Commercial Derivative Sustainment Overview

Copyright © 2014 Boeing. All rights reserved.

Defense, Space & Security | Global Services and Support (GS&S)

Commercial Derivative

Sustainment Overview

274374.pptx | 1

Sergio Parisi

KC-767 Italy Tanker Program – Site Manager

28 May 2015



Boeing Tanker/Transport History

60+ years of successful Tanker/Transport Sustainment

KC-135, K/DC-10 and 707 Tankers

C-17 Globemaster Integrated Sustainment Program

KC-767 Tanker (Japan and Italy)

KC-46A Tanker and C-40A (emerging products)

Commercial derivatives offer distinct customer advantages

Maximizes One Boeing military and commercial sustainment strengths

Leverage existing Commercial infrastructure

– Publications, training, commercial parts pool, etc.

– Low utilization maintenance program available if less than 1,200 annual flight hours

Yields significantly reduced initial customer ownership cost

Partnering with Boeing optimizes sustainment approach

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Spectrum of SupportTraditional Organic Support

Performance Based Support

Customer / Industry Share RiskCustomer Holds All Risk

Traditional Support Contractor Supply Role PBL at Subsystem Level PBL at System Level

Support concept can be tailored to specific customer needs

USAF C-17

• Customer responsible for

system performance

• Customer procures desired

hardware and services

• Customer manages

configuration

• Customer performs O/I/D-

level maintenance

• Minimal contractor

performance metrics

Japan Tanker

Korea AEWC

• Contractor responsible for

partial Supply Chain mgmt

• Customer has primary

Configuration Mgmt. role

• Contractor warehouses

customer-owned spares

• Contractor supplies to

customer O/I/D-level

maintenance

• Contractor supplies metrics

USN P-8A

USAF Tanker

Turkey AEWC


full Supply performance

• Contractor has primary

Configuration Mgmt role

• Long-term performance

based contract

• Contractor and customer-

owned spares


limited I/D-level maint.

Italy Tanker

CoA AEWC


Weapons Level sustainment

• Customer defined system level

performance metrics

• Long-term contract

• Industry owned spares and

support equipment

• Contractor provides virtually all

O/I/D-level maintenance

• Customer responsible for

deployed maintenance

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Performance Based Logistics

Long-term contractual agreement incentivizes investment

Clear outcome-related performance metrics

Contract incentives linked to performance metrics

Strong partnership between government and industry

Partnering Optimizes Readiness at Best Value

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PBL partnership creates shared destiny to enable success



Results of a Successful PBL

Reduced total ownership cost

Efficiency and readiness improvements

PBL reduces customer ownership cost while increasing fleet readiness

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It’s a perfect solution in a more

for less operational environment



U.S. Air Force C-17 GISP PBL Program

Sustained average readiness rate of 85 percent for the past 10 years

Most dependable airlift aircraft with availability that is 10 percent above overall airlift fleet average

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75

80

85

90

95

100

05 06 07 08 09 1070

04

$~1.1B Cost

Reduction

DP

FH

% (

CY

201

0$)

C-17 Dollar Per Flight Hour

Cost Reduction (%) *

Fiscal Year* Savings validated by U.S. Government customer

C-17 GISP reduced cost by 26 percent, resulting in savings of $1.1 billion



Commercial Derivative PBL Case StudyItaly KC-767A Tanker Program

A PBL partnership providing unprecedented readiness rates

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All Cargo All PassengerConvertible Combi

BOEING PROPRIETARY – Distribution Limited to Boeing Personnel

19 cargo pallets

BCA 767-200ER

200 passengers10 cargo pallets/100 passengers

Italy KC-767A Tanker Configurations

Copyright © 2014 Boeing. All rights reserved. 274374.pptx | 8



Crew Rest Facilities

Remote Air

Refueling Operator

(RARO II) Station

Advanced Air

Refueling Boom

Cargo Door and

FloorClassic

Cockpit

Common Tanker Transport Configuration

767-200ER

BOEING PROPRIETARY

Convertible

Freighter

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Unique Italy KC-767A Tanker Transport Configuration

