Copyright 1999 Federal News Service, Inc.
Federal News Service
OCTOBER 7, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
3619 words
HEADLINE: PREPARED TESTIMONY OF
GENERAL
JOHN G. COBURN
COMMANDER, U.S. ARMY MATERIEL COMMAND
BEFORE THE
SENATE ARMED SERVICES COMMITTEE
BODY:
Mr. Chairman and members of the Committee.
Thank you for the
opportunity to appear before you to testify on the spares and repair parts
issues impacting the U.S. Army. I will present a short, general overview of the
Army Spare and Repair Parts Program, how our spares and repair parts challenges
are impacting readiness, and some of the initiatives we are applying to overcome
these challenges.
U.S. ARMY MATERIEL COMMAND
The U.S. Army Materiel
Command (AMC) is the Army's principal integrator bringing together technology,
acquisition, and logistics into a seamless environment supporting Army
Readiness. The AMC today is a command engaged in worldwide operations in support
of our National Military Strategy. Over 3500 military and civilian members of
the command are currently deployed overseas supporting Army readiness in 22
countries and Army contingency operations in locations such as Bosnia, Croatia,
Egypt, Macedonia and Kosovo. Closer to home, you will find subordinate
organizations in over 40 States and 70 Congressional Districts. The AMC also
manages the Army's worldwide prepositioned stocks of equipment vital to
logistics power projection of U.S. Forces and supports counter drug operations
as well as domestic counter terrorism efforts. The AMC plays an increasingly
important role in the Army's Revolution in Military Logistics (RML).
From
science and technology to maintenance and spare parts support, along with
simulation, testing and ammunition procurement, as well as Security Assistance
and Chemical Biological Defense, the Army Materiel Command remains committed to
supporting our Army and our Soldiers every day.
To develop, buy, and
maintain materiel for the Army, AMC works closely with industry, colleges and
universities, the sister services and other government agencies to ensure
state-of-the-art technology and support for the defense of the nation. The AMC
also touches every Soldier in the Army every day through Logistic Assistance
Representatives who work directly with Army units in the field.
The AMC
stands for quality - in all it does. The driving force is service to the
Soldier. From helmets to helicopters, AMC supports every Soldier in every unit
every day.
ARMY EQUIPMENT READINESS
The Army's equipment readiness
measures primarily focus on 16 major weapon systems. Acceptable readiness rates
for these systems are 90 percent operational availability for ground systems,
and 75 percent for aviation systems. During the most recent reporting period, 15
of our 16 major weapons systems achieved the Department of Army readiness goals.
Continued high Operations Tempo (OPTEMPO) has a significant impact on our
equipment and requires the Army to increase its investment in maintaining these
systems. Having said that, Army readiness remains high. This year we can again
report that equipment readiness rates continue to improve. This is primarily a
result of Soldiers working harder every day to maintain our steadily aging
fleets that see more usage under increased OPTEMPO. Secondly, our emphasis on
improved distribution systems allows us to increase response times to satisfy
demand. Additionally, we have also been able to reduce our inventory costs.
THE ARMY SPARES AND REPAIR PARTS PROGRAM
The Army executes the spares
and repair parts program at three levels. First is retail level, which satisfies
the operational demands of the field Army. Second is the wholesale level, which
satisfies the replenishment demands from the retail level and demands from the
depot maintenance programs. The third level provide spares and repair parts for
War Reserve requirements to meet Defense planning guidance for two Major
Theaters of War (MTW). The Defense Logistics Agency (DLA) is the Services' major
supplier of Class IX consumable parts. They supply our Soldiers' requisitions in
the same manner as the Army does for non-consumable items -- via the military
standard requisition and issue priority system (MILSTRIP). They hold themselves
to the same 85 percent supply availability standard as the services. We
regularly review with DLA how we are doing, both on a macro and micro basis.
Both DLA and the Army's national supply systems are demand based; that is, what
is stocked and how much, is based on demand from our Soldiers.
SUPPLY
AVAILABILITY - WHOLESALE LEVEL MEASURE OF SUCCESS
Supply Availability (SA)
is the percentage of the requirements that are fully filled on the first pass
through the automated supply system. The SA rate goal of 85 percent is a measure
of the effectiveness of the wholesale supply and repair parts system. The Army
has consistently met this goal, but we do have one weak area. Our aviation parts
have been between 78 percent and 82 percent. Shortfalls identified in Fiscal
Year (FY) 97, attributed to aviation, are now fully funded. This temporary
shortfall along with a 24 month average replenishment time for aviation items
caused a bubble in the pipeline which we have worked hard to correct and we
project to get well in FY00.
