Depot Maintenance In The Air Force
AD-A249 422Depot Maintenance in The Air Force:How Requirements Are Determined and How TheyRelate to Aircraft Readiness and SustainabilityAF901R1, .0 T. J. O'MalleyTovey C. Bachman92-11677'i :1 11! '
May 1990Depot Maintenance in The Air Force:How Requirements Are Determined and How TheyRelate to Aircraft Readiness and SustainabilityAF901R1T. J. O'MalleyTovey C. BachmanPrepared pursuant to Department of Defense Contract MDA903-85-C-0139.The views expressed here are those of the Logistics Management Institute at the time of issue but notnecessarily those of the Department of Defense. Permission to quote or reproduce any partexcept for Government purposes must be obtained from the Logistics Management Institute.Logistics Management Institute6400 Goldsboro RoadBethesda, Maryland 20817-5886
UNCLASSIFIEDSECURITY CLASSIFICATION OF THIS PAGEREPORT DOCUMENTATION PAGE1a. REPORT SECURITY1b. RESTRICTIVE MARKINGSCLASSIFICATIONUnclassified3 DISTRIBUTION YAVAILABILITY OF REPORT2a. SECURITY CLASSIFICATION AUTHORITY"A" Approved for public release; distribution unlimited.2b. DECLASSIFICATION / DOWNGRADING SCH EDULE5 MONITORING ORGANIZATION REPORT NUMBER(S)4- PERFORMING ORGANIZATION REPORT NUMBER(S)LMI-AF90IR16a NAME OF PERFORMING ORGANIZATIONLogistics Management Institute6b OFFICE SYMBOL(If applicable)7a. NAME OF MONITORING ORGANIZATION7b. ADDRESS (City, State, and ZIP Code)6c ADDRESS (City, State, and ZIP Code)6400 Goldsboro RoadBethesda. Maryland 20817-58869 PROCUREMENT INSTRUMENT IDENTIFICATION NUMBERMDA9O3-85-C-0139[8b OFFICE SYMBOL(if applicable)USAF/LE8a. NAME OF FUNDING/SPONSORINGORGANIZATIONHeadquarters, United States Air Forcej[10. SOUKC . OF FUNDING NUMBERSTASKIPROJECTPROGRAMNONOELEMENT NO.8c ADDRESS (City, State, and ZIP Code)Director of Logistics Plans and ProgramsThe Pentagon. Room 4B283Washington. DC 20330WORK UNITACCESSION NO11 TITLE (Include Security Classification)Depot Maintenance in the Air Force: How Requirements are Determined and How They Relate to Aircraft Readiness and Sustainabilitv12. PERSONAL AUTHOR(S)T. J. O'Malley, Tovey C. Bachman13b TIME COVERED3a TYPE OF REPORTFinalIFROMTO14 DATE OF REPORT (Year, Month, Day)1990, May15 PAGE COUNT7016. SUPPLEMENTARY NOTATION17COSATI CODESGROUPI SUB-GROUPFIELDII18. SUBJECT TERMS (Continue on reverse if necessary and identify by block number)depot maintenance, aircraft readiness and sustainability, requirements forecastingII19 ABSTRACT (Continue on reverse if necessary and identify by block number)This report presents a method to quantify the effect of depot maintenance funding on aircraft readiness and sustainability and discusses the problemof forecasting maintenance budget requirements on that basis. It concludes that, while the Air Force should pursue improvements in technicalforecasting methods, that course alone would not guarantee stability and accuracy of the forecast. Given the inherent volatility in item demand rates andthe effect of Air Force management decisions, the Air Force needs also to develop stronger tools and procedures to provide visibility and managementcontrol of the requirement.20 DISTRIBUTION /AVAILABIL.TY OF ABSTRACTASRPT] S,:ME[ UNCLASSIFIED;'UNLiMITED22a NAME OF RESPONSIBLE INDIVIDUALDD FORM 1473,84 MARL DTIL USERS21 ABSTRACT SECURITYCLASSIFICAThON22b TELEPHONE (Include Area Code)83 APR edition may b used until exhaustedAll other editions are obsolete22c OF;ICE SYMBOLSECLRITV CLASSiFICA-ION OF HIS PAGEU NCI.ASSIFIED
LMIExecutive SummaryDEPOT MAINTENANCE IN THE AIR FORCE:HOW REQUIREMENTS ARE DETERMINED AND HOW THEYRELATE TO AIRCRAFT READINESS AND SUSTAINABILITYTn the 1987 Implementation Review of Depot Maintenance Programs, theDefense Resources Board (DRB) called on the Services to base depot maintenancefunding requirements on end-item readiness and sustainability. In large part, theDRB request was motivated by a perceived lack of credibility in Service estimates ofrequirements. This perception had developed over time with observations ofestimates that varied unexplainably from year to year, projections of maintenancebacklogs that failed to materialize, and Service reprogramming of depot maintenancefunds to other accounts.The Air Force Logistics Command (AFLC) has begun the process of basing itscomponent repair requirement on peacetime readiness considerations with theintroduction of the Aircraft Availability Model to determine reparable sparesrequirements. Implementation of a new model - Distribution and Repair in aVariable Environment (DRIVE) - will add explicit consideration of wartimesustainability. Neither of these actions, however, can ensure stable and accuraterequirements forecasting, and it is the instability in