Assessing Logistics Cost Using the FMS Decision Support and Budgeting Model - foreign military sales

DISAM Journal,  Summer, 2000  by Steven House

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Introduction

Recent decline in the Department of Defense (DoD) budget due to changes in the world political environment have decreased the resources available to national defense. During the 1990s, there has been continued pressure from Congress to reduce defense spending without compromising readiness of naval aviation. This has caused the Navy to seek ways to reduce the logistics infrastructure thus freeing up scarce resources for fleet modernization. One initiative naval aviation logistics managers adopted was expanded use of readiness based sparing (RBS) as a method for reducing shipboard spares allowances.

Background

The concept of RBS to develop consumer allowances in the Navy is not new. It evolved because previously used allowance computational models were equipment oriented and did not relate dollars spent to weapon system readiness. Naval aviation first used RBS during the early 1980s for development of the packup kits for the SH-60B LAMPS Program and by NAVAIR to budget interim support spares requirements for new systems. Early in 1993, NAVICP, Philadelphia (formerly known as ASO) in conjunction with the fleet commander, tested the RBS concept with the deployment of the USS America (CV-66). Post-cruise analysis of the RBS exercise concluded that the RBS Aviation Consolidated Allowance List (AVCAL) supported America's airwing with no loss in readiness. In addition, the RBS AVCAL was approximately $33 million less than the traditional demand based AVCAL. This was accomplished by increasing the range of less expensive weapons replaceable units (WRAs) by 24 percent while decreasing depth of high cost WRAs by only .01 pe rcent (Source: 1995 article in the Supply Corps Newsletter written by the Deputy Branch Head for IMA/Site Support, Mr. Jim Stabalito). Since this initial RBS test, all afloat aviation allowances have been computed under RBS with an average net savings of approximately $32 million per aircraft carrier. Implementation of RBS at shore stations is now continuing with equally favorable results.

Because of the increased cost of today's weapon systems, many potential international customers are seeking ways to reduce their initial and life cycle support costs so that they can afford to buy the right mix of weapon systems. In arriving at these decisions, they seek data to assess whether reducing initial logistics support will adversely affect weapon system readiness. The more sophisticated customers use their own life cycle cost models to do the analysis. However, less sophisticated FMS customers rely on the U.S. government and the individual services to provide the data and recommend a cost effective support strategy. In either case, it is incumbent on the Navy FMS community to adopt an RBS approach which will meet the readiness and cost objectives set by the potential FMS customers. The Navy -- developed Aviation Retail Requirements Oriented to Weapon Replaceable Assemblies (ARROWS) model is the RBS tool currently being used by the Navy to provide the best mix of spares which will support weapon syst em cost and/or readiness objectives. It was used by NAVICP, Philadelphia to realize the AVCAL cost reductions discussed earlier and to identify future benefits through continuing implementation of RBS for Naval air stations and Marine Corps support packages. It therefore follows that by adopting RBS analyses using this model, the Navy can demonstrate to the potential FMS customer that it is adopting cost saving techniques which will reduce life cycle cost while still maintaining performance and readiness of each weapon system.

In 1995, NAVAIR wanted to develop a decision support and budgeting (DSBM) model for the FMS assistant program manager for logistics (APML) to use for quick preparation of price and availability estimates during in-country briefings and to support site surveys after an FMS case was signed. This model needed to be portable so that it could operate on laptop computers, be user friendly and capable of assessing multiple "what if" scenarios which can assess the support cost of alternative support strategies. Since a stand alone ARROWS model is difficult to use and requires extensive training before the user can become proficient in its use, a more user friendly approach had to be developed. The approach was to developed a powerful tool which provides integrated logistics support managers with the capability to use, adjust and assess an already established baseline database (developed specifically for each individual FMS case) to assess cost implications of alternative operational and maintenance repair concepts. A series of "front end" menu screens and programs were developed to assist the user in reviewing the aircraft configuration, making changes to the maintenance repair concept, defining the operational and support characteristics of each unique FMS case and automating all the inputs to the ARROWS model. The DSBM model then fed data to ARROWS for computation of all desired alternatives, displayed run results and provided detailed outputs which can be used to assess the cost implications of each alternative. Figure 1 provides an overview of the objective and purpose of the model.