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Friday, January 21, 2011

USAF Sustainment Bill Grows By $4 Billion

Nearly 10% of funding cuts identified by the U.S. Air Force through Fiscal 2016 will be made possible through changes in how the service handles maintenance and support for its weapon systems.
After receiving what Air Force Secretary Michael Donley calls a “shot in the arm” from Defense Secretary Robert Gates last year, the service came up with $34 billion worth of items to trim in the forthcoming Fiscal 2012 budget. These are being called “efficiencies” because much of the money is being reapplied to other, higher-priority projects and do not necessarily reflect a top-line reduction.
About $3 billion of the savings came from the Air Force’s maintenance and sustainment accounts, Donley says. This is an area in which the service “needs to make some significant improvements” because aircraft maintenance costs are rising sharply, he told a gathering hosted by the Air Force Association last week.
Upon completing the Fiscal 2011 budget request, Air Force officials realized that another $7 billion would be needed from Fiscal 2012-16 to fund 82% of the sustainment requirements, up from 80%.
“A two-point change in weapon system sustainment was going to cost us $7 billion over the [future years defense program, or FYDP],” Donley says. “This kind of growth is really unsustainable and is a good representation of the challenges that we face in cost and mission growth inside our Air Force budget.”
It is unclear how this bill was not anticipated in earlier years.
A working group that was assembled to identify ways to save money on sustainment found about $3 billion; but overall cost growth across the FYDP for sustainment is about $4 billion.
“We list that as an efficiency. The requirement was for $7 billion of growth; we cut it back to $4 billion. In the process, we saved that $3 billion,” Donley says. “It is listed as an efficiency, but there is still $4 billion of growth.”
While trimming $3 billion from the bill, Air Force officials expect to be able to fund 84% of the sustainment requirements, up from the 80% funded last year.
“The Air Force will fund more depot maintenance, sustaining engineering, contractor logistics support and technical orders to ultimately increase aircraft availability to meet [combatant commander] needs,” a service official says.
Contributing to the estimated cost spike is the introduction of more than 400 new aircraft into the fleet, including more C-17s, C-130Js, MC-12s and F-22s, as well as Predator, Reaper and Global Hawk UAVs, Donley says. Many of these aircraft are being managed through contractor logistics support arrangements or are in the early phases of being transitioned into the Air Force depot system, and contractor logistics are often costly.
In some cases, the Air Force may be forced to continue these arrangements because it failed to acquire data rights needed to establish depot maintenance operations up front when the aircraft were purchased. Now, the service faces a high procurement price.
Last year, Air Force Gen. Donald Hoffman said the service faced an uphill battle in acquiring data rights to the Predator/Reaper aircraft made by General Atomics. “We have been told by some that, ‘You can buy the company,’” Hoffman says.
“They are not for sale.” Talks later resumed, and the Air Force has been studying options for how to proceed on sustaining these aircraft.
However, during the procurement era heavily influenced by Darleen Druyun — a former senior acquisition official who later went to jail for conducting illegal job talks with Boeing — service officials often chose not to price the cost of data rights up front.
So, it is likely that more sustainment bills will come to light as the Air Force struggles to buy those rights, establish organic maintenance, and still meet a statutory requirement to conduct at least 50% of all depot maintenance in service facilities.

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