Candid Voices - military readiness; effects of outsourcing repairs

Air Force Journal of Logistics, Winter, 2000 by Kenneth B. Bowling

Military Readiness and Outsourcing Depot Repair

Chaos theory attempts to explain the fact that complex and unpredictable results will occur in systems that are sensitive to their initial conditions. A common example of this is known as the Butterfly Effect. In theory, the flutter of a butterfly's wings in China could affect weather patterns in New Mexico, thousands of miles away. In other words, it is possible for a very small occurrence to produce unpredictable and sometimes drastic results by triggering a series of increasingly significant events.

When near-term fiscal expediency becomes the prime driver behind weapon system sustainment, we put long-term military readiness at great risk. The choice to outsource Air Force depot-level repair in a tightly constrained budgetary environment has neglected long-term, investment-based planning and chosen, instead, near-term executability. Leveraging the revolution in business affairs and acquisition reforms are constantly talked-up as a cure to the ills of the acquisition and logistics business and as sources for desperately needed modernization funding. The dialogue is unbalanced, and the proof is lacking. Thus, the question, are we declaring victory without results?

Background

A former Chairman of the Joint Chiefs of Staff told Congress several years ago, "Today's modernization is tomorrow's readiness." This is an outstanding statement! However, the statement is more instructive when restated in the following way, Today's modernization [with proper life-cycle planning and investment, to support complex, eventually decades-old, military-unique hardware that is the linchpin of national security] is tomorrow's readiness. The crux of this article is proper life-cycle planning and investment are not taking place and the primary culprit is the Source of Repair Assignment Process (SORAP).

Long-term investors understand a fundamental concept: the earliest investments reap the greatest returns over a long term. In other words, because time is so powerful, make your biggest investments as soon as possible. Another well-understood concept is nearly intuitive--scarce resources with high demand drive up prices. Finally, business practices call for providing services at the lowest cost in order to maximize profit and minimize loss. All of these are simple, instructive, and useful in many aspects of life, including long-term support of major weapon systems.

In this case, the investment to be made occurs (or should occur) in repair technologies, infrastructure, training, technical data, and human capital at the Air Force's air logistics centers (ALC), also referred to as depots. Second, the limited resources being considered are depot-level repair contractors. Finally, the business question is, what is the long-term best business choice for depot-level repair of our weapons systems, especially considering two primary factors:

* The Air Force cannot divest itself of its mission and go into a more lucrative market sector.

* The weapon systems being repaired today will be around for at least the next two generations.

So a limited contractor base is driving up repair costs (if we rely on them), and long-term support must get cheaper or face insolvency. These seem to be divergent planning factors, but they are not. We can and must plan for both because this is reality. Today, more than ever, planners, budgeters, and managers fail to recognize the macroeconomics lesson that reveals the proper perspective: near-term investment provides long-term payback.

I am not claiming subject matter expertise. In fact, Joint Publication 4-0, Doctrine for Logistic Support of Joint Operations, requires the individual Services to balance sustainability of combat capability with economy in the context of long-term objectives and capabilities. [1] It further states that this balancing act is the greatest challenge to the logistician. This is an unchallenged truth. With great pain, many senior leaders recognize supporting military-unique hardware for up to 4 or 5 decades (for example, B-52, KC-135, C-141, C-5, F-15, F-16, and Minuteman III) is expensive and complex. Also self-evident is the fact that reducing operations and support costs, particularly for an aging fleet, is the key to realizing long-term savings to be rolled into modernization efforts.

Competition Is Key

One way to achieve these cost savings is competition, according to Secretary of Defense William S. Cohen in his November 1997 Defense Reform Initiative Report. [2] "Competition between the public and private sectors works." This may be true, but competing weapon system support with a sharply decreased defense industrial base can have unintended pitfalls unless they are identified and avoided. The government's efforts to encourage defense industry consolidation were certainly prudent, but the results are today's near absence of private (that is, nongovernment) competition. In the aerospace sector, for example, some 40 different companies have consolidated into 5: Lockheed Martin, Boeing, Pratt & Whitney, General Electric, and Raytheon.