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Contractor Costs Must Come Down, US Army Brass Says

May. 10, 2014 - 03:45AM   |  
By PAUL MCLEARY   |   Comments
A variety of vehicles are examined in Anniston Army Depot's final inspection process.
A variety of vehicles are examined in Anniston Army Depot's final inspection process. (Jennifer Bacchus / US Army)
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WASHINGTON — Almost nothing is certain when it comes to the Pentagon’s procurement and operations and maintenance accounts these days, and service leaders appear to have reached the point where they’ve given up trying to put on a good face for industry.

At a defense industry conference near Dulles airport in the Washington suburbs on May 6, several Army generals took to the podium to both celebrate how modernized their fleets of ground vehicles are, while bemoaning how expensive the remaining work has become.

The Army’s tactical-wheeled vehicle fleet is on average two to three years old, yet the Army is still planning on requesting two to three years of supplemental wartime funding after the final withdrawal from Afghanistan to get its entire fleet back up to where it needs to be, said Gen. Dennis Via, commander of Army Materiel Command.

“Our fleets are actually in pretty good shape because of the billions in taxpayer dollars that were invested in reset and recap,” added Lt. Gen. Raymond Mason, deputy chief of staff G-4. “Our average tactical fleet age has gone down” since the start of the wars in Iraq and Afghanistan.

But whether that’s good news is a matter of interpretation.

“That’s good news in the sense that those vehicles are in great shape,” he continued, “but that also means there’s not a lot of work for you guys in that particular business, and I clearly understand that. But here’s my concern. When we entered the war in 2001, 85 percent of our vehicles needed depot maintenance. Today that’s reversed.”

His concern stems from declining budgets, and that the lack of funds might force the Army to go back to that 85 percent number.

One of the reasons vehicles cost more to maintain now than they did before the wars is the amount of electronics that have been added in order to jam roadside bombs and increase their computing and communication power.

A few years ago, 8 to 10 percent of the cost of repairing ground vehicles was related to software, Mason said, but today that number is more than 25 percent.

To do that kind of complicated work, simple wrench-turners in Army uniforms don’t always meet the need. As a result, the cost of field service representatives (FSR) deployed to domestic and overseas depots “is killing us” he said.

“We want to go to a multi-capable FSR that can work on multiple systems. The contract logistics cost to the Army is really unaffordable right now, I’m just being honest with you. So we’re going to try and bring that back down.”

The Army has about 278,000 vehicles across the service fulfilling a variety of roles, but that number is on its way down to about 240,000 over the next several years, said Don Tison, assistant deputy chief of staff for Army G-8.

“From a numbers standpoint, we’re fine,” Tison said. “These years of large procurement accounts have helped us fill out the fleet. Modernization and obsolescence are another matter.”

One of the big projects moving forward is to try to increase the number of public-private partnerships the Army undertakes with industry to drive the cost of sustainment down, while also keeping the ground vehicle industrial base humming.

But just as the generals offered a frank assessment of where they are — and how much work is available for industry in the coming years — the defense executives at the event were also in truth-telling mode.

“When we draw down capacity, as an industry partner, there has to be something that replaces that,” said James Grooms, vice president of logistics and sustainment for Navistar. ■


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