News | Jan. 23, 2018

NATO partners visit DLA Aviation, discuss performance-based logistics initiatives

By Cathy Hopkins DLA Aviation Public Affairs

NATO partners from Germany traveled to Defense Supply Center Richmond, Virginia, Jan. 9-10 to exchange knowledge with Defense Logistics Agency Aviation acquisition professionals on performance-based logistics and long-term contracting initiatives.

DLA Aviation Commander Air Force Brig. Gen. Linda Hurry greeted the group of military and civilian employees from the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support and the Bundeswehr University Munich saying the exchange of information and lessons learned on PBL processes and strategies is sure to prove invaluable to both nations.

It was the first visit between groups, but all echoed Hurry’s sentiment when she said she looked forward to a long-term partnership as the groups work together to ensure capable defense industrial bases, generate innovative and efficient solutions and maintain secure and resilient supply chains.

The visit falls right in line with DLA’s commitment to support strong partnerships with international partners. In this global economy, the agency seeks to engage with its allies to learn of others’ efforts and successes in delivering cost-effective and innovative solutions, as stated in DLA’s recently released 2017-2022 Strategic Plan.

DLA Aviation Deputy Commander Charlie Lilli and Strategic Acquisition Programs Director Chris Davis headed up the DLA Aviation delegation and Air Force Col. Stefan Pott, deputy head, Directorate Air, Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support and Ruediger Knoepfel, program manager for the Eurofighter Program Office, headed up the German delegation.

Lilli told the delegation, “DLA Aviation is most interested in establishing a long-term partnership where we can provide subject matter experts for you to use throughout your entire process.  We would love to keep up with how you are doing with follow-on items. We can learn a lot, both ways.”

Pott said the goal of their visit was to exchange experiences, best practices, lessons learned and future PBL developments.

Pott began the briefings educating DLA Aviation senior leadership on how their division was organized and on their procurement and funding practices.  Leaders learned about the many similarities between the two organizations.  Directorate Air procures and provides in-service support of all air- and space-based aircraft, flying weapon systems and reconnaissance systems for the German military forces.  It is also tasked with system-based researched and technology for current and future systems.

Pott, who previously served as the first battalion commander of the maintenance and logistics group for the Eurofighter when it went into service in 2004, said his team manages more than 65 military projects, with other NATO agencies, to include the Eurofighter and the Tornado weapon systems. 

The Eurofighter Typhoon is a twin-engine, canard-delta wing, multi-role fighter designed originally as an air superiority fighter. The Tornado is an air-to-ground and air defense fighter.

Knoepfel, a former Tornado pilot and X-31 aircraft test pilot, said he never thought when he witnessed the Eurofighter’s maiden flight in 1994, he would be Germany’s program manager for the weapon system and working on its fifth-generation, computer-driven model.  The Eurofighter was originally used as an air-to-air weapon system that in recent years, developed a new role as an air-to-surface system and is changing from mechanical to electronic radar systems. He said the fleet is one pillar of their future combat system and will be in-service until possibly 2050.

Pott explained his organization, while run by civilians, has both civilian and military personnel responsible for material sustainment. It is a purchasing and supply organization for military services.

Pott said they have a complex partnership with the other NATO nations, including Italy, Great Britain and Spain, supporting the Eurofighter weapon system that impacts their office processes and policies.  Each nation has its own program manager, industry suppliers, and procurement requirements and polices.  All operating collaboratively on a cost-share basis, within the NATO Eurofighter Tornado Management Agency, or NETMA.

Lilli told Pott that the organization of the countries in NETMA sounds similar to the organizations supporting the U.S. F-35 Joint Striker weapon system. In discussions, Lilli and Pott agreed Germany’s future combat system is similar to the F-35 fifth generation integration system.  Knoepfel said four nations have processes going on simultaneously with the aircraft regarding development and upgrades to keep the aircraft in service, which makes it a very interesting program to manage.  

Pott told DLA Aviation leaders that back in July 2016, the office changed from a traditional logistics support contract for spare parts to a performance-based logistics contract that was awarded within 15 months with support from experts in Bundeswehr University Munich.  

Both Lilli and Davis expressed admiration that the group was able to accomplish the transition in such a short period of time.

German Air Force Col. Ekkehard Stemmer, who also works in Directorate Air, discussed the rational between moving to a PBL consumable and repair parts contract based on analysis of logistics concepts, integrated logistics support elements, national and international models and different studies to break a trend of increasing costs and procurement difficulties. He said the common item of the old traditional contracts is they are activity and output based, not outcome based. So there is no incentive base. 

“In past contracts, we paid for spare parts, man-hours and for aircraft on the ground. The longer it was on the ground, the more the contractor earned,” said Stemmer.  “Now with the PBL contract, we want to pay for performance, for flying hours. Finding the right framework within our procurement laws to pay an incentive was a challenge, but we were able to find a way to make a positive incentive within the existing law.” 

Stemmer said one of Germany’s incentives to move to a PBL contract, along with partner nation Spain, was the pool of spare parts could go first to those nations that already had PBL contracts in place and Parliament’s discussion to decrease funds for sustainment.  This new approach transforms support from an output to outcome system, starting with contracting to repair spare parts at this time. Stemmer said the contract may possibly advance to a weapon system mission-based approach in the future. 

Lilli said rationing parts across customers is a classic problem, and suppliers will sell to the customer that benefits them the most.  

“Both DLA and the German delegation agreed we share many of the same issues and concerns that warrant the need for effective PBL strategies,” Davis said after DLA Aviation leaders briefed the delegation on the activity’s incentive and disincentive efforts, sustainment,  and lessons learned from its ongoing Captains of Industry – Supplier Capability Contracts. We also see similarities in conducting business case analysis, difficulties in defining requirements, establishing ‘proper’ metrics and managing obsolescence in aging weapon systems.” 

Historically, there has not been any type of collaborative relationship between DLA and Germany regarding sharing experiences with acquisition support. 

Davis said both sides agreed to commit to a long-term relationship and establish cooperative communications regarding ongoing and future efforts.  He said the idea of possibly establishing a rotational program between the two organizations, allowing for an in-depth understanding of PBL strategies and performance-based contracting, was also discussed. 

Following the DLA Aviation visit, the German delegation traveled to Naval Air System Command, Patuxent River, Maryland, to discuss Navy acquisition practices before returning to Germany.