Land Force: SRP-ing vehicle sustainment | ADM Feb 2010
One of defence's challenges will be to capture savings from both legacy and new vehicle fleets.
Gregor Ferguson | Sydney
Australia's military vehicle industry took its Christmas holiday disappointed that the DMO hadn't announced a source selection for the contract to sustain the Army's M1A1 Abrams main battle tanks, ASLAV armoured vehicles and M88A2 Hercules recovery vehicles.
The tender for this contract, RFT 112907/07, closed on 30 April and industry sources told ADM that when Defence started announcing major aerospace fleet sustainment contracts in the fortnight before Christmas they hoped their long wait for a decision would be over.
Not so: at the time of writing no decision had been announced: "Tender evaluation is now at an advanced stage," ADM was told.
"The DMO is not able to release any additional details at this time."
Not only was industry awaiting the outcome of this tender, Defence itself is waiting for the result before progressing the Through-Life Support (TLS) arrangements for its M113 armoured personnel carriers recently upgraded under Project Land 106.
The DMO will "await the outcome of the Abrams/HERCULES/ASLAV tendering process before finalising its concepts for a mature through life support arrangement [for the M113s] and any resultant tendering requirements."
It's not clear to what extent the tender evaluation process is affected by the Strategic Reform Program (SRP) and Defence's resulting drive for efficiency dividends right across the portfolio, but the requirement to capture efficiencies and cost savings pervades every corner of DMO activity these days.
However, it appears the first serious attempt to capture SRP savings in a vehicle sustainment contract is the current transition of the Bushmaster in-service support contract to a Performance-Based Contract (PBC).
"This transition ... is expected to provide opportunities to identify and realise efficiency savings over the life of the new arrangement," the DMO told ADM.
"Consistent with the aims of the SRP this is expected to generate savings to the Commonwealth for reinvestment."
How so?
And how much?
The current in-service support contract is based on a traditional contracting model.
Because it came into service as an all-new, locally developed vehicle the original Bushmaster sustainment regime, including inspection and service intervals and spares provisioning, was based on predictive data derived from the ADF's experience of earlier wheeled vehicles.
But after five years' fairly intensive operational use Defence and the manufacturer, Thales Australia, have developed plenty of hard data on usage, spares consumption and Mean Time Between Failures (MTBF) of key items.
This provides a robust base on which to develop a more cost-effective PBC for Bushmaster sustainment.
According to company sources, efficiency dividend targets set by the head of the DMO, Dr Steve Gumley, are easily achievable if the scope of the revised contract allows this.
Negotiations with the Commonwealth are due to complete this month and the outcome will tell us much about the DMO's willingness to explore significant changes in contract scope and methodology.
Savings please
Industry could achieve even more than the targeted up-front saving and annualized savings thereafter, ADM was told, if Defence were to scope the project correctly.
The company declined to discuss the detail of how it could deliver such significant savings while negotiations are under way (and while other acquisition and sustainment tenders were still live - see below).
But it is clear that simply doing the same old thing less frequently and at a lower hourly rate won't deliver the long-term savings (and, importantly, the efficiencies) the SRP demands.
Unless the DMO and Joint Logistics Command are willing to embrace significant structural change in their sustainment business practices, they'll never achieve the efficiency dividends and savings they want, and so will not be able to free up personnel to man the increasingly hard-pressed capital equipment Systems Project Offices (SPOs).
A key difficulty for both Defence and industry bidders is that Defence lacks accurate cost data for many of its current in-house sustainment activities so it's hard-pressed to benchmark the benefits of different approaches against current practice.
Something that would help provide this data would be to fit Health and Usage Monitoring Systems (HUMS) to portions of the Bushmaster and other fleets to record mileage, nature of use (road, cross-country, etc) and consumption of fuel and spares over a representative period.
This would help provide robust predictive data for efficient fleet-wide management and the establishment of an efficient and sustainable TLS regime.
