Gulf Coast Chapter of the American
Society of Military Comptrollers (ASMC)
and the Northwest Florida Chapter of
the National Contract Management
Association
8 March 2012
I n t e g r i t y - S e r v i c e - E x c e l l e n c e
Kenneth D. Merchant, Maj Gen, USAFProgram Executive Officer for WeaponsCommander, Air Armament Center
196ABW-2012-0013
Balancing Capability / Affordability to meet Warfighter Needs
Overview
• Air Armament Center Mission
• Re-Organization at Eglin
• Better Buying Power Initiatives
• Weapon Buying Opportunities
296ABW-2012-0013
AAC Mission
To develop, acquire, and test war-winning weapons. We deliver state-of-the-art weapons to the warfighter, provide top quality installation support to all AAC and tenant units, and serve as
responsible stewards of our resources.
396ABW-2012-0013
Transition Technology to Weapon Systems and Provide War Winning Capabilities On Time, On Cost 4
The Weapons Life Cycle
Developmental and Operational Test and Evaluation
Training Future Pilots, Maintainers, EOD Personnel and others
Training Testing AcquisitionTechnology
Science and Technology with AFRL and others
Product Support and Weapon Lifecycle Development
96ABW-2012-0013
Balancing Capability / Affordability to meet Warfighter Needs
Overview
• Air Armament Center Mission
• Re-Organization at Eglin
• Better Buying Power Initiatives
• Weapon Buying Opportunities
596ABW-2012-0013
FM
Functional Operating Location
(Eglin AFB, FL)
AQ
EN DP
SB PK
XR
Air Force Test Ctr (AFTC)
AF Life Cycle
Mgmt Ctr (LCMC)
HQ Air ForceMateriel Command
SAE
Air Armament Center(AAC)
Eglin AFB, FL
AAC Now…to Proposed
Armament Directorate
Eglin AFB, FL
AIR DOM
DIR ATTK
LR SYS
MINI MUN
ADV PRGM
TST & TRNG
AQ
EN
SB
XR
PK
FM
DP
JA
EO
SE
XP
46 OG
46 MXG
46 RANG
AF Seek Eagle Ofc
46 TG(Holloman AFB, NM)
46 Test Wing 96 Air Base Wing AAC Center Staff
CS
96 MDG
96 MSG
96 CPTS
96 CEG
96 CPTS
HC
IG
PA
XP
Museum
IP
CP
Air Force Test Ctr (AFTC)
Edwards AFB, CA
AF Life Cycle Mgmt Ctr (LCMC)
WPAFB, OH
96 Test WingEglin AFB, FL
CCC
CS
CCP
CCQ
CAG
HO
CSH
96 MDG
96 MSG
96 CPTS
96 CEG
96 OG
96 MXG
96 RANG
AF Seek Eagle Ofc
PA
IG
Museum
IP
XP
EO
JA
SE
CP
46 TG(Holloman AFB, NM)
XP
Mun Sust (Hill)
Balancing Capability / Affordability to meet Warfighter Needs
Overview
• Air Armament Center Mission
• Re-Organization at Eglin
• Better Buying Power Initiatives
• Weapon Buying Opportunities
796ABW-2012-0013
Context for 5th Gen Air Armament
• Change• Reduced Budgets = Program Cancellations• Smaller Workforce• Increased Competition• Increased Collaboration for Better Business Deals• Increased Focus on Process Improvement• Increased Focus on Leadership
896ABW-2012-0013
9
• Comprehensive reviews of Indirect Costs with focus to increase buying power
• Maximizing efficiencies through competition and business strategies
• Identifying cost drivers and developing should costs for production programs
• Analyzing benefit/need of weapons warranties
Better Buying Power Initiatives
96ABW-2012-0013
• Members (SESs & PMs):• NAVAIR NAVSEA • MDA DCMA • Armament Center Army PEO for Space and Missiles
• Capitalize on targets of opportunity for large savings• Synchronizing awards for alignment between
programs• Multiple year contracts -- Base year plus options• Bundled material procurements• Common contract requirements language• Value Engineering Proposals/cost reduction
initiatives• Jointly benchmarking warranty approaches
• Explore cross-cutting efficiencies and "Better Buying Power" opportunities with our main industry partners
10
Maintaining momentum of Joint Management Council (JMC)
DCMA & Joint Buying Command Fully Engaged to Establish Better Rate Structure
Better Buying Power Initiatives
96ABW-2012-0013
Balancing Capability / Affordability to meet Warfighter Needs
Overview
• Air Armament Center Mission
• Precision Strike Weapon Status
• Better Buying Power Initiatives
• Weapon Buying Opportunities
1196ABW-2012-0013
Today’s Weapons Purchases
1296ABW-2012-0013
Unstable buys cause the closure of production lines and the laying-off of skilled full-time workers. Specialized manufacturing capacity and human capital cannot be regenerated without great cost and significant time. (USA007065-11, pg1)
Quantity, Quality, and Price
13
Quantity
Quality
Price
EOQ Min Quantities Current Practice
96ABW-2012-0013
AIM-XXX Data (notional)
14
FY1FY2
FY3FY4
FY5FY6
FY7FY8
FY9FY10
FY110
20
40
60
80
100
120
140
160
0
200
400
600
800
1000
1200
1400
Profile (60 to 150/yr) WSEP Use (25/yr)Total Buys Real Inventory
Costly inventory lost to non-critical Test &
Training (WSEP)
Unstable buys drive up per unit cost and reduce the industrial
base’s ability to sustain itself
These inefficiencies ultimately extend the
process allowing inflation to consume valuable TOA dollars
96ABW-2012-0013
FY1FY3
FY5FY7
FY9FY11
0
20
40
60
80
100
120
140
0
200
400
600
800
1000
1200
Profile (125/yr) WSEP Use (18/yr)Total Buys Real Inventory
AIM-XXX Data (notional)
15
Practical weapon substitutions for
WSEP
Avoided inflation and lower WSEP costs free TOA to enable competition/carry another contractor
Stable buys drive down cost and steady
demand provides a stable revenue flow & basis for long-range strategic investment
96ABW-2012-0013
A-A Enterprise Look
16
Missed opportunity to leverage buying efficiencies
AMRAAM NGM
96ABW-2012-0013
Summary
• Current practice of unstable purchases inhibits our ability to leverage buying power
• Effective upfront spending, stable buy quantities, and effective WSEP use are vital to correction
• Predictable spending leads to smarter break points• Enterprise view of each capability is critical to
leveraging better buying power
1796ABW-2012-0013
Final Thoughts
• Declining Budgets Will Present Significant Opportunities• Rapidly Changing Defense Landscape• Programs That Can’t Keep Up Will Not Survive• The Defense Team Needs to Innovate
– Not just on technology, but how we maximize procurement funds
1896ABW-2012-0013
QUESTIONS?19
96ABW-2012-0013
Top Related