such forecasts that contributesmost to the lack of credibility.Volatility in item demand rates and the effect of Air Force managementdecisions (e.g., accelerating or decelerating a weapon system phase-in or phase-out,or a major additive program) complicate the task of requirements forecasting. Whilethe Air Force should pursue improvements in technical forecasting methods, anysolution must also involve the development of stronger management controls toimprove the stability of the requirement. The requirement is not simply the output ofa mechanical computer model that operates on item rates and factors. It is a sum ofmany human judgments. Air Force managers need improved visibility to be aware ofthe effect of those many judgments, and they need mechanisms to impose overall.6iAF901R1/MAY 90
corporate Air Force judgment and control without unnecessarily disrupting theoperation of the maintenance program.Such tools are being developed within the framework of the AFLC LogisticsModernization System (LMS). The DRIVE model in the Weapon SystemManagement Information System (WSMIS) and the Requirements Data Bank, inparticular, are crucial to the formation of the maintenance requirement. The AirForce needs to ensure that the product and processes defined by these systems will, infact, give the necessary visibility and control of the requirement. Coupling thiscapability with a management commitment to minimize variability in estimatesshould allow the Air Force to regain credibility in its maintenance requirementsprocess without jeopardizing support. The greater management control isparticularly important in view of Air Force plans to stock fund depot-levelreparables, which will greatly change financial management of spares.We recommend that the Air Force revisit the CORONA REQUIRE study of1982-1983. That study was a comprehensive review of the spares procurementrequirements process by a team chaired by General Alton D. Slay, U.S. Air Force(Retired) and representatives from all levels of the Air Force logistics community.Although the study dealt primarily with procurement, most of the problems itaddressed have parallels in depot maintenance, and those parallels will becomestronger when procurement and maintenance become more closely linked understock funding. The agenda for "CORONA REQUIRE II" would focus on thedevelopment of a requirements process that recognizes the innate variability andjudgmental quality of the requirement and provides the necessary levers for effectivemanagement control. While some of these management tools are already in place orbeing developed, they must yet be integrated into the process and we must be surethat management procedures are in place to take advantage of them. The Air Forcewould benefit greatly from the efforts of such a study group ensuring that thedeveloping LMS will indeed provide the tools to manage, control, and stabilize boththe procurement and maintenance requirement.iv
CONTENTSPageExecutive Sum m ary .iiiList of Tables.vii.ixList of FiguresChapter 1. Introduction .Chapter 2. The Depot Maintenance Requirement1- 1.2- 1Content of the DEP/REP/MOD Program .Development of the Exchangeables Requirement .The Effect of Stock Funding .The Demand-Based Portion of the Requirement .Bias in Demand Forecasting .Management Decisions and the Requirement .2- 22- 22- 42- 52- 72-14Chapter 3. Estimating the Effect on Aircraft Readinessand Sustainability .3- 1IntroductionThe Approach .3- 2Chapter 4. Some Effects of the FY88 DEP/REP/MOD Funding Cut.4- 1Maintenance Outputs .Supply Indicators .Operational Indicators .How Readiness Was Maintained .Chapter 5. Conclusions4- 24- 44- 54-11.5- 1Appendix A. The Effect on Aircraft Readiness and Sustainabilityof Depot Maintenance Funding .A-1 - A-16Appendix B. GlossaryB-1.-B- 3
TABLESPageReadiness and Sustainability Impacts: Combat SupportManagement System Authorized Kits (F-16A Results) .3-3Readiness and Sustainability Impacts: Combat SupportManagement System Authorized Kits (F-11iD Results) .3-44-1.DEP/REP/MOD Obligations (Millions of Dollars) .4-14-2.Organic Exchangeables' Production (Thousands).4-24-3.Organic Programmed Depot Maintenance/ModificationProduction (Aircraft).4-3Depot-Level Engine Production (Organic and Contract/Interservice .4-34-5.Depot Fill Rate (Percent).4-54-6.End-of-Year Depot Backorders for Exchangeables3-1.3-2.4-4.4-5(Items in Thousands).Aceession ForNTIS GRA&IDTIC TABUnannauccedJustif icatioBy-.Distributionf.ri t OAlabliyt. 11V.ViiAIt'mapcLI001