Wing Air

Refueling Pods

Centerline Hose

Drum Unit

Link 16Air Refueling

ReceptacleIncludes common

options plus additional

modifications shown

Certified

“Combi”

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Boeing is proud to support our amazing ItAF customer

Italy KC-767A PBL

PBL Structure/Approach Four aircraft fleet MOB: Pratica di Mare FFP “Award Fee” Contract with Italy MoD 5-year base PoP (through 2016) Boeing-owned Mission Spares Green hardware: LHT Responsibilities: Full PBL Line/Heavy maintenance (IG) Local supply management Engineering support Publication revisions Training

ItAF Customer Results Strong partnering with ItAF 98.9 percent cumulative mission

success rate Offloaded 22.6M+ pounds of fuel Achieved 10K FHs in 3.5 years Seamlessly surged FHs by 28 percent Executing optimized scheduled

maintenance program at PdM Includes equivalent C1-C4 checks Key for tailored Prime Availability metric

Reduced cost of ownership Boeing-owned Spares/SE Contractor maintenance staff FAA compliant sustainment practices

Overview and Results

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Italy KC-767A Tanker PBL Key Enabler

KC-767A is a Commercial Derivative Aircraft

Low utilization maintenance program at maximum 1,200 AFH

Commercial counterpart MPD designed for 3,000+ AFH

Phased maintenance approach

Blends A & Heavy 1C - 4C checks into phase packages

Eliminates need for expensive off-station depot visits

Work force stabilization mixes line and depot personnel

Improves aircraft availability

Commonly used by Small Commercial Operators

Reduces total cost of ownership

Extended LUMP basic intervals

A-Check equivalents from 90 to 120 days

C-Check equivalents from 24 to 32 months

FAA approved the new maintenance plan

Leveraging Commercial Maintenance Program

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Block vs. Phased Maintenance Savings

Results Summary:

20 percent decrease in man-hours due to LUMP with interval increase65 percent decrease in depot hours means high hourly rate reduction28 percent increase in O-level hours shifts costs to lower cost O-Level Labor rate

D-Level

O-Level

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Lower cost of ownership and improved aircraft availability



From Theory to Field

Boeing Fleet Support Center at Pratica di Mare, Italy

Performs line maintenance and servicing

O-level and D-level maintenance

Aircraft configuration conversions

SB & AD incorporation

Goal: Balance workload to avoid peaks and extra costs

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Ultimate Test: 2014 Phase 32 Execution

Boeing team faced with AC 226 Phase 32 (4C) Check

Evaluated off-station options; settled on execution at PdM

Established 60-day inspection cycle to leverage existing staff

Contracted for surge and specialty support

Extensive planning performed; required material pre-staged

Exemplary Boeing/IG team performance

Executed 703 task cards encompassing ~6,000 inspection hours

Completed inspection efforts in exactly 60 days

Executed 150 pick-up tasks and returned FMC Tanker to ItAF

Facilitated highly active ItAF mission schedule w/remaining three jets

Unprecedented execution of 4C-equivalent check at MOB location

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Commercial Derivative Sustainment Summary

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Italy KC-767A A/C Operating Summary

Sustained Excellent Performance

Supporting Customer Operations!!



Commercial Derivative Sustainment Summary

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Italy KC-767A Current Performance

Overall Consistent, World Class Performance at High Activity Levels



PBL Conclusions

Clear performance objectives and measurements

Reduced total ownership cost

Efficiency and readiness improvements

Financial incentives clearly linked to performance

Contractor assumes increased risk

Multi-year commitment for platform/system readiness

Contract that incentivizes industry investment

Business case transparency … best value to Government

Partnership and trust

Optimize existing fleet by minimizing operational cost (More for Less)

Model expandable to other platforms when initial investment is made

Characteristics of Successful PBL Programs

PBL buys affordable readiness – not just individual parts or services

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Questions?

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Commercial Derivative Sustainment Overview