT&L Goal 2: Logistics: Integrated and Efficient Enterprise Integration Expand End-to-End Policies Reliable Delivery Weapon System Support Sustain Weapon System Material Readiness Logistics: Integrated and Efficient Supporting Objectives

7. AT&L Goal 3: Systems Integration & Engineering for Mission Success Lead Development of Systems Views of Integrated Architectures Lead Development of Integrated Plans and / or Roadmaps Establish a Broader Mission Context for DAB Reviews Foster Interoperability, Jointness, and Coalition Capabilities Improve the Systems Engineering Environment Provide Effective Systems Engineering Policies, Practices, Procedures, Methods, and Tools Provide for a Professional Systems Engineering Workforce Improve Balance of Cost, Schedule, Performance, and Risk in Programs Reduce the Life Cycle Cost of Defense Systems Assess System Technical Maturity / Readiness for Ops Testing based on Developmental Test Results Supporting Objectives

8. AT&L Goal 4: Technology Dominance Increase technical personnel in DoD Improve intelligence analysis & systems Stimulate and focus research and engineering Accelerate acquisition cycle and enable joint acquisition Enable Network Centric Warfare through innovative technologies Leverage technologies to enable rapid defeat of adversaries Supporting Objectives

9. AT&L Goal 5: Resources Rationalized Resource joint warfighting capabilities (Link resources to capabilities-based approach to enhance Joint warfighting capability) Rationalize infrastructure to support joint warfighting capabilities (BRAC, RRPI, Integrated Global Presence and Basing Strategy) Achieve domain owner objectives (Fundamental business process change and streamlining) Rationalize contracting (Business process streamlining) Enhance outsourcing / competitive sourcing (Revised OMB A-76) Supporting Objectives

10. AT&L Goal 6: Industrial Base Strengthened Develop & employ a logical, capabilities-based approach to identify and evaluate industrial base sufficiency Establish organizational cross-feed mechanisms for major industrial base assessments and associated recommendations Develop and implement policies that encourage smart industrial base management on the part of program managers Help emerging defense suppliers navigate and bring value and innovation to DoD Supporting Objectives

11. AT&L Workforce Management Team Effort! AT&L Goal 7: Motivated, Agile Workforce Flexible Personnel System Streamlining DAWIA initiative Implement a Central Referral System Marketing and targeted recruiting Rapid Deployment Training AT&L Performance Learning Model (PLM) - an overarching learning strategy AT&L Workforce Transformation Supporting Objectives

12.  300 Ships 100,000+ Ground Combat/Tactical Vehicles  900 Strategic Missiles  15,000 Aircraft/Helicopters + 250K+ Wheeled Vehicles + Comm/Electronics Equipment + Support Equipment +... Maintained by: 681,000 DoD personnel Private sector companies Maintenance cost: ~$59B per year National Defense PP&E is valued at  $600 Billion Systems Supported Source: LMI

13. DoD Field- and Depot-Level Maintainers Distribution by Service (in 000s) Totals Field-Level Maintainers 631.1 ~93% Depot Maintainers 44.1 ~7% Army Field Maintainers 220.8 (33%) Army Depot Maintainers 7.2 (1%) Air Force Field Maintainers 186.8 (28%) Air Force Depot Maintainers 15.1 (2%) Navy Field Maintainers 173.6 (26%) Navy Depot Maintainers 20.9 (3%) Marine Corps Field Maintainers 49.9 (7%) Marine Corps Depot Maintainers 0.9 (<1%)

14. Major Intermediate-Level Activities Army 21 Aviation Intermediate Maintenance (AVIM) companies 31 Direct Support/General Support (DS/GS) companies Navy 15 shore-based Aircraft Intermediate Maintenance Detachments (AIMDs) 12 carrier-based AIMDs 6 Shore Intermediate Maintenance Activities (SIMAs) 2 Trident Refit Facilities (TRFs) Air Force 65 aviation maintenance groups Marine Corps 12 Marine Aviation Logistics Squadrons (MALS) 11 Amphibious assault ship-based AIMDs 3 Force Service Support Groups 14

15. Organic – Commercial Distribution of DoD Depot Maintenance ArmyNavyAir Force FY03 $ (in billions) USMC 85% Organic 52% 56% 54% 48% 44% 46% DoD-wide: 54% Organic; 46% Commercial Commercial Organic Source: USD(AT&L) report Distribution of DoD Depot Maintenance Workloads: Fiscal Years 2002 and 2003, February 2004 24