FIGURESPage2- 82- 1.Evolution of the Requirement2- 2.Predicted and Actual Value of OIM Depot ReparablesG enerated .2-11Percent Overestimate of Value of OIM Depot ReparablesG enerated .2-11Ratio of Actual to Predicted Value of OIM Depot ReparablesG enerated .2-12Difference Between Multiplier-Adjusted Forecasts and ActualValue of OIM Depot Reparables Generated .2-132- 6.Predicted and Actual OIM Depot Reparables Generated .2-152- 7.Percent Overestimate of OIM Reparables Generated(Q uantity) .2-152- 8.Depot Maintenance Funding Trend .2-172- 9.Total Aircraft Inventory Trend .2-172-10.Flying-Hour Trend .2-182-11.OIM Depot Reparables Generated (Base NRTS)3- 1.Linkage Between Depot Purchased Equipment Maintenanceand Sustainability .2- 3.2- 4.2- 5.2-18.3- 3.4- 74- 1.Mission Capable Rates .4- 2.Not Mission Capable and Partially Mission Capable Rates4- 3.Fully Mission Capable Rates: B-52 and C-5 .4- 84- 4.Fully Mission Capable Rates: F-16 and F-15 .4- 84- 5.Partially Mission Capable Rates: B-52 .4- 9.4- 7
FIGURES (Continued)Page4- 6.Partially Mission Capable Rates: C-5 .4- 94- 7.Partially Mission Capable Rates: F-15 .4-104- 8.Partially Mission Capable Rates: F-16 .4-104- 9.Number of MICAP Incidents Resolved with WRM Assets .4-124-10.Total Number of MICAP Incidents Resolved4-124-11.Cannibalizations .4-134-12.Number of MICAP Incidents Resolved .4-13.
CHAPTER 1INTRODUCTIONIn recent years, the depot maintenance requirements of all the Services havecome under increasing scrutiny from Congress and OSD. In 1987, the DefenseResources Board identified a need for an in-depth assessment of depot maintenancebacklogs and the relationship of funding levels to readiness and sustainability. TheHouse and Senate appropriations committees both questioned the credibility of depotmaintenance requirements in the markup of the FY89 budget.Within the Air Force itself, the same question of credibility persists. There is awidespread perception that the depot maintenance requirement is overstated, aperception strong enough that in FY87 the Air Force reprogrammed more than 300 million from the depot maintenance account to civilian pay, the LogisticsModernization System, and other nondepot requirements. Those Air Force actionscaused early 1988 estimates of projected backlogs - unfunded maintenancerequirements - of more than 800 million in FY88, growing to over 1.5 billion bythe end of FY89. Although backlogs in the 150 million to 200 million range hadbeen managed in the past with little effect on readiness, the prospect of such largebacklogs was alarming. The logistics community was greatly concerned, and the AirForce Logistics Command (AFLC) even projected a potential need for furloughs of thecivilian work force.The most drastic consequences did not materialize. Early retirement programsinstead of furloughs reduced the work force, workload was shifted from depot-level tobase-level maintenance, programmatic requirements were deferred or canceled, andaircraft overhaul work packages were downsized. Aircraft mission capable (MC)rates were maintained in the face of diminished depot production by dint of increasedworkarounds - more cannibalizations, lateral supply, and the use of war reservestocks. In brief, the Air Force demonstrated the ability to survive a dramatic shock todepot maintenance funding - partly by establishing priorities for the elements of therequirement and performing only the most necessary actions and partly by workingharder and with more workarounds on the flightline.I-I
In this report, we discuss a statistical method we used to estimate the probableeffects on Air Force readiness and sustainability - peacetime availability rates andwart.re sortie generation - of changes in funding for depot maintenance. Weexamine supply and readiness indicators during FY88 and part of FY89 to see theactual effects of funding cuts on the Air Force, and we discuss how much of actualexperience our method captured. Finally, we look at how the depot maintenancerequirement is built and what light the events of FY88 shed on this process. Thatlook is primarily directed at two desirable goals for the process - linking therequirement to aircraft readiness and sustainability and developing credible anddefensible budget funding estimates.I-2
