Lockheed Martin/ Comprehensive CBP P 3 Fleet Sustainment

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1 I. Program Overview Organization Name/Program Name: Program Leader Name/ Position/Contact information , Phone Customer: Organization/Name/Position/ Contact information , Phone Program Category Program Background: What is this program all about? (No more than one page). Describe: The overarching need for this program History of the program The product that is created by this program Scope of work original & updated Expected deliverables Current status of the program II. VALUE CREATION = 20 POINTS Lockheed Martin US Customs and Border Protection Comprehensive P-3 Aircraft Fleet Sustainment John L. Norris, Program Manager John.L.Norris@lmco.com US Customs and Border Protection Dr. William J. Byrd, P-3 Aircraft Program Manager William.J.Byrd@dhs.gov System Level Sustainment The Department of Homeland Security (DHS), Customs and Border Protection (CBP) performs critical surveillance missions and protection of the US homeland, including anti-drug, anti-infiltration and counter-terrorism operations. CBP began using P-3s for these missions in 1986, and recently celebrated 25 years of successful operations. The fleet has grown to 16 P-3 aircraft, based at operational sites in Corpus Christi, Texas and Jacksonville, Fla. There are two P-3 variants in the CBP fleet: eight P-3 LRT (long-range tracker) and eight P-3 AEW (airborne early warning). The LRT aircraft have a unique mission system specialized for intercept and track of surface and airborne targets. The AEW aircraft contain a unique mission system built around a sensitive radar surveillance system (AN/APS-145) housed in a 24-ft. diameter circular dome mounted on top of the fuselage. The AEW aircraft specialize in large-area surface and air search, and often pass detection off to the LRT aircraft for tracking and turnover to local law enforcement. The Lockheed Martin Aeronautics Company (LM) scope of work consists of: All maintenance and support activities for the aircraft and support equipment at organization, intermediate and depot levels; Production of new wing kits and horizontal stabilizers for a structural life extension known as a Mid-Life Upgrade (MLU); Installation of the MLU kits at the LM depot; LM vendor accomplishment of zero-time since overhaul of engine and propeller systems; Long-range fleet planning; Supply chain management; Administrative and support functions; Commercial IT. The tactical deliverable is to provide CBP law enforcement crews with mission-capable P-3 aircraft to successfully complete national operational taskings. The strategic deliverable is comprehensive fleet management of airplanes averaging 42+ years old through operational service until age or beyond. LM is in the second year of a 10-year, $800 million Performance Based Logistics (PBL) contract AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 1

2 Value: What is the value, competitive positioning, advantage, and return created by this program to your: Customers National interests, war fighter Company Strength, bottom line, and shareholders Scientific/technical value (particularly for R&D programs) Excellence and Uniqueness: What makes this program unique? Why should this program be awarded the Program Excellence Award? The program value is successful completion of Department of Homeland Security (DHS) operational tasking against drug smuggling, terrorist infiltration, and surveillance of various threats to homeland security. Success is measured in the number of threats detected, intercepted and dispatched, tons of drugs and contraband confiscated, and the value of illegal cash seized. The value to the customer is completing tasked missions. Additional value comes in a year life extension of the CBP P-3 fleet. The value of the program to Lockheed Martin is a template for comprehensive sustainment of legacy platforms, a model for PBL, and an industry-leading strategy to operate missionized P-3 aircraft through 65 years of life. The performance-based, long-term contract enables LM to adopt a long-term vision for fleet sustainment, and to deliver financial return for successful mission accomplishment. This experience provides LM with competitive strengths in comprehensive PBL contractor sustainment, life extension, and creation of a unique P-3 supply system. This program has demonstrated excellent performance across a spectrum of measures: Exceeding PBL operational performance metrics since contract inception; increasing engine and propeller availability and providing a pool of ready for installation (RFI) assets; starting a new wing production line; Developing a Mid-Life Upgrade (MLU) installation line and delivering the first two MLU aircraft; success in developing and implementation of a long-term sustainment strategy for 20+ years of extended operations; and establishing models for life extension and aging aircraft sustainment. III. ORGANIZATIONAL PROCESSES/BEST PRACTICES: (HOW DO YOU DO THINGS) = 30 POINTS Strategic: Opportunity Management - Describe how your program has identified its operational and business opportunity, and manages this opportunity throughout the program s life cycle. Lockheed Martin developed a program to provide an operationally viable aircraft fleet for another 20 years. LM demonstrated unique knowledge and capabilities in addressing P-3 structural integrity issues and fatigue life. This unique capability and our experience in long-term planning raised customer confidence in LM s ability to achieve success. Our ability to respond to this operational opportunity was based on our broad spectrum of capabilities in P-3 manufacturing, engineering, systems, modification, life extension and sustainment. LM has been extremely successful in managing CBP P-3s throughout their life cycle. Our involvement has been comprehensive, consisting of: manufacturing the baseline P-3 aircraft; designing unique CBP aircraft modifications for the LRT and AEW variants; developing mission systems; performing the aircraft modifications and 2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 2