However, when considering sustainment methodologies one size definitely does not fit all, ADM was told.
There is a world of difference between specialist tactical vehicles such as the Bushmaster, ASLAV, M113 and Abrams, and general service B Vehicles.
The former incorporate blast and ballistic protection in their design and through the addition of armour plate and other measures; they also incorporate a considerable weight of Intelligence Surveillance and Reconnaissance (ISR) equipment, fire control systems and other communications and self-protection equipment which demands a very different support, configuration control and fleet management approach compared with the high-volume, relatively lower-technology sustainment approach required for the B Vehicle and trailer fleet.
So while Thales Australia, for example, is a bidder for Land 121 Ph.3 teamed with US truck manufacturer Oshkosh, the company doesn't see itself as the logical TLS contractor for these Medium/Heavy trucks.
Instead, much of the TLS for these vehicles, if selected, will be carried out by another as yet undisclosed industry partner.
Thales's TLS strengths lie more in the specialist protected vehicle classes where its high-end engineering and systems integration skills come into their own.
For this reason it is focusing on the Bushmaster and would also be the TLS provider for its Hawkei light protected vehicle if this is selected in Land 121 Ph.4.
B Vehicles
With the first Mercedes-Benz G-Wagens due to enter service soon under Project Land 121 Ph.2, and decisions due next year on the Medium-Heavy truck fleet to be acquired under Land 121 Ph.3, Defence and Industry are grappling with the TLS challenges associated with both the new vehicles and the outgoing legacy fleet.
In contrast with the current TLS regime for the ADF's Mercedes-Benz Unimogs, the G-Wagen will be supported by the manufacturer under a 15-year TLS contract which comes into effect in 2011 or -12, with an option to renew for a further 15 years.
Meanwhile, the Unimogs are supported at unit level for 1st and 2nd line repair; deeper maintenance is carried out via the Defence Integrated Distribution System (DIDS) contract, primed by BAE Systems, and this could be the regime which will prevail through to the end of their life of type some time between 2017 and 2021.
Mercedes-Benz had carried out a series of Unimog rebuilds, but completed the final batch of 170 vehicles in Darwin some 12 months ago and Defence reportedly has no plans to carry out further rebuilds; these vehicles will be replaced under Land 121 Ph.3.
Meanwhile, Mercedes-Benz has a standing offer to supply spares for the Unimog fleet; this expires in 2012, but availability of Unimog engine and drive train spares will never be an issue, ADM was told.
Industry sources have noted that Defence is cutting back on vehicle servicing activities by extending inspection and maintenance intervals to reduce costs.
This is a reflection of the increasing reliability of modern trucks and Defence's relatively low usage compared with the private sector, and represents both a challenge and an opportunity for Defence.
"Sustainment of the B vehicle fleet for the remainder of its life is expected to be a significant challenge, given the age and condition of the vehicles," according to the DMO.
"The Commercial and General Service Vehicle Systems Program Office (CGSVSPO) is working closely with the Original Equipment Manufacturers (OEM), Land Rover Australia, Mack Trucks Australia, Mercedes Benz Australia Pacific and Haulmark Trailers, to support the fleet for the remainder of its in-service life.
"It is intended that the Commonwealth will continue its support arrangements with Mercedes Benz Australia Pacific and Haulmark, while seeking to enter new support contracts with Land Rover and Mack Trucks Australia in 2010."
Recent CGSVSPO initiatives to reduce the maintenance cost of the fleet have provided an opportunity under the SRP to harvest savings, Defence says.
Increased maintenance intervals for the Land Rover fleet were introduced in 2009 and, based upon these results, will be introduced for the Unimog and Mack Fleets in 2010.
"It is estimated that savings of up to $600,000 per year will be realized through this initiative," Defence says.
"It should be noted that there has been no reduction in the availability of Land Rovers due to the increase in maintenance intervals - in fact the long-term projection is for this initiative to increase overall availability rates while achieving cost reductions."
