Prototypes for Readiness – Tapping Commercial Innovation to Improve Defense Readiness and Reduce Sustainment Costs

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The problem

It’s no secret that DoD has an aviation readiness problem.  In September 2018, GAO reported that front line Air Force and Navy tactical aircraft were well below their operational availability goals and their operating and support costs were rising.  SECDEF Mattis set the goal of raising mission capable rates for F-16, F-18, F-22 and F-35 aircraft to 80% by September 2019 – an ambitious goal since they were reportedly in the 49%-70% range in 2017.   The Mattis goals also called for reducing operating and support costs. This month, however, SECDEF nominee Mark Esper told Congress that neither F-22 nor F-35 will meet the Mattis goals in 2019.  

The problem is serious.  GAO said the 2018 F-35 mission capable rate was 52%, meaning the ability to fly at least one mission.  The full mission capable rate, i.e. ability to safely fly all missions, was 27%. The fastest way to increase military capability in operational units is to increase the operational availability of the equipment we have delivered to them.  The normal DoD way to do this is to increase spending on spare parts and maintenance. A surge in spending now would provide a short term fix. History suggests that funding will eventually decline and maintenance and supply backlogs with again build up.  And there is real concern that the new aircraft like F-35 will have much higher operating and support costs per flying hour than the aircraft they replace. Affordability matters.

Where to look for leverage?

One suggestion is to look to commercial innovators for new ideas and new technologies.  About the same time GAO issued its dismal report, Forbes reported on the huge success Delta Airlines has had in improving its operating fleet availability.  In 2010, Delta had 5212 flights canceled due to maintenance, with at least one flight canceled every day. Delta launched a major improvement initiative. By 2017, they had reduced maintenance cancellations by an astonishing 98% and achieved 242 consecutive days without a single maintenance cancellation.  They did it by changes in management focus and workforce culture, but also invested in equipment upgrades and in technology for data analytics and maintenance management, reliability improvements, maintenance and supply chain process improvements, and a new subsidiary to ensure availability of spare parts.  There is much for DoD to learn from the Delta experience, and every reason to believe that non-traditional suppliers can offer DoD solutions that open new avenues of readiness improvement and cost reduction.  

Of course, DoD’s equipment and operating environment differ from those of a commercial airline.  And DoD operates decades-old equipment in numbers that are too small to attract much commercial interest. As GAO pointed out, a major cause of DoD aviation downtime is supply support: “Some aircraft are encountering supply shortages as a result of parts not being available, in some cases due to obsolescence issues or diminishing manufacturer sources. Overcoming part shortages through either searching for replacement parts or reengineering parts takes time, which can contribute to aircraft being unavailable for longer periods. “    There’s a big opportunity here to speed supply response through digital engineering and digitally driven manufacturing (e.g.  numerically controlled machining or 3D printing). 

Several years ago, faced with a hard-to-get spare part need, the Army Armaments R&D Center demonstrated conversion of old drawings to digital form, fabricating and validating a prototype part, and making the digital data and process recipe available in a solicitation to industry.  Army went from no bids on the old drawing package to over a dozen bids on the digital data package, with the fastest lead time and lowest costs in the procurement history of that part. But the whole process took significant time. Today DoD has authorities for Other Transactions for Prototypes that would enable this to be done in one seamless end-to-end process.  Industry capabilities in Digital Engineering and Advanced Manufacturing (including additive manufacturing) could be tapped on a continuing basis. Prerequisites would be technical data on the old part and conversion to digital format (or reverse engineering if technical data is not available). Prototyping a drop-in replacement part using new manufacturing processes and possibly new commercial components would be needed, followed by qualification testing.  Then sole source limited production would meet the immediate need. The digital product model and process recipe would be captured for use in future procurements.  

Beyond digitally manufactured spare parts, readiness and sustainment can benefit from the kind of innovations now being prototyped in other settings:  data analytics, prognostics, reverse engineering, high throughput testing, material substitutions, anti-corrosion, supply chain visibility and risk management, cybersecurity, and the list goes on.  Experience with OTAs, either individually or through an OTA consortium, shows that DoD can move at commercial speeds to get solutions that meet the need. Reverse engineering gets beyond an obsessive concern with ownership rights in technical data.

A confidence-building precedent

In fact, there is precedent for using OTAs to apply commercial innovations to DoD cost and readiness needs – DoD’s Commercial Operations and Support Savings Initiative (COSSI).  DARPA launched the COSSI program in the 1990s as a dual use technology program with a win-win business model. Cost shared OTA prototypes adapted commercial technology for DoD applications and validated the savings potential.  Successful prototypes led to sole source FAR Part 12 procurement of retrofit kits as commercial items at a fixed price. According to a 2001 industry roundtable report, 77 COSSI projects were initiated in 1997-2000, with DoD investing $234M and industry investing $143M.  The net present value of expected savings to DoD was $7.5B, a return of 30:1 on DoD’s investment – not bad! Once DARPA funding ended, the Services did not support continuation of COSSI in their budgets. Some buying command legal offices objected to sole source procurement after a successful prototype and qualification for the substitute part or component. This led to delays and added cost or even failure to accomplish the substitution/upgrade in some cases. Today, thanks to Congressional amendment to prototype authority 10 U.S.C. 2371b, there is a clear legal path to follow-on production after a commercial item is adapted as a prototype (substitute) for a legacy part or component and qualified as its replacement.

The COSSI technique combined with modern digital manufacturing can be a powerful way to drive down sustainment and upgrade costs for legacy systems.  Perhaps more importantly, this technique could help DoD deal with the readiness problems that are limiting mission capability in our operating forces.  All that is needed is DoD leadership!

written by Dr. Michael McGrath, Principal, McGrath Analytics, former Deputy Assistant Secretary of Navy RDT&E; Vice President, ANSER; Vice President, SRI; Program Manager, DARPA; and Richard L. Dunn.

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