3 Strategic: Strategic Supply Chain Integration and Cost Effectiveness Management: - Describe how your program is integrating its supply chain to assure visibility and adapting long-term cost effectiveness up and down the supply chain. Strategic: Operational Integration and Systems Engineering Describe the challenges faced by your program in terms of integrating the system into its operational environment and its impact on systems engineering planning and management. mission system installations at our depot facility; developing references and technical documentation to support the systems; developing the MLU life extension program; starting new wing production; developing industry-first expertise in MLU installation; addressing diminishing manufacturing sources (DMS); performing site maintenance; performing depot scheduled and drop-in maintenance; and creating a CBP Inventory Control Point (ICP). For the first time in 6 years CBP flew 10,000 hrs. Lockheed Martin developed a fully integrated and costeffective CBP P-3 supply chain. To achieve integration, customer focus and cost-effectiveness, LM established a dedicated Inventory Control Point (ICP) at CBP locations. The ICP employees are fully dedicated to this single customer, ensuring responsiveness. Procurement consists of requisitioning from DoD sources via MILSTRIP for items supported by DoD/US Navy via NAVICP, and purchasing from commercial sources for items that are not supported by DoD. The supply chain is fully integrated in terms of people, functions, processes and tools. Led by a supply chain manager, the ICP has item managers, buyers, a quality engineer, a logistics management analyst and a financial analyst. Access is provided to CBP legacy IT systems, DoD/Navy systems for MILSTRIP transactions, webbased resources for research and analysis, and LM SAP systems for commercial transactions, billing and payment. The full integration and focus of ICP resources on CBP yields efficiency and cost-effectiveness across the supply chain. Use of DoD sources leverages large-scale supplier agreements negotiated for DoD assets. ICP personnel search for improvements when possible, such as improving responsiveness or price from alternate sources of supply/repair. Vendors are tracked to improve responsiveness and cost. One of the key challenges in establishing a vendor base and ensuring adequacy of future supply is creating sourcing for parts and repairs where there is no existing vendor. Since the aircraft are currently 42+ years old - and will be operational until they are 65 years old - there are DMS issues. The ICP has solved sourcing for 25 parts and repairs of DMS items. The operational environment for the CBP P-3 has evolved. The typical challenges of integrating new assets into a system-of-systems environment were minimal, since the P-3s perform unique functions in unique scenarios. There were substantial systems engineering and integration challenges at the onset of the CBP P-3 program in the 1980s. The CBP P-3 variants were developed from original operational requirements. The aircraft modifications were substantial, including integration of a large rotating 2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 3

4 Operational: Planning, Monitoring, and Controlling - Describe your planning and resource allocation processes. How do you monitor and review your program s progress and make corrections to keep the program on track? radar antenna dome on the fuselage of the AEW aircraft. The mission system was designed with largely commercial products and new mission software. Systems integration of the mission systems, sensors, display and controls was a typical new-production operation. Lockheed Martin utilized a systems integration laboratory (SIL) for software and system integration. Lockheed Martin s planning and resource allocation process determines the best distribution of resources, primarily people and budget. People resources start with a determination of required skill mix, number of individuals required, levels of experience, work shifts, and staffing for operational detachments. The CBP P-3 organization is analogous to a US Navy P-3 squadron, with appreciable distinctions. Personnel working on the CBP Program are all highly skilled, with substantial prior service experience. Technical personnel are fully qualified to perform without further formal or onthe-job training. Mechanics have FAA Airframe and Powerplant certificates, and in some positions Inspection Authorization certifications. The advantage of using experienced, high skill level technicians is that fewer people are required than a US Navy P-3 squadron. Our staffing at each site is approximately 80 total - mechanics, avionics technicians, supply technicians, QA, maintenance