Leaner, Meaner Depots

Jan. 1, 2006

Last January, Air Force Special Operations Command called Warner Robins Air Logistics Center in Georgia, with an urgent request. Iraqi elections were being held at the end of the month, and the air commandos needed as many AC-130 gunships as possible operating in the Middle East, safeguarding polling sites. One of those aircraft was down for repairs at the depot, and commanders wanted to know if depot workers could have it ready a few weeks early, in time for the key vote.

Depot managers asked workers to put in some overtime and cut out unnecessary steps in the repair process. By the end of the month, that AC-130 was flying in Iraq.

War has proved a powerful motivator for workers to have aircraft ready on a tight schedule, but the depot’s rapid response would not have been possible without a host of changes that have occurred at Air Force depots, the service’s in-house aircraft and equipment overhaul centers.

In danger of being put out of operation a decade ago, Air Force depots have embraced a new mind-set that has allowed them to better meet combat needs. The depots have become an unlikely model for Defense Department transformation.

“There was clearly an element that thought we should privatize air logistics centers, and I think [in conjunction with depot closings] it really created a lot of turmoil,” said Lt. Gen. Donald J. Wetekam, deputy chief of staff for installations and logistics, at the Pentagon. On the other hand, “when people see their livelihood threatened” it is also a great motivator. USAF has been able to “leverage that, to really work some significant improvements in air logistics centers over the last five years,” he said.

A decade ago, the Air Force had five depots. Today the service has three: Ogden ALC at Hill AFB, Utah; Oklahoma City ALC at Tinker AFB, Okla.; and Warner Robins ALC at Robins AFB, Ga.

In 1995, the independent Base Realignment and Closure Commission surprised the Air Force by calling for the Sacramento ALC at McClellan AFB, Calif., and the San Antonio ALC at Kelly AFB, Tex., to be shut down by 2001.

The five Air Force depots were no longer efficient and were only operating at about 70 percent capacity. The BRAC panel believed that by combining the work at three depots and outsourcing additional work to contractors, the service would save money.

Unfortunately, moving 40 percent of the Air Force’s depot work to new facilities across the country proved far more complicated than first expected.

A Difficult Decade

“It’s been extremely difficult moving major workloads. We did not come near the projected targets in terms of the people we moved, so we had to build expertise for the weapons that transferred,” said Wetekam. “You have a new workload coming in, and you have [an] inexperienced workforce when it came to that workload.” That created many growing pains.

The Air Force turned to contractors under “bridge contracts” to take on some logistics work that depots temporarily could not complete because they were moving equipment and personnel around the country.

The contracts proved effective but raised the ire of Congress for violating a federal law (known as the 50/50 requirement) that prohibits military depots from contracting out more than half their maintenance work. Beginning in 2000, as the Sacramento and San Antonio ALCs shut down, work “gaps” led to increased Air Force reliance on contractors for overhaul work, and the service violated the 50/50 rule. (See “Loggies vs. Contractors,” January 2001, p. 70.)

Ultimately, lawmakers granted the Air Force a waiver to the 50/50 requirement in 2001 and 2002 but only after depot commanders spent a lot of time convincing Congress that the Air Force was not permanently privatizing the work.

“We depended on bridge contracts with many of our vendors to get us through some tough times,” said Wetekam.

The Air Force closed the Sacramento and San Antonio depots on time, but it took a few years before workers fully adapted to a changed operating environment.

Kenneth I. Percell, executive director of Warner Robins ALC, said the closings made for some “strange bedfellows.” He said depot managers and workers who had long competed against each other to stay open were now working together. Meanwhile, contractors were no longer rivals but partners.

The depots were struggling to get out of BRAC “survival mode” in the early part of the decade. Maj. Gen. Kevin J. Sullivan, commander of the Ogden ALC, was blunt. “There was not a whole lot of innovation or excitement,” Sullivan said. “The emphasis was not on support—it was on survival.”

Depot managers say two key factors have helped the depots emerge from their survival mode over the past three years into modern business operations that now compete with contractors for work. Those factors are: (1) war and (2) the Air Force’s decision to publish a long-term strategy for depot maintenance.

Throughout the 1990s, Air Force depots often operated in a near surge mode to support air operations in the Balkans and Iraqi no-fly zones. “The Air Force is not in the same situation as the Army. The Army has had a tremendous spike in their workload since 9/11,” said Wetekam. Air Force depots learned to operate in surge modes over the past decade, and that has helped the service respond to workload spikes brought on by the current wars.

For example, Warner Robins technicians worked 12-hour shifts, seven days a week, from September 2001 to December 2001, to overhaul radar systems used by fighter aircraft. Prior to Sept. 11, work on those radar systems was a low priority. After the attacks, hundreds were needed—almost immediately—in Afghanistan.

Private Sector Influence

M. Scott Reynolds, deputy director for maintenance at Air Combat Command, one of the largest depot customers, said Air Force depots have become “more business like” and responsive to warfighter needs. While quick to point out that ACC does not favor either depots or logistics vendors for maintenance work, Reynolds said depots offer a big advantage by not requiring contract modifications every time the work changes.

Perhaps the biggest changes at the depots have resulted from adopting the new practices that revolutionized commercial industry in the 1980s and 1990s. The most important practice, known as leaning, eliminates wasteful or unnecessary steps from manufacturing, logistics, and administrative processes to improve efficiency and effectiveness.

For the depots, that has meant looking at every step in their complex processes to speed up the time spent overhauling aircraft, engines, weapons, and key subsystems. Steps are being cut wherever possible.

Depots have been pushed toward leaning by simple Air Force economics. By the end of the decade, the average Air Force aircraft will be about 30 years old and will likely require more complex maintenance and overhaul work. Mounting modernization bills and war costs, however, mean the service has few extra dollars for depot work.

