Fleet Management Program
The Army is turning over its M109 self-propelled howitzer and AH-64 Apache helicopter to the care of industry, said Maj. Gen. Roy E. Beauchamp, USA, commanding general of the Tank-automotive and Armament Command (TACOM) in Warren, Michigan.
The move to outsource fleet management has been expected by industry for several years, according to representatives of several large manufacturers. They predict a similar move will follow for tactical vehicles.
The Army wants industry to manage the fleet of the M109 family of vehicles (Paladin) which includes the M109 self-propelled howitzer and the M992 field artillery ammunition supply vehicle.
The fleet manager will be responsible for all technical resources from training to field maintenance and, therefore, responsible for all spare parts modernization. Soldiers will still take care of day-to-day maintenance.
The Army expects to save 20 to 30 percent in life cycle sustainment support costs through the program. A minimum of 10 percent savings is needed to award the contract, said Beauchamp.
Money, however, is not the only issue being considered, he said. Army and industry leaders must confront several legal issues before a contract award. Potential trouble spots include employee displacement, decapitalization, payment methods and A-76. A-76 is an Office of Management and Budget regulation that requires federal agencies to evaluate whether government or industry offers the best value for a specific project.
"We are trying to support the Army's objective to do a fleet management program, to learn from it, and to see what utility it has to us," said Beauchamp.
Apache Prime Vendor
The Army began negotiations in October to outsource management of the Apache. Team Apache Systems (TAS), Mesa, Arizona, a joint venture of Boeing's McDonnell-Douglas Helicopter Company, Seattle, and Lockheed Martin Electronics and Missile Company, Bethesda, Maryland, approached the Army with the idea and is the sole bidder on the contract.
"Only TAS, which is composed of the system developers and producers of the Apache system, is capable" of re-engineering the helicopter's logistics system, according to the Commerce Business Daily notice posted by the Army in late October.
TAS employees will manage each part of Apache logistics from requirement determinations to field support and inventory maintenance. The Army Aviation and Missile Command, Redstone Arsenal, Alabama, oversees the one-year contract which has four one-year priced options. The Army has begun negotiations with TAS, said Bruce J. Metzger, contracting officer.
"It is a complicated business when you start thinking about all the things that go into managing a system," said Beauchamp. "It looks pretty easy as long as someone else does it.
"There are lots of people who want to do one system, but TACOM does 3,342 systems for the Army: the maintenance, the modernization, the depot maintenance, the sustainment, and the readiness management."
"Many of our customers simply operate the equipment they buy from us, relying on our company to put the equipment in service, train operators, stock repair parts, and perform service and repair at the jobsite," said Dave Lombardi, director of vehicle systems at Stewart & Stevenson, Sealy, Texas.
His company already has technical representatives in the field with the Army's family of medium tactical vehicles, said Lombardi. They support a variety of tasks from soldier training to vehicle diagnostics.
Some contractors are currently forward deployed in Bosnia and Germany, for example, but Beauchamp said he does not want contractors writing doctrine through circumstances. Army leaders are working on the issue.
TACOM began formally collecting industry's input to the fleet management program in September and plans to release a request for proposal in the near future, according to the executive summary of the program. The source selection is scheduled for November.
The initial proposal was "too restrictive," said Dave Longley, public affairs director of United Defense, Arlington, Virginia. His company is preparing a proposal for the Paladin fleet management.
The plan will not save the Army time or money if its leaders require industry to duplicate the current management system, he said.
"We want to use best commercial practices," said Longley.
The ability "to buy response and not buy stockpile" is the primary advantage of the program for TACOM, said Richard Engel, director of government vehicles for Freightliner, Portland, Oregon.
The fleet manager is expected to provide "all spare and repair parts (both common and unique) used on the M109 family of vehicles in both the active Army and National Guard," according to Army documents. The winning company will maintain the war reserve as well as day-to-day inventory.
Contractors in Battle
The Army is asking private industry to become the focal point for life cycle sustainment of the M109 family of vehicles during peacetime and national emergencies.
The latter is a major concern for Beauchamp. "When we are in the battlefield and a contractor says, 'I don't think so.' I do not want to be exposed to the risk."
Because fleet management is a contractual relationship, if a company did not fulfill its terms, that would leave Beauchamp and his staff only one recourse-to sue for breach of contract.
"I am not interested in suing a contractor," said Beauchamp. "If I have a dead soldier, that is little consolation."
Contractors are already performing in hostile areas, said W. John Stoddart, general manager of the medium vehicle group at Oshkosh Truck Corporation, Oshkosh, Wisconsin. His company has employees in Bosnia. In Germany the company is providing troops with technical support to tactical vehicles. They are also shipping in-stock items directly to field units with electronic ordering.
The complexity of modern military vehicles is one of the reasons to outsource their care, said Beauchamp. The Army, however, will have to maintain the knowledge and capability in-house.
"In the final analysis there has to be organic capability for us to maintain the system because there are places that contractors will not be allowed to go," he pointed out. "There are places that the contractors won't want to go because of the liability."
Personnel issues are not the only pending legal concerns. The program must pass an A-76 review. The Office of Management and Budget turned down the Army's request for a waiver in the Paladin project, said Beauchamp. Officials at the Army Aviation and Missile Command expect a waiver for the Apache prime vendor support contract, said Metzger, the Army's contracting officer.
Financial issues are being worked out at a level higher than TACOM, said Beauchamp. Decapitalization of military vehicles requires the Army to account for military property released to commercial care. Leaders are also debating payment and interface methods between wholesale and retail entities.
As the Army moves forward with the outsourcing effort, officials are still grappling with the issue of how to deal with small businesses. "Clearly small business has to be a part of this," said Beauchamp, who added "no small business can take on what we are talking about." He foresees a role for small firms as suppliers and subcontractors to the prime vendor, but said TACOM's approach to the issue has not been set.
The Apache program requires TAS to continue set-aside and subcontracting efforts identical to those in use by the government.