control, administration, human resources and safety - while maintaining six maintenance crews to support CBP detachments. In comparison, a US Navy squadron staffing level is typically more than 200. Establishing the required staffing considered several maintenance and support aspects including: forecasting workload; operational surge requirements and organizational level scheduled maintenance planning for phase inspections. Determining the organizational level tempo of operations required planning for scheduled inspections and unscheduled maintenance. Depot planning is based on integrated fleet management, considering aircraft fatigue life remaining, scheduled depot induction requirements, and accommodation of unscheduled depot repair work. Depot work planning, scheduling and manpower leveling is complex, involving inductions up to 18 months with 50,000 hours or more of planned effort. The depot team is comprised of 50 highly skilled technicians and support personnel. Depot plans are scheduled and tracked. Lockheed Martin uses integrated earned-value management system (EVMS) tools and production and support function metrics that calculate progress against plan for cost and schedule, identifying trends requiring management attention. Overall management oversight consists of periodic reporting and reviews. The program has routine scheduled reports and meetings, including: directorate reviews; 2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 4

5 Operational: Supply Chain and Logistics Management - What processes, tools and relationship-building methods have you used to develop, refine and improve supply chain and stakeholder integration? Please indicate also methods used to analyze/fact-find regarding supplier proposals. This is one of the most imperative needs of our industry please provide specific details and data that assisted you in gauging the effectiveness. Operational: System Integration, Testing & Reviews - Describe the activities and processes used to succeed in your system integration, and testing. How did you conduct system design and technical reviews? weekly integrated program team meetings; coordination meetings; status reports; Program Management Reviews; and informal reviews. Lockheed Martin has developed, refined and improved supply chain and stakeholder integration. There are many stakeholders involved in the process: customers; supply chain management; maintenance control; ICP employees; Procurement Quality Assurance (PQA); and major vendors and suppliers. Supply Standard Operating Procedures (SSOPs) detail policies and procedures, roles and responsibilities, required documents and forms, and accountability. SSOP coordination meetings result in strong relationships and commitment to continuously improve operations to achieve performance metrics and high customer satisfaction. Being a support/sustainment contract, the program is limited in the frequency of supplier proposals and the majority of procurements are against established terms and conditions. Major subcontractors are used to support the engines, propellers and AEW rotodomes. These subcontracts are major, ranging from $1 million to $10 million annually. The process is specified in Lockheed Martin company procedures and policies covering procurement, subcontractor management and supplier QA. Supply chain effectiveness is based on results. The simple result of supply chain effectiveness is the end-state metric of operational missions missed due to supply. The CBP IT system tracks aircraft readiness, including tracking of time that an aircraft is awaiting parts through the NORS (Not Operationally Ready - Supply) system. For the first seven months of FY 11 NORS averaged 4%, and for the most recent four-month period is 2%. Other metrics used to indicate effectiveness of the supply chain are: cannibalizations; site-to-site asset transfers; vendor Repair Turn-Around Time (RTAT); time to qualify new vendors; count and value of items in the NRFI (Not Ready For Issue) category; supply requests delivered from stock; and supply responsiveness by mission priority. In developing the AEW and LRT P-3 variants for CBP, systems integration and testing tasks were significant. The challenge was to develop systems architecture, baseline software and to integrate multiple diverse sensor and systems into one coherent picture for the airborne crew. This included multiple operator stations and displays, radars, electro-optical and infrared sensors, navigation/ communications, and a new flight station. Use of a sophisticated systems integration laboratory with operational software and simulated sensors and electronics systems was key to systems integration. System design 2011 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 5