In the last decade, our wholesale spares and
repair parts inventory has been reduced significantly. As we reduced our
inventory, appropriate steps have been taken to assure we have right sized our
inventory to satisfy the current force structure. Our current inventory is
valued at $7.7 billion and supports $126 billion in end item/weapon systems.
The DLA SA rates are 86.5 percent overall and 88.4 percent for the Army. We
do a good job forecasting our parts stockage requirements to DLA, which assures
the Soldier ordering parts will get what he needs, when he needs it.
AUTHORIZED STOCKAGE LISTS (ASLs)
The Army uses Authorized Stockage Lists
(ASLs) to support readiness in the field Army. These ASLs contain critical
demand-supported repair parts. ASLs are configured, sized, and located to
adequately support peacetime readiness and training OPTEMPO. The total dollar
value of the Authorized Stockage List requirement throughout the Army is
approximately $880 million. Of this amount, $620 million is on hand or on order.
Of the remaining $260 million, $100 million will be ordered when units reach
their reorder point. The final $160 million represents commanders' decisions to
accept risk and constrain their ASL to accommodate other priorities and funding
constraints.
WAR RESERVES
The purpose of Army War Reserves in spares and
repairs parts is to meet wartime surge requirements in support of a two MTW. We
have programmed $373 million in the President's Budget FYDP (Future Years
Defense Program). The funding is against the Army's highest priorities for War
Reserves which are initial repair parts for prepositioned brigade sets
(ASL/Prescribed Load List (PLL)), medical stocks for prepositioned hospitals,
and medical and chemical defense sustainment supplies.
The next priority
for funding is key weapons system sustainment spares and repair parts which
cannot be obtained from industry in time for the two MTW scenarios and must be
pre-stocked in War Reserves. Today's estimated total War Reserves shortfall is
$1.8 billion, 70 percent ($1.239 billion) of which is for spares and repair
parts. The Army continues to make progress in funding War Reserves requirements.
ARMY SPARES AND REPAIR PARTS FUNDING
The Army funds its field units and
institutional training requirements based on a sophisticated Training Resources
Model that predicts spares and repair parts requirements for both air and ground
OPTEMPO. The Army fully funds this requirement.
Army field organizations use
these operations and maintenance dollars to purchase parts from the Army
Materiel Command, the Defense Logistics Agency, the Air Force, or the Navy
working capital funds.
The AMC maintains a wholesale inventory to support
peacetime parts requirements. The dollars to maintain this inventory come from
the revenue generated each year from sales to Army units and other customers
(both Defense and Foreign Military Sales). The AMC managers replenish the
inventory first by repairing unserviceable items that are returned by the
customers, or, if not economical, by purchasing from industry.
Traditionally, execution of forecasted sales ensures that spares and repair
parts requirements are fully funded.
Army expenditures for parts are shown
in the chart below (Chart 1). The operations and maintenance (O&M)
expenditures reflect total purchases not just purchases from AMC. The line
titled AWCF (Army Working Capital Fund) reflect AMC wholesale costs to replenish
the inventory. In both cases, actual expenditures are shown for FY95-98,
estimated actuals are shown for FY99, and the President's Budget numbers are
reflected for FY00 and FY01.
Chart 1 Army's Spares and Repair Parts
Expenditures (NOTE: Chart not transmittable)
CHALLENGES - AGING EQUIPMENT
AND INCREASED OPTEMPO
One of the most serious issues the Army faces is aging
equipment. This issue is so serious that, if not properly addressed and
corrected, it will inevitably result in degradation of the Army's ability to
maintain its readiness. Aging equipment causes increased parts consumption,
depletes inventory, necessitates controlled substitution, and increases the
procurement costs of replenishment stocks.
Our weapons systems are aging
because we have not modernized as quickly as we should have. When coupled with
the increased OPTEMPO we have faced over the last decade, increased maintenance
has been required in order to avoid degradation in our operational readiness.
More maintenance means increased operations and support (O&S) costs. In
order to resource unanticipated O&S costs, the Army was faced with an
unpleasant choice: either accept a degradation in our current readiness posture,
a choice the Army finds unacceptable, or reprogram money from another source.
Because of funding challenges, we are forced to reduce the quantities of systems
or stretch our programs to great lengths or both. These actions raise unit costs
and further delay modernization.
