Capability InService Support Contracting Page 1 Complex Materiel

Capability & In-Service Support Contracting Page 1

Complex Materiel or Complex Systems - defined as those assets that support defence & security operations through… ► FLYING (eg. aircraft & helicopters) ► SAILING (eg. ships, boats & submarines) ► DRIVING (eg. wheeled & tracked vehicles & cannons) ► TRANSMITTING (eg. ATC / ADC radars & satellite ground stations) “CAPABILITY” Page 2

There are numerous contracting activities throughout the life cycle of a Complex Materiel/Systems Conce pt GSR/ Spec Acquisiti on Procurement supply of Complex Materiel or Systems Offset / ICP In. Service Dispos al Procurement services to maintain Complex Materiel/Systems In-Service Support (ISS) or “Sustainment” (some in-house, some outsourced) Procurement of services & supply to upgrade Complex Materiel/Systems Page 3

Outsourcing of In-service Support or “Sustainment” of Complex Materiel is nothing new… ► Why? …most of our defence systems are foreign sourced hence, we expect OEM to help us maintain the system throughout its entire life ► Normally, we outsource; Maintenance, Repair & Overhaul (MRO) of components/parts removed from the system (Intermediate & Depot level MRO) Technical Services to help us solve technical problems Provision of Spares as and when we need them ► We have Contracts - to allow payment to be made to the above services rendered by OEM ► Apart from OEMs - Contracts with any other independent service providers or repair stations They quote, we pay Page 4

Using this arrangement, service providers have the upper hand they can easily satisfy contractual obligations however, buyer’s expectation still not met Happy Contractor - Unhappy Customer ► Contract Outcome do not normally reflect the defence “Capability” that the Contractor is expected to deliver ► No emphasis on “Outcome of Services” - payment only on “manhour & spares” - very transactional ► Even we know there is delivery problem, it is difficult to penalize the Contractor ► The current arrangement do not promote true “partnership” between the users & service provider …we are “not sure what are we buying…. ” Page 5

Eg. sustainment of an aircraft fleet may involve the following contracts - Contractor’s performance measured on each contract will not be the same Through Life Support (TLS) Contract Fleet Maintenance (FM) Contract Modification / Upgrade (CM) Contract Repairable Item (RI) Contract Aero-Engine (ENG) Contract Engineering Services (ES) Contract FM Contract CM Contract Aircraft Avionics Component (eg. Line AN/APG-65 Airborne Radar) Heavy Mod RI Contract TLS Contract Mech Component (eg. SJU-5/6 Ejection Seat) RI Contract Aero-Engine (F 404 -GE 402 Engine) ENG Contract Aircraft System Design Change & Configuration ES Contract Mgt Page 6

Eg. Sustainment of ASTROS II Artillery System - Contractor’s performance depends on what services we are buying Artillery System Design Change & ES Contract Configuration Mgt ENG Contract CM Contract Radar & Comm System RI Contract Launch er Syste m TLS Contract Through Life Support (TLS) | Contract Maintenance (CM) | Repairable Item (RI) | Engine (ENG) | Engineering Services (ES) Page 7

DEPENDING ON THE TYPE OF CONTRACT, THERE ARE 4 STAGES OF PBC APPLICATION TO PRODUCE THE DESIRED OPERATIONAL PERFORMANCE Contract Scope Missi on Performan Weapon ce System Performan ce Logisti cs Performan Distributi ce on Performan Simple ce Performance Metric Stage 4 Stage 3 Stage 2 Stage 1 Delivery Agreeme nt Logistics Response Time Parts Availabili ty Focus Syste m / Platfor m Lifecyc le Focus Missio n Assur ed Suppo rt Component Material Availabili ty Operatio nal Availabilit y Mission Reliabili ty Planning Logistics Value Engineeri ng Repair Config. Mgmt Maintenance Systems Platforms Planning Logistics Value Engineering Repair Config. Mgmt. Maintenance Operations Platforms Typical Contract Scope (responsibility of the supplier) Planning Logistics Value Engineeri ng Repair Ideal Weapon System Focus Parts Components Commodities Components Assemblies Platform Weapon Systems Scope Complex Based on Do. D PBL Maturity Model Page 8

Depending on the type of contract, there are 4 stages of PBC application to produce the desired operational performance Contract Scope Missi on Performan Weapon ce System Performan ce Logisti cs Performan Distributi ce on Performan Simple ce Performance Metric Stage 4 Stage 3 Stage 2 Stage 1 Delivery Agreeme nt Logistics Response Time Parts Availabili ty Focus Syste m / Platfor m Lifecyc le Focus Missio n Assur ed Suppo rt Component Material Availabili ty Operatio nal Availabilit y Mission Reliabili ty Planning Logistics Value Engineeri ng Repair Config. Mgmt Maintenance Systems Platforms Planning Logistics Value Engineering Repair Config. Mgmt. Maintenance Operations Platforms Typical Contract Scope (responsibility of the supplier) Planning Logistics Value Engineeri ng Repair Ideal Weapon System Focus Parts Components Commodities Components Assemblies Platform Weapon Systems Scope Complex Based on Do. D PBL Maturity Model Page 9

PBC can be tailored in such a way that the nation has a thriving defence industry PBC measures long-term behaviour of Contractors i. e in terms of relationship with all Subcontractors so that all parties are focused on positive/constructive behaviour in delivering defence capabilities Relationship with Subcontractors demands the Contractor to maintain healthy & cordial commercial ties with; ► OEM: for continuous design and material support ► Vendors: for outsourced services (preferably from local) Unfriendly Contractors not accomplishing the above should not be rewarded Tenure Extension or Award Term Page 10