6 Operational: Risk / Opportunity Management - Describe the processes used to identify both risks and opportunity and to assure potential for both is addressed effectively. Please indicate any forward-leaning processes to support. Team Leadership: Team Culture and Motivation - Describe how you created your team spirit and culture, and accomplished entire team integration and individual team member motivation. Team Leadership: Lessons Learned and Knowledge Management - Describe how you collect lessons learned and best practices, and how they are shared with your team and company to improve performance. Also how are you capturing expertise and knowledge to assure availability over the life of the program? and technical reviews were conducted regularly with engineers and programmers and periodically with customer experts at program reviews and technical interchange meetings. The multi-year development, test and evaluation process was directed by a Systems Engineering Management Plan (SEMP) and a Test and Evaluation Master Plan (TEMP). Lockheed Martin implemented standard schedule tools to track and analyze program progress. Lockheed Martin documented systems engineering processes and procedures for Risk/Opportunity Management, and risk identification is a routine part of program management. Sources of risk are identified and quantified in terms of cost and/or schedule, along with a severity assessment of the consequences and the probability of occurrence. For each risk identified, a mitigation plan is developed to reduce the probability or severity of the risk, or action to implement if a risk materializes. The formality of the LM process of conducting risk management and the treatment as a systems engineering and management function is a forward-leaning processes. Program success is a result of the professionalism of the employees, leadership training and motivational skills of managers, and an environment of inclusion, respect and excellence. With these conditions, a positive culture organically develops. This Program employs technicians who have spent decades supporting P-3 aircraft. Many senior employees have 20+ years of experience. These individuals truly enjoy their work and provide flight crews with an aircraft that is ready to perform its tasking. Lockheed Martin has well-defined positions, and recruits experienced individuals with specialized credentials who operate with focus on performance objectives. We provide fair compensation for high skill levels, and recognize exceptional contributions. This team was recognized with a company-level team award for outstanding accomplishments in Lockheed Martin has assembled a core technical team with strong experience and achievements in similar sustainment work, mostly supporting P-3 aircraft. The CBP team was challenged to apply lessons learned to a best-practices solution. Continuous improvement solutions from other programs was quantified and brought to CBP operations. LM subject matter experts captured the improved approaches in various program logistics, quality, maintenance and procedures documents. LM achieved initial development and ongoing incorporation of subject matter expertise and made best practices documentation available across the company ensuring continuity AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 6

7 Team Leadership: Leadership Development - How do you develop team s skills and build future leaders Best (& Next) Practices: Identify your program s specific Best Practices that you believe are unique, and could be shared with others and become industry s Next Practices. The CBP P-3 team includes individuals with exceptional relevant technical experience, and we encourage ongoing education and professional development. LM develops team skills using a variety of methods: integrated webbased skills training; focused technical training; and specialized training and certification/re-cert for skill sets such as quality inspectors and NDT technicians; and equipment operators. To develop a cadre of future leaders, Lockheed Martin promotes internal advancement to leverage specific experience. Succession planning is used to mitigate departure or reassignment. The best practices in place for the CBP program that are potential models for other programs are: P-3 Fleet Planning and Life Extension; integrated ICP and dedicated supply chain; improved maintenance requirements; management of post-mlu fleets; and coordination between operating sites and the depot. IV. ADAPTING TO COMPLEXITY: (HOW DO YOU DEAL WITH YOUR PROGRAM S UNIQUE COMPLEXITIES) = 20 POINTS Identify the Program s Market Uncertainty level How new is your product to your market and users, based on the definitions below. Then describe how you deal and address this specific uncertainty: - Derivative an improvement of an existing product/system. - Platform a new generation in an existing product line. - New to the Market a product or system adopted from another market - New to the World - breakthrough product, never seen before Identify the Program s Technological Uncertainty using the definitions below. Then describe how you deal and This program has market uncertainty elements that fall into Derivative and New-to-the-World categories. The Derivative category applies to the 16 P-3 aircraft and to the integrated mission system, as discussed previously. The MLU kit production and installation is New-to-the-World market. The MLU portion of the program has had the most uncertainty, including: the ability to return original tooling to production status and setting up an integrated production line; interchangeability of new components with legacy components; and ability to re-attach original components to new production, which includes fitting outer wings to fuselage structure, flaps and leading edges to new outer wings, and engine nacelles to new wings. These challenges and risks were successfully managed and overcome. Initially, there were large uncertainties about the condition of the airframes, systems and mission avionics. Since the flight station and mission system were designed by LM and supported by LM, the uncertainty was reduced. A large uncertainty surrounded the condition of the aircraft structure, specifically corrosion and fatigue. Phase inspections discovered areas of corrosion, introducing uncertainty into the duration and workload of the phase and follow-on depot inspections. Handling peak loading at the depot is difficult to manage since labor is assigned from the existing workforce. Technology uncertainty is rated as Medium Technology for MLU production, installation and aircraft mission systems. The MLU program was initially a restart of a dormant production line that had not produced wings for 15 years AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 7