For example, the Army's only heavy lift
cargo helicopter, the Chinook, has been in our inventory for 37
years. It is being upgraded from the CH-47D model to the CH-47F model, also
known as the Improved Cargo Helicopter. We expect to have it in our inventory
for another 30 years. Fielding is scheduled to begin on time but a tight budget
means it will occur at a slower rate. As a result, CH-47Ds must be kept in the
force longer, driving up operations costs and increasing consumption of spares
and repair parts. Increased spares and repair parts usage and increases in other
O&S costs delay modernization and puts long term readiness at risk.
The
Army's modernization plans emphasize recapitalization of our aging equipment.
The Army recapitalizes its equipment through a combination of replacement and
refurbishment programs that not only extend useful life, but also reduce O&S
costs. It is important to understand that aging legacy equipment will be with us
for a long time. Even in 2025, when the Army will be equipped with the combat
systems of the Army After Next, these same legacy systems will represent about
70 percent of the Army's force structure. For illustration purposes, by 2025,
the average age of M1 tanks, M2/M3 Bradleys, and M88 recovery vehicles will grow
to 36, 32, and 48 years respectively. That is why the Army places such high
importance on recapitalization.
The Abrams Integrated Management (AIM) XXI
program is a good example of a change in how the Army will sustain its equipment
in the future. This M1 tank rebuild program optimizes the unique capabilities
and competencies of a public/private partnership. After complete disassembly in
the Anniston Army Depot in Alabama, the tank's individual parts are rebuilt at
the most cost effective facility - government or contractor. The tank is then
reassembled at the Lima Army Tank Plant in Ohio, to M1A1 production
specifications. In essence, the field gets a "zero mile" M1A1 tank. We are
looking at expanding a M1A1 recapitalization effort to allow the introduction of
O&S cost savers (upgraded engines) and performance enhancements (second
generation Forward Looking Infrared Sensors) during the AIM XXI process.
The
AIM XXI program is a success story for readiness and sustainment. This strategy
is transferable to other systems. The Army's depots and arsenals, partnering
with industry, have the immediate capability and capacity to recapitalize our
aging weapons systems and equipment.
ARMY INITIATIVES
Response Times:
Through the Army's Velocity Management Effort we have completely re- worked
our Logistics Response Time Process. We have refined and improved the associated
ordering, inventory management, acquisition, issue, materiel release, shipment,
distribution, transportation, and receiving segments which speed materiel to the
combat Soldier on the modern battlefield. Since 1995, whether peacetime, combat,
or contingency operation, these process improvements have been responsible for
the improvements in logistics response Order Ship Time (OST) by 57 percent for
our Continental United States (CONUS) units and 41 percent for our Outside
Continental United States (OCONUS) units.
These peacetime improvements in
response time have resulted in speeding the materiel distribution flow. We have
been able to accomplish this through enhanced automated real-time processing and
receiving techniques, in conjunction with air movement and expedited carrier
systems, which quickly gets the materiel directly to the military user. In
peacetime, we rely on improved automation connectivity with dedicated commercial
trucks and express services to support our Army installations in CONUS. This
does not change in wartime. For OCONUS shipments, we expect to use the same
peacetime automation systems supplemented by a suite of distribution movement
systems to speed this flow. These systems are mainly: Military Air Line of
Communications (ALOC) for combat, contingency, and hard to reach locations and
Commercial ALOC (COMALOC) for standard theater distribution support to OCONUS.
The Army expects to continue to "practice in peace what we will do in war"
by building throughput shipment consolidations at DLA operated Containerization
and Consolidation Points (CCP) for our large Army supply support activities. In
wartime, we expect that theaters not actively involved will be supported mainly
by COMALOC or Worldwide Express which will enable the Air Force to reallocate
its military heavy lift aircraft to support our active combat theaters via
normal military ALOC and Air Mobility Express.
The major challenge with
speeding the materiel distribution flow is that we have reduced the need for
large stocks of materiel that supported both peacetime and wartime needs.
Therefore, we must place increased reliance on our funding, management, and
acquisition of the right items for War Reserves that are needed to support the
future war fight.
Business Systems Reengineering:
We are working on
several initiatives to improve and provide a modernized Logistics System to
support the Army. The Army is integrating retail and wholesale inventory
management and financial accounting functions in a Single Stock Fund (SSF)
concept and transitioning to a National Maintenance Program (NMP) which will
achieve a coordinated and controlled repair-based logistics system. The SSF will
streamline logistics and financial processes in the Army Working Capital
Fund-Supply Management Army (AWCF-SMA) business area to improve Warfighter
support.