“We are not going to get a lot more money,” said Sullivan. “We are going to have to change.”

Additionally, the Air Force has set a goal of improving aircraft availability by 20 percent and cutting logistics cost by 10 percent over the 2006-11 budget cycle.

The workforce is already lean. Logisticians have to make the necessary changes with fewer people: In 1998 there were 24,834 people working at the Air Force depots. Today there are 22,612, but the amount of work has held steady.

Ross E. Marshall, deputy director for the 309th Maintenance Wing at Ogden ALC, says the bottom line is simple: The Air Force should pay less but get more for its money.

The changes also are necessary for forming partnerships with defense contractors. “When I deal with the Boeings and the Lockheeds, they want to know that the air logistics centers are going to be good partners, competitive, and that they will continue to improve their process and performance,” Wetekam said.

Increasingly, the work is shared between depots and industry through private-public partnerships. “Workload isn’t handed to the air logistics centers lock, stock, and barrel anymore,” said Wetekam.

At Tinker, Pratt & Whitney provides management and parts for engine overhauls, while the depot provides the labor for F119 aircraft engine overhauls. As part of the deal, the depot invested $13 million in its in-house engine repair facilities.

Expanding partnerships have forced the Air Force to more closely monitor its 50/50 workload requirement. After breaching the requirement in 2001 and 2002, the Air Force has established a goal of having 52 percent of the work performed by the depots, to provide a cushion for unforeseen work that might have to be pushed to the private sector.

Since 2002, the Air Force has not missed the mark and expects to be well within the margin through 2007. By 2008 and 2009, the Air Force expects to be closer to an even split and will likely move some additional work to depots.

A Combat Advantage

Wetekam believes the ongoing improvements will improve Air Force readiness.

At Ogden, logisticians have cut the time it takes to overhaul F-16 fighters. What used to require 145 days now takes just 120 days. That, officials say, translates into one extra squadron of aircraft being available for combat. (See “Aerospace World: Ogden Sets Record Repair Rate,” October 2004, p. 20.)

Managers sped up the process by scrapping a long-standing practice of parking aircraft and having logisticians work on them at preset times. Now, Ogden has established cells for various stages of F-16 repair, and aircraft are moved from one area to another as soon as work is finished—rather than waiting for workers to come.

Under the old schedule, aircraft went to a parking stall, people came to that place and did a task, but there was a firm schedule, said Marshall. If work does not expeditiously happen today, “you bottle up the whole system.”

Other leaning improvements at Ogden were just a matter of common sense. Workers have cut times by creating tool kits they could keep at the workstations, rather than wasting time walking back and forth to and from the tool cabinets.

Garry B. Ritchey, executive director at Tinker, says leaning at the Oklahoma depot has allowed back orders to be reduced from five million to 1.5 million hours. For example, overhauls on KC-135 tanker aircraft were cut from more than 400 days to 193 days. The number of tankers undergoing repairs at any one time was cut from 37 to 22—meaning that there are 15 more KC-135s out in the fleet, ready to perform their primary missions.

“I think people have always been trying to do a good job; we are just more organized in how we approach it,” Ritchey said. “Improvements in one area have led to improvements in other areas.”

Warner Robins managers say streamlining the C-5 repair process has cut the number of days needed to overhaul the cargo aircraft from 339 days to 171. Currently, 100 percent of the C-5 aircraft are being finished on time. Only 40 percent finished on schedule before improvements were applied to the line.

Depot mangers say the initial focus of leaning has been on cutting repair times, not saving money. “We have not focused as much on cost reduction as we need,” said Sullivan, so managers will “focus next year on cost reduction.”

The improved processes may have saved hundreds of millions of dollars at depots in recent years. “You save money because you save time,” Wetekam said. “You save money because people are more efficient. You save money because you have better control of material and less inventory. You save money because you have better quality, and that leads to less rework. … All those things can add up.”

For the first time in years, Air Force depot workers can say with confidence that they have a future.

The Depot Master Plan

In October 2003, the Air Force published a long-term strategy for its depots. The “United States Air Force Depot Maintenance Master Plan Fiscal Years 2004-2020” laid out a concept guaranteeing a core workload to these logistic centers.

The plan also called for investing hundreds of millions of dollars to train depot workers and overhaul facilities.

In exchange for the funding infusion, the depots were told they must form more partnerships with industry and adopt commercial business practices.

“The Air Force is committed to maintain a ready and responsive ‘world class’ organic depot infrastructure with technologically advanced facilities and equipment and a highly qualified workforce,” stated the master plan.

The master plan also included a 20-year roadmap for depots that for the first time stressed the need for early planning on how weapons will be sustained.

As a result, the Air Force has already begun discussing with industry how it will take care of systems, such as the F/A-22 aircraft, years before they are fielded.

Additionally, the Air Force has attempted to predict when systems will be retired and no longer need depot work.

Every two years, the Air Force reviews its weapons support work and determines what work the depots should perform. Oftentimes, those decisions are made based on whether there’s a commercial market for the work.

For example, the depots do nearly all the overhaul and repair work for highly specialized fighter jet engines—but commercial firms do the work on widely available turbofan engines.

Over the next several years, the Air Force is investing an average of $150 million annually in upgrading depot facilities, buying new equipment, and providing specialized training for its workforce.

The additional dollars will put the depot infrastructure spending on par with commercial manufacturers, which on average spend about six percent of annual revenue on infrastructure improvements.

George Cahlink is a military correspondent with Government Executive Magazine in Washington, D.C. His most recent article for Air Force Magazine, “New Day for Defense Civilians,” appeared in the February 2005 issue.