8 address this uncertainty: - Low-tech: application of mature, well-established technology - Medium Technology: existing technology modified to meet new design requirements - High-Technology: recently developed new technology - Super High- Technology: nonexisting technology that needs to be developed during the program. Identify the level of your System Complexity using the definitions below. Then explain how you are dealing with this level of complexity: - An Assembly performing a single function. - A Sub-system fitting within a larger system. - A System a collection of subsystems performing multiple functions. - An Array a System of Systems ; a widely dispersed collection of systems serving a common mission. Identify the Pace and Urgency of your team s effort using the definitions below. Then describe how you deal with the program s pace requirements: - Regular timing no specific time pressures. Fast/Competitive time to market is important for competitiveness. - Time Critical there is an absolute and criticalto-success deadline. - Blitz there is a crisis element driving the need for immediate response Uncertainty with tooling restoration and assembly consistency needed mitigation. The effort culminated in the ability to remove a 40 year old wing from an aircraft and replace it with a new production wing, with fit tolerances for wing mating and attachment of multiple assemblies and subassemblies. Thorough program planning prepared the team for potential unexpected results. When installation difficulties were encountered, they were fully documented, coordinated with the production/ manufacturing team, suppliers and the engineering team to ensure lessons learned were incorporated into the process going forward. The team has produced the world s first two operational MLU aircraft, three more are in work, with one scheduled to deliver in the summer of Program System Complexity is system-level. The fleet consists of 16 aircraft operating independently or together. Additionally, there is an array of sophisticated support equipment. The aircraft systems perform multiple operational functions based on mission tasking. Lockheed Martin deals with this system complexity by identifying and hiring highly experienced people who know the P-3 aircraft and its maintenance procedures; having a comprehensive portfolio of documented procedures, policies and references maintained in a technical data reference library; and having direct reach back through the LM organization to engineering and support resources and capabilities at company locations. The aircraft and mission systems had their own unique complexity derived from aging aircraft issues, notably corrosion and fatigue, and obsolescence. There is always an uncertainty in what will be discovered when a hidden area of the aircraft is examined during inspections. Pace and urgency on this program is mixed, but has significant Time Critical and some Blitz response requirements. We interpret Time Critical to mean that there is an immediate need to respond to operational requirements, preparing and launching an aircraft to launch no later than tomorrow. This tempo is typical for CBP operations. CBP is a federal law enforcement agency where tasking comes from operational headquarters to respond to known or suspected activities occurring in real time and where arrival on scene is imperative. Operational intelligence can create Blitz requirements, requiring the immediate launch of an aircraft. This is frequent in this operational environment. To respond to uncertain operational taskings, the aircraft are kept in an operationally ready condition. When it is not possible to have an aircraft ready (i.e. scheduled maintenance or phase inspections) LM completes repair maintenance as soon as parts and labor can be applied AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 8

9 Other Complexities & Uncertainties - Describe other complexities and unknown factors faced by this program and how you addressed them. In supply, LM assigns operationally priorities to parts requisitions to ensure proper attention. AOG situations necessitate immediate response and we target having a part sent overnight for following morning arrival. When required, LM uses site-to-site transfers and selected cannibalization. Many operations require detachments outside the continental US. To meet this demand, LM has an adequate number of detachment-qualified personnel who can respond for immediate deployment. To support detachments, LM maintains pack-up kits prepared for rapid response. There are many other program complexities that require flexibility and creative responses. CBP uses a unique IT system for maintenance, supply and finance. The software was originally developed in the 1980s and it is antiquated by today s standards. The requirement to utilize the