The SSF will provide worldwide access to stock, integrate
supply and financial processes, integrate logistics and financial automated
information systems, and simplify processes by eliminating multiple ledgers,
eliminating multiple billings, and eliminating multiple points of sale. The NMP
and SSF initiatives will provide a seamless, integrated supply and maintenance
system that is "needs-based." These programs will link local repairs to national
need, provide a partnership-based process that improves inventory management,
and provide a single automation architecture. These programs will also preserve
the Commander's financial buying power without negatively impacting on his/her
ability to execute the mission. The overall objectives of SSF and the NMP are to
streamline support to the Warfighter and improve readiness while achieving
substantial cost savings and other efficiencies.
Our retail logistics
business systems provide commanders in the field with the tools to manage
supply, maintenance, and ammunition operations. A major cornerstone to
modernizing these logistics business systems for the Army is the Global Combat
Support System-Army (GCSS-Army). The GCSS-Army will modernize our current
outdated legacy systems and streamline our business processes with a new
software and hardware baseline.
The GCSS-Army will follow a three-tier
development strategy with all three tiers working in parallel. Tier I is the
Retail Logistics Modernization Program which will capture all existing
functionality, subsume current retail legacy systems, and incorporate critical
functional enhancements. Tier II is the Wholesale and Retail Integration
Program. The AMC's Wholesale Logistics Modernization Program (WLMP) is Block I
of Tier II. Block II is the integration of the wholesale and retail logistics
processes and business systems made possible by new concepts of operation and
new and expanded capabilities. Finally, Tier III is the Joint Interoperability
Program where the Army will ensure that all integration and interface
requirements between Army and Department of Defense (DoD)/Joint Service business
systems are achieved. The GCSS-Army will implement all required interfaces with
automated information systems of the joint community, national sustaining base,
and applicable and approved allied systems. When completed, GCSS-Army will
provide our Soldiers and Joint Leadership with unparalleled information and a
near real- time common logistics operations system.
The WLMP was established
to modernize the Army's information management system for wholesale logistics
and restructure our business practices to meet the needs of today's and
tomorrow's Army. Under WLMP, AMC will outsource the wholesale logistics software
support function. This includes both Central Design Activities, the Logistics
Systems Support Center and the Industrial Logistics Support Center, which
support AMC's two largest wholesale systems, the Commodity Command Standard
System and the Standard Depot System.
Acquisition Reform Initiatives:
Throughout the 1990's, DoD and the Army have developed and deployed a
variety of Acquisition Reform Initiatives designed to improve our business
processes, resulting in enhanced weapon system performance, supportability, and
reduced acquisition costs. While many of these reforms were focused on systems
acquisition, several directly or indirectly impact the Army's spares and repair
parts posture.
The business arrangements we craft with our industry partners
are significantly different today than they were a decade ago. The era of an
individual contract for a six-month supply of a single item has passed. Today we
are creating flexible, long-term instruments for entire families of items
(Corporate Contracts), using electronic ordering (EC/EDI), direct vendor
delivery (DVD), and more commercial terms and conditions (Commercial Items/Best
Business Practices). These process changes result in reduced administrative lead
time (ALT) for secondary items and logistics response time (LRT).
Other
Acquisition Reform Initiatives focus more on systems acquisition, but will have
a positive effect on the Army's spares and readiness posture as new or
modernized systems enter service. Increased emphasis on Total Ownership Cost
Reduction (TOCR) will result in weapons systems which are designed with
supportability considerations equal in importance to performance and acquisition
costs. This, in turn, will result in systems with fewer components, easier
repair access, more reliable components and a greater susceptibility to
modernization and upgrades.
The elimination of military-unique
specifications and standards will likewise result in systems which can be
supported using more commercial and commercial-like components, permitting
insertion of emerging technologies (Technology Insertion) into aging weapons
systems. Modernization Through Spares (MTS) will provide a mechanism for not
only maintaining systems which otherwise may become technologically obsolete,
but can actually result in a system with greater capability or reliability than
the original system displayed. The effects of these initiatives will be slow to
develop, and must be viewed as investments over the life of the system. Short
term, hard dollar savings will be difficult to identify, but the cultural change
reflected in this group of initiatives should result in significantly improved
readiness over time.
SUMMARY In conclusion, near term readiness remains high
but we must maintain vigilance in sustaining that state of readiness. Long term
readiness is a greater concern. While our ability to meet our wartime
sustainment requirements is at some risk, the situation is improving over the
FYPD. To mitigate the risks associated with sustaining a high level of
readiness, we must continue to fully fund OPTEMPO, fill our sustainment stocks
for War Reserves, and develop a Recapitalization Program for our aging
equipment. We appreciate the continued support of Congress in these efforts and
thank you for the opportunity to appear before the Military Readiness
Subcommittee of the House Armed Services Committee.
END
LOAD-DATE: October 13, 1999
