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AF grapples with rising logistics support costs

by defensetech on January 25, 2013

U.S. Air Force officials are placing a keener eye on their spending for maintenance of the fleet, and specifically trying to figure out why the cost of using contractor logistics support (CLS) contracts is rising faster than its own organic depot system, says Lt. Gen. C.R. Davis, military deputy for Air Force acquisition.

Over the past few years, the Air Force — and the Pentagon overall — has been more diligent in crafting contracts with more favorable terms for the government to avoid overpaying for developing and buying goods and services. For nearly a decade, the Pentagon seemingly overpaid on a host of cost-plus contracts that overran their targets — some in the billions of dollars.

The Air Force now is turning its green eye shades toward the operations and sustainment world, where contractors earn billions maintaining aircraft fleets. In sustainment, “I don’t think we have gone to the same level of sophistication of these contracts as we need to,” Davis tells Aviation Week.

The cost of maintaining weapon systems is increasing year over year, he says, in part because the fleet is aging more rapidly than the Air Force can buy new replacement platforms. But the service is seeing a peculiar trend that it is studying.

Costs for weapon systems maintained through CLS contracts are increasing faster than those supported through the government’s organic depot system, a system that is often criticized — fairly or not — for being inefficient. “We are just trying to take a look and getting at what are the true costs of sustainment,” Davis says.

This review is especially important as the Pentagon tries to understand the forthcoming cost of maintaining and operating the F-35 fleet.

The Air Force alone has not reduced its planned buy of 1,763 aircraft despite the funding crunch. Last year, Naval Air Systems Command arrived at a sustainment figure exceeding $1 trillion for 50 years of F-35 service, stunning Pentagon officials and lawmakers. The services are now refining those numbers.

But just as important as the cost of maintaining is implementing contracts that can manage the government’s liability, according to some Pentagon officials, and share in savings that can be produced by industry. While near-term work to better understand CLS and organic depot maintenance costs will affect programs already on the books today, they are sure to be a training ground for the maintenance plan that will support the F-35 in the future.

The F-35 Joint Program Office held an industry day last year to explore various ideas for maintaining the massive fleet, though no results have been released by program officials.

– By Amy Butler

– This article first appeared in Aerospace Daily & Defense Report.

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{ 17 comments… read them below or add one }

Belesari January 25, 2013 at 6:07 pm

F-35 the jet that infected and ate the DoD.

Just get rid of the damn thing. Then instead of trying to design the whole aircraft for 30 different things try having the key components, Engine, electronics, radar, etc as a shared component by multiple aircraft. And yes your gonna have to come to grips with the US stealth obsessions.

Is it more dangerous for the US to have aircraft that arent stealthy….yes but they fly that way anyways and no offense i dont think losing 30 soldiers on the ground because the air force didnt want to risk one of its pilots so it went all stealth then got only 1/3 of the aircraft it needed to do the job which mint the aid wasn't there when needed.

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stephen russell January 25, 2013 at 8:49 pm

Maybe privitize some logistics IE non classified ones among UPS & FedEx & then merge the rest & subcontractr plane maint to Maint companies or hire airlines for some projects.
More can be done.

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blight_ January 26, 2013 at 2:37 pm

"specifically trying to figure out why the cost of using contractor logistics support (CLS) contracts is rising faster than its own organic depot system"

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Robert Fritts January 26, 2013 at 5:46 pm

We could save enough money to fund the whole F-35 mess by privitizing the USPS with FEDEX & UPS.

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L Mitchell January 31, 2013 at 10:13 am

You hire UPS, FedEX, any airline…you ARE hiring a contractor to the government.

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Harvey January 26, 2013 at 5:13 pm

Take ANY effort/task and have one contract totally "civilian" and another a government contract to do the EXACT same task, and the government contract will cost more. Why? because of all the "overhead/oversight/Defense Contract Administration Servicey Region (DCASR or whatever it is called today) hoops that the contractor must implement and jump through on a USG job vs. civilian job.

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we chan January 26, 2013 at 7:10 pm

China fly gi joe half price special for 1 war only

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kmmontandon January 27, 2013 at 12:13 am

"why the cost of using contractor logistics support (CLS) contracts is rising faster than its own organic depot system,"

Yes, it truly is a mystery why contractors who set their own prices are more expensive than the military's own personnel.

A completely unsolvable enigma.

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Harvey January 27, 2013 at 3:23 pm

Because it is a bid for a GOVERNMENT contract. Having served in USAF and then worked in defense electronics in a number of levels of "direct contributor" through lower management and done proposal generation as well as been on "Source Selection" boards – -
A) It is either competitive or sole source. Even if sole source, the price has to pass USG cost evaluation and if competitive bid, has to be in line with both USG expectations AND the other compeitors
B) as I said, when you sign up to work for the USG, you automatically incur all kinds of non-civilian "overhead" e.g. job audits, record keeping, inspections, documentation, tests, evaluations, program and technical reviews ….These all cost the contractor money to implement and comply with. If the contractor wants the job, he must accept these and factor the additional cost of compliance into his bid
C) Civilian job marke salaries are adjusted according to Union contract rules and usually annualy for non-Union employees. The adjustments are kept close to "market rates" for non-union and per the Union contract for union employees (else employees quit for better paying competitors). Military personnel (can't resign and) get raises "at the convenience of Congress and the DoD budget – and when I was in service, those adjustments were a bunch less than the commercial world.

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Vaporhead January 28, 2013 at 7:13 am

Retired Generals and Colonels who run these private companies know all this already and like it because these useless administrative tasks get them lots of money!

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PolicyWonk January 27, 2013 at 10:04 am

Well, the USAF/fighter mafia has never been thrilled about the transport (or ground support missions) anyway. So it isn't all that surprising that they'd want to foist it off on someone else.

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patriotic January 28, 2013 at 10:27 am

Now it doesn’t take a rocket scientist to figure out with using a contractor you also pay a profit in the cost. Funny how Sec.Def. Gates understood this and cancelled most contracts. Trick with contractors is they low ball the bid to get their foot in the door and after the government gets rid of the government employees that use to do the job they have you on the hook. The government is forced to pay the contractor whatever they want. Automatic bonuses just for doing the job of around 10 to 15% per year, cost over-runs, automatic increases and like a spoiled child they will walk out if they don’t get what they want.

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Lynn January 29, 2013 at 8:11 pm

Problem is, gov contracts are not effectively overseen or managed through external QA/QC audits so there's a lot of waste incurred in these contracts. I've seen too many contractors (and gov. personnel) spend a good part of the day reading CNN, socializing or doing personal stuff because there isn't enough work. On the other hand, too many of the salaries for some of these contractors is obscene where one agency I worked at was spending over $1 MIL just for three contractors and they didn't even make anything [basic research consulting]!!! These companies are in the business of making profits and also responsible for creating the very "market conditions" that are causing the costs of these contracts to explode—its not rocket science.

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what is logistics January 7, 2014 at 2:52 am

Most organizations pay milage (both packed and empty) depending on a pre-determined milage range town to town.
Like say Greenville SC to Sodium Pond City UT. The milage compensated will not be the same as what you impact in to your GPS. Also, There are only a few GPS that will actually determine vehicle tracks. As for being a car owner, it is a fantastic spending way to go. As for selecting Werner, well I would not suggest that.

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blight_ January 25, 2013 at 7:29 pm

Even Government Owned, Contractor Operated apparently wasn't enough for the free market; it became government bought, contractor tinkered with.

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Eric January 26, 2013 at 2:40 pm

maybe hire contractors to assess the contractors!!

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blight_ January 26, 2013 at 3:19 pm

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