legacy IT system and to introduce modern IT management systems required setting up separate networks, one for CBP data and one for LM data. There have been many challenges and obstacles to implementing a mature solution and to provide data for analysis and management. The requirement to deploy outside the United States requires employees to meet security clearance and international travel requirements. LM was required to dispatch two detachment crews outside the US the day after contract start. LM worked ahead of contract start to select individuals with appropriate credentials, ensuring they could be immediately detached. Another significant challenge is the requirement for employees to complete a DHS Background Investigation (BI) before they are able to go on detachments or to access government supply systems. The BI process is complicated and timeconsuming, often requiring six months. The challenge is to ensure prospective employees are aware of the BI process and timeline, and clearing the BI is a condition of employment. V. METRICS (HOW DO YOU MEASURE PROGRAM S PERFORMANCE) = 30 POINTS Customer - How do you measure the impact of your program on your customer and your customer s satisfaction? Include a description of your metrics, as well as numerical evidence. Customer impact and satisfaction are assessed with a mix of formal metrics, informal metrics, formal and informal communications, meetings and correspondence via documents and . The primary performance metric for this PBL contract is the Operational Performance Measure (OPM), which measures success in completing all missions requested. It is a pure results performance metric. OPM is calculated from two contributing metrics: Launch Rate (LR) and Mission Completion Rate (MCR). OPM = LR x MCR. LR = number of operational requests/number of successful aircraft launches. MCR = number of successful missions completed/number of launches. An OPM of 90% means that for all mission requests for aircraft, 90% of missions were successfully completed. OPM is measured quarterly, and incentive fee is calculated from OPM AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 9

10 Performance - How do you measure your program s performance in traditional terms such as schedule, budget, requirements, and business results? Preparing the Future - How do you measure and assess the long-term contribution of your program to the corporation/organization? Team - How do you measure and assess the impact of your program on your team development and employee satisfaction? Unique Metrics - Describe any unique metrics you are using to measure your program s progress and how do you focus it for outstanding success. The target OPM for this contract is 75%. Our actual OPM for the six full quarters since contract start is: 86.1%, 87.1%, 91.9%, 92.5%, 95.5%, and 92.3%. Program performance is measured regularly and adjustments are made to respond to trends. Business results are driven by OPM, which determines incentive fee earned vs. fee pool available. Success here has resulted in favorable overall program financial performance and return on sales. Experience on this program provides opportunities to leverage results to other potential customers, whether for other P-3 operators, or as a PBL approach to non-p-3 operators. LM uses rigorous planning and management tools to help plan activities. Detailed depot planning schedules are used for the extensive 6- to 18-month depot events, and EVMS tracks schedule and budget performance. At the sites, LM has phase inspection schedules and maintenance decks for all inspection requirements. Technicians work to a flight schedule for detachment and operational tasking. The program budget is tracked and reported via a Contract Financial Status Report (CFSR), a monthly deliverable. It tracks actual costs in various categories and sub-categories to budgeted amounts. All expenditures for material, parts and supplies used in site maintenance and support are reported. The long-term contribution of the program to Lockheed Martin Corporation is measured and assessed in many ways. Status reports of traditional financial metrics such as sales, return on sales, cash flow and EBIT are maintained Entering into a long-term PBL contract demonstrates longterm business and financial return to the company. This contract has a base year with nine renewable option years. This program aligns with the strategic objectives for the P-3 Program Office and LM Aeronautics objectives. As a long-term business undertaking, the program offers an opportunity for career development and advancement. Career advancement potential exists within the CBP contract, and in other business areas within the company. The company has a long-term commitment to providing CBP with operationally viable P-3 aircraft for the entire duration of this contract, and well beyond. The dedication and professionalism has created an environment of high employee satisfaction, excellent performance, and dedication to customer objectives. This program has a set of high-level performance metrics created specifically focused on operational results. The previously described OPM metric measures the number of missions successfully completed compared to mission requests. OPM is the highest level of PBL: measuring the ultimate customer goal of launching on need and successfully completing that mission. OPM is unique to this contract AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 10