16. Field maintenance key to both DoD and commercial maintenance structures Maintenance structure drivers include... –DoD deployable maintenance capabilities –Equipment differences (e.g., age, complexity, role) –Available commercial infrastructure –Life-cycle status (i.e., position in life cycle) –Business support concept (e.g., run to optimum age and dispose vs. continuous rebuild) Depot (Centralized) vs. Field Level Percentage of Personnel Note: Commercial percentages are estimated based on available data Field MaintenanceDepot Maintenance 0%20%40%60%80%100% Legacy airline Railway Parcel trucking Low cost air carrier DoD maintenance Trucking maintenance 125K 8.7K 15K 13K 681K 40K Approximate Total Number of Maintainers DoD/Commercial Sustainment Structure Comparison

17. Sustained Materiel Readiness ISSUE: Concentrate on achieving/sustaining SPG/CPG readiness Balance Safety, Reliability, Maintenance and supply distribution activities to achieve materiel readiness at best cost. Optimize “TIME-ON-WING” and “TURN AROUND TIME” Promote End-to-End (E2E) Materiel Readiness Value Chain Perspective across DoD Sustain Optimize Materiel Condition Reliability Sustain Optimize support cost, cycle time

18. Sustained Materiel Readiness WAY AHEAD: Translate SPG/CPG capabilities to Weapon System/Materiel Requirements Develop cause and effect predictive models Foster and promote continuous process improvements –Capability (Co) Technical superiority technology insertion –Dependability (Do) Safety/Reliability/Condition Based Maintenance + –Availability (Ao) Cycle process discipline –Lean, Six Sigma, Theory of Constraint, Etc. –Institute Integrated Budgets (engineering, logistics, industrial)

19. Update/execute Policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Safety/Reliability Sustaining CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Process Improvement (Lean, 6Sigma, Theory of Constraints) Integrated Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balanced Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement

20. INTEGRATED REPAIR/BUILD CYCLE TIME PLAN R&D S&T Design SAFETY STANDARDS Technical PLAN MATERIEL READINESS GOALS ACHIEVED? Building the Optimum Materiel Readiness Sustainment Plan/Budget MAINT/RCM STRATEGY COMMON METRICS PIPELINE SPARES FORECASTING & PROCUREMENT PLAN PROCUREMENT O&M In Svc Eng/Log DEPOT DLR WCF INTEGRATED BUDGET Required Amount of RFI Materiel (installed + uninstalled) READINESS BASED MATERIEL REQUIREMENTS MODEL SPG/CPG INTEGRATED MANAGEMENT PLAN PLANNING FACTORS START “WAR PLAN” MATERIEL TRANSPORTATION DISTRIBUTION PLAN EQUIPMENT RELIABILITY mission-based operational readiness requirement Required Number of RFI Weapons mission-based materiel readiness requirement YES NO Seek to reduce sustainment costs Seek to increase sustainment performance

21. Strategic Planning Guidance/Contingency Planning Guidance Materiel Availability Requirement Materiel Readiness Policy Accomplish Materiel Acquisition Accomplish Materiel Distribution Accomplish Supply Support Accomplish Materiel Maintenance Accomplish In-Service Engineering Materiel Readiness Metrics and Performance Standards Sustainment Functions Integrated to Produce Materiel Readiness Sustained Materiel Readiness Materiel Readiness Data Collection Data Analysis: Does Value Chain Performance Meet Plan? Y N ADUSD (MR&MP) (Process Integrator) Undertake Coordinated Process Improvements Responsibilities as ADUSD (Materiel Readiness) “Should Be” (Plan) “As Is” (Actual) Acquisition Policy & Metrics Distribution Policy & Metrics ISE Policy & Metrics Maintenance Policy & Metrics Supply Policy & Metrics

22. SUMMARY OSD and DoD Components Identify Strategic Materiel Readiness Requirements Employ useful Materiel Readiness Standards/Measurement Tools/Processes Resource to achieve/sustain Materiel Readiness most efficiently/effectively Five Pillars for Sustaining Materiel Readiness Policy (E2E) Measuring materiel readiness Optimizing materiel reliability Optimizing materiel turnaround time/cycle time Balancing resources UID/SIM enables this!

23. Responsibility Warfighter Combat Capability Ensure a ready and controlled source capable of providing combat ready weapon systems anytime and anywhere efficiently and effectively. Program Manager Private Sector Government Team (Engr, Log, Ind) Partnering

24. Materiel Readiness Modeling Why?: Prescribe policies/procedures and monitor/review/assess materiel readiness E2E Value Chain operations relative to the ability of the Department’s major weapon systems to meet mission requirements. How?: Develop DoD-wide predictive modeling/analyses capability to determine cause and effect relationship to materiel readiness-based outcomes, e.g.,: Reliability improvement initiatives Cycle Time Process improvements for Supply/Maintenance/Transportation/Distribution Alternative resource strategies (short-term/long-term) Determining life-cycle costs from an integrated budget perspective when materiel readiness issues are addressed Status: Assessing current DoD and commercial models Submitted cross-cutting proposal – enhance best of breed model Working with Services to convert status models to predictive models