CHAPTER 2THE DEPOT MAINTENANCE REQUIREMENTAir Force depot maintenance is responsible for the complex repair and overhaulof airframes, missiles, engines, components, and other equipment items. 1 Theannual cost of these services has recently been in the 4.5 billion range. Congressappropriates funding for depot maintenance to Operation and Maintenance (O&M)accounts that are used by "customers" to buy maintenance services from the DepotMaintenance Industrial Fund (DMIF).2The DMIF is a revolving fund that provides working capital for the depotmaintenance industrial resources. The fund's customers include the other MilitaryServices, many Federal agencies, and other Air Force and DoD activities, with thelargest customer being the Direct Air Force (DAF) account, which supports theoperations of the major operating commands and has recently hovered about the 3.1 billion lvel. We focus our attention on that account, commonly referred to asDepot Purchased Equipment Maintenance (DPEM)3 although the new official term isthe more illustrative DEP/REP/MOD (for depot repairs and modifications).Air Force Logistics Command, Materiel Management (MM), determines theDEP/PREP/MOD requirement, obtains appropriations, and buys maintenance servicesfrom the DMIF to execute the program. Approximately 65 percent of the program isperformed organically at five major air logistics centers (ALCs) or depots. The AirStaff, Directorate of Logistics Plans and Programs, is responsible for planning,programming, and budgeting for depot maintenance.IMuch of the information in this chapter on the contenL and management of the depot maintenance program is taken from the Air War College Report AC-AWC-88-209, DPEM Versus DMIF:What's the Difference and Why Should We Care, by Colonel David M. Reed, U S. Air Force (USAF)2Strictly speaking, DMIF is the Air Force Industrial Fund, Depot Maintenance Services.3The DAF appropriation includes non-DPEM programs of approximately 300 millionannually, including interim contractor support and depot maintenance for selected classified programs that are kept separate from both DPEM and DMIF.2-1
CONTENT OF THE DEP/REP/MOD PROGRAMSix major programs comprise the DEP/REP/MOD. The largest of these.typically 55 to 60 percent of the total, is the Exchangeable Component RepairProgram, which repairs components for all Air Force-owned equipment. Another, theAircraft Program, includes programmed depot maintenance of airframes;on-condition maintenance requirements for crash damage, corrosion, etc.;installation of modification kits; and other actions on airframes. It constitutesapproximately 25 percent of the total DEP/REP/MOD. The third major program isthe Engine Program, which includes the cost of overhauling engines and enginemodules. It is typically about 10 percent of the total. Thus, those three programscomprise the bulk of the DEP/REP/MOD appropriation.The remaining three smaller programs are the Missile Program, which providesdepot maintenance in support of intercontinental ballistic missiles; the Other MajorEquipment Items Program, which includes repair of such items as groundcommunication vans and refueling vehicles; and the Area Base Support Program,which includes precision equipment calibration and other on-site : .pport.In this study, we focus on the Exchangeables Program although at times wedraw illustrative examples from "he other programs. The Exchangeables Program isthe largest of the DEP/REP/MOD programs and clearly a major contributor toaircraft readiness and sustainability. In addition, because procurement costs are onthe order of seven times greater than repair costs, DEP/REP/MOD dollars havegreater leverage, in a sense, than procurement dollars.Failure to perform 100 million of repair causes 700 million of assets to remain unserviceable.DEVELOPMENT OF THE EXCHANGEABLES REQUIREMENTSThe first step in computing the exchangeables requirements is to calculate aprocurement and a repair requirement for each of the 170,000 recoverable spare partsmanaged by the Air Force. The D041 Recoverable Consumption Item RequirementsSystem performs that computation, and the results are used both for near-termguidance of execution (the generation of procurement requests and induction ofunserviceable assets into depot repair) and for long-term projection of budgetrequirements.2.2
On the basis of individual factors such as failure and condemnation rates, repairtimes, procurement and repair costs, the D041 projects up to 26 quarters of grossrequirements for each item - so many to replace accumulated failures, so many tofill repair and transportation pipelines (i.e., the expected numbers in repair or intransit), so many for safety level to cover statistical fluctuations in demands, so manyfor special additive programs, and so on. It also computes the number of "candidates"for induction into depot repair - quarterly failures times percent not repairable atthe base discounted by the percent condemned at the depot. The D041 also conta
HOW REQUIREMENTS ARE DETERMINED AND HOW THEY RELATE TO AIRCRAFT READINESS AND SUSTAINABILITY Tn the 1987 Implementation Review of Depot Maintenance Programs, the Defense Resources Board (DRB) called on the Services to base depot maintenance funding requirements on end-item readiness and sustainability. In large part, the
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