Support arrangements
Traditional TLS arrangements, both in-house and out-sourced, tended to be predicated on an interval-based inspection and service regime.
Shifting to an inspection and on-condition maintenance regime which reflects the reality of ADF usage provides plenty of opportunity to capture savings.
But there are traps for the unwary.
Modern military and commercial vehicles have extended service intervals - up to 80,000km between oil changes, for example.
And consumables such as timing and fan belts and brake pads last far longer than before.
Commercial trucks can cover nearly 1 million kilometres a year on routine long-haul trips, but Defence expects its future fleet of trucks under Land 121 Ph.3 to cover about 250,000km over 25 years, or roughly 10,000km a year.
That means just two oil changes, perhaps three, during the life of these vehicles, which is absurd.
Automotive lubricants and fluids deteriorate over time due to water ingress and contamination through ageing hoses and seals; so annual oil changes, for example, are necessary, along with regular inspections to check for damage incurred during off-road or combat operations.
This means that a TLS regime needs to be designed specifically for each vehicle, one which captures industry efficiencies as far as possible but which also recognises the unique features of military service.
In particular, a truck which spends a high proportion of its time off-road is likely to need more frequent inspections (if nothing else) than a regular haulage vehicle and its consumption of certain spares will likely be different also.
For the G-Wagen, the support regime will see a 50-strong repair pool of vehicles to ensure operational availability while vehicles are cycled through unit maintenance facilities, or back to Mercedes-Benz's Mulgrave facility for deeper maintenance or repair.
The rule of thumb is that if a mechanical repair is estimated to take more than about 40 hours the vehicle will be returned to Mulgrave and replaced with a spare from the pool.
As noted earlier, significant savings are achievable if Defence is willing to consider different ways of managing the TLS regimes of its different vehicles.
How far these savings can be achieved with the current legacy fleet of vehicles is uncertain, however.
Lacking hard data on the real cost of operating and sustaining these vehicles, in many cases, Defence will need to use its judgement on how much disruption of current arrangements is justified given the remaining life of type of many of the fleets.
Abrams, ASLAV and Hercules oh my
Gregor Ferguson | Sydney
The tactical vehicle support tender sought contractors to provide TLS for the ASLAV family of vehicles (FOV) and/or the M1A1 Abrams Main Battle Tank (M1A1) FOV and the M88A2 HERCULES Recovery Vehicle (M88A2) FOV.
The Army's 257 ASLAVs are the legacy element of this contract.
They are currently based in Darwin, Brisbane, Adelaide and Victoria (Bandiana, Melbourne and Puckapunyal), as well as deployed overseas.
Under the Existing TLS model, they are supported by General Dynamics Land Systems Australia in Brisbane and Darwin and undergo deeper maintenance at Bandiana under the aegis of the DIDS prime contract managed by BAE Systems.
Defence is considering replacing all or part of the existing support model; although industry sources have declined to comment while the tender evaluation is under way, ADM understands the only two bidders for the ASLAV element were GDLSA and what amounts to the in-house option - the DIDS prime contractor, BAE Systems.
Meanwhile the Army's 59 M1A1 Abrams and seven Hercules, which were delivered between November 2006 And March 2007, are still being supported under the interim
Foreign Military Sales (FMS) arrangements which are due to expire soon.
The FMS system delivers spares but doesn't fit them, store them, catalogue them or undertake configuration management: in Darwin these functions are currently undertaken by GDLSA under a standing order arrangement.
It's hard to see why the DMO should have taken so long to select a TLS contractor for these vehicles.
Nevertheless, industry sources state the DMO has been much more pro-active in engaging with industry than in recent years, suggesting there's potential for significant change, and therefore cost savings, in the way these vehicles are sustained.
Regardless of which contractor is selected, industry is confident that a new TLS approach which delivers both efficiencies and, crucially, genuine saving in costs is eminently achievable.
All it needs is a decision.