25. Materiel Readiness Integrated Management (E2E)

26. Condition-Based Maintenance Plus Why?: To improve reliability centered maintenance effectiveness and efficiency through application of technology initiatives and process improvements Sustain inherent performance, safety, reliability of materiel How?: –Utilize interactive electronic technical manuals, portable maintenance aids and other enabling tools and technologies –Implement diagnostics, sensors and prognostic algorithms and techniques –Employ reliability-centered maintenance concepts and practices –Enable statistical and engineering analysis processes –Develop condition-driven maintenance plans –Integrate maintenance and logistics processes and reporting systems Status: Completed survey of Service CBM+ Select Programs Establishing the DoD CBM+ baseline CBM+ website on-line and regularly updated OSD/Service CBM+ Advisory Group meets weekly Partnerships?

27. No Requirement to Build for Time on Wing Build to Achieve Inherent Reliability OCM Repair Not Only What Is Broken but What Will Likely Fail Before a Defined Time on Wing Repair Only What Is Broken Maintenance Is Unplanned Focus is Planned Maintenance Facilitates Resource Requirements Predications Maintenance Driven by Equipment Conditioner or Lowest $/Shop Visit Maintenance Based on LCC & Value (What's Easiest Today) (What's Best for the Long Term) OCM vs RCM On-condition Maintenance vs Reliability-centered Maintenance RCM

28. Engine Life Recovered After Repair RCM = Reliability Centered Maintenance

29. Continuous Process Improvement Why?: Maximize weapon system readiness while minimizing materiel flows and in-process inventories –Goal – Optimize reliability and cycle time while striking a reasonable balance with costs across the total life cycle value chain How?: Employ: Lean for eliminating all types of waste Six Sigma (6σ ) for minimizing process variation Theory of Constraints (TOC) for alleviating process “bottlenecks CBM+ (Condition Based Maintenance Plus) Status: DOD CPI Transformation Review initiated DOD CPI Policy in coordination OSD-led CPI Working Group (O-6 level) meets weekly, updates OSD-led GO/SES Group monthly Partnerships?

30. AIMD Lemoore Power Plants Shop Engine Repair Cycle Time Apr-04 Oct-02 Apr-03 Oct-03 Oct-01 Apr-02 Focus on Continuous Improvement (Maintenance Cycle Time)

31. CCAD Engine Turn Around Time Run Chart Reduction in Mean & Variation Continue In 2004!

32. “Leaning” the Weapon Support Value Chain Establish DoD-wide framework Activities with high near-term benefit Comprehensive Effort across Weapons Systems Sharing lessons learned Developing performance measures Standardizing education, training and certification programs Aviation programs Maintenance depots (e.g., ALCs) Intermediate maintenance activities (AIMDs/SIMAs) Continuous Process Improvement Lead Programs Annual progress assessments

33. Special Continuous Process Improvement (CPI) Projects (E2E Materiel Readiness Value Chain Assessment) Air Force: F-15 aircraft Army: High-Mobility Multipurpose Wheeled Vehicle UH-60 Black Hawk Helicopter Marine Corps: Blount Island Command's tactical wheeled vehicle intermediate maintenance line: HMMWV (A2 series) MK 48 Logistics Vehicle System (LVS) Medium Tactical Vehicle Replacement (MTVR) Navy: F/A-18 aircraft SSN-688 Class submarines

34. Improving Materiel Readiness Reliability, Cycle-Time, Cost Drive reliability up to optimum level Drive sustainment cycle time down to optimum level (O&S only) Higher $ Lower $ more less reliability Sustainment cycle-time Life-cycle cost (acquisition + O&S) Cost of Readiness Higher $ R&D/ACQ Only R&D/ACQ/O&S Lowest $ Lower $ Higher $

35. Engine Integrated Recovery Approach 300 Engines Repaired per year 600 Eng req’d to meet CNO goals 400 hour MTBR $700/Flight Hour $165K/Repair 108 Engines Repaired per year 390 Eng req’d to meet CNO goals 1000 hour MTBR $380/Flight Hour $250K/Repair T58 TEAM Industrial Industrial Process Depot/I-Level (IA5A, FHP) Facilities/Capital Equipment (IA5A) Parts Forecasting (NWCF) Depot/I-Level Production (IA5A, FHP) Technical Life Management Reliability Centered Maintenance (RCM) Design Changes Engineering Investigations Failure Modes/Effects Logistics Publications Parts Forecasting Inventory Tracking Build Specs Configuration Tracking Integrated Approach is HARMONY! Current Process is out of TUNE Integrated Approach is Harmony. COMMERICAL SPEC VH SPEC Optimized Repair Spec

36. Update/execute Policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement