Objective 3.1’s stated purpose is to “generate cost awareness to drive savings/avoidance by over $2 billion per year,” according to the 2017 AFMC Strategic Plan. The objective aligns with the command’s third goal to “drive cost-effectiveness into the capabilities we provide.”
This objective encompasses multiple categories of savings, including:
• Cost savings: Funds, manpower or other resources that are tied to a budget line and offered back to the command and are removed from the organization’s budget;
• Cost avoidance: Benefits from actions that reduce or eliminate the need for an increase in manpower or costs, including funds, manpower or other resources. It also includes cost savings re-purposed and not returned to the command; and,
• Time savings: Employees’ time freed up through productivity gains and translated into dollars.
All AFMC centers, as well as many Headquarters AFMC directorates, actively contributed initiatives, with the top five highest dollar amounts originating from the Air Force Life Cycle Management Center.
Some examples of savings initiatives, gathered from around the command, include the following:
Air Force Sustainment Center
The center’s Strategic Alternative Sourcing Program Office searched the commercial aviation sector for used aircraft parts to repair military aircraft, finding savings in parts with prices lower than those the Air Force has paid in the past. The program office manages the process of qualifying the parts and authorizing new vendors as additional sources of supply for procurement.
Savings: $21.4 million in cost avoidance.
Air Force Research Laboratory
The lab initiated Agile Business Processes in fiscal 2016, aimed to gather improvements and resources savings from employees and throughout the organization. Reported cost avoidances include cancelling low-value support contracts, divesting and transferring tasks to other agencies or organizations, and centralizing and streamlining processes.
Savings: $17 million in cost avoidance
Air Force Installation and Mission Support Center
The center’s Air Force Installation Contracting Agency led the acquisition to implement contracted transient alert services across major commands. This $145 million acquisition provides support to passing aircraft temporarily landing at, but not assigned to, the bases. It also provides support such as equipment and ensuring aircraft safety. The initiative covers 44 Air Force bases at nine major commands.
Savings: $6.5 million in cost avoidance
Air Force Life Cycle Management Center
The center’s Engine Water Wash Program washed more than 416 bomber, tanker, reconnaissance and airlift jet engines, resulting in improved operating performance, saving more than 577,000 gallons of jet fuel. The program aims to reduce engine fuel consumption by using heated high-pressure deionized water to remove accumulated internal contaminants from an engine’s components.
Savings: approximately $1.9 million in cost avoidances
Air Force Test Center
The center developed a new, enhanced yaw testing technique, eliminating damaged balances and preventing testing delays caused by obtaining replacement balances. The prior technique involved a 90-degree roll, followed by pitching, to simulate yaw, which regularly led to broken balances.
Savings: $375,000 in cost savings
Brig. Gen. James Peccia III, director of the AFMC Financial Management Directorate, said that though these savings were achieved during the most recent fiscal year, there remains a continual need for innovative approaches resulting in reduced costs and more efficient processes.
“Our Airmen’s ingenuity is inspiring,” Peccia said. “Month after month, they keep finding new ways to work smarter and more efficiently. Those savings can go directly to our mission readiness and support of the warfighter.”
The command’s focus on fiscal responsibility echoes the message of Secretary of Defense James Mattis in a memo issued to all Defense Department personnel March 26. In it, he underscored the responsibility of each DOD member to commit to “exercis[ing] the utmost degree of financial stewardship as you instill budget discipline within your organization.”
AFMC personnel interested in sharing a cost savings initiative with the AFMC Financial Management Directorate can send an email to AFMC.FM.Workflow@us.af.mil. The message should include a title for the initiative, a short description, the organization represented, and the submitter’s contact information.
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Air Force Life Cycle Management Center
Center’s top 5 ‘should cost’ initiative contributors to realized savings
“Should cost” refers to the tool used to manage all costs throughout the life cycle of a program. It focuses on controlling the cost of the work being executed and also the cost of forecasted work. Air Force Materiel Command’s top five highest dollar should cost initiative contributors to last fiscal year’s realized savings originated within its Air Force Life Cycle Management Center, and include the following:
Battlefield Airborne Communications Node Program Should Cost Initiative
BACN E-11A Platform Maintenance Contract: The BACN effort is funded annually with Overseas Contingency Operations, or OCO, funding. These funds are approved on a yearly basis. Due to the high-priority need of the effort, the initial E-11A Platform Maintenance contract began with an Undefinitized Contract Action. A UCA is any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. It was determined in 2012 that this platform maintenance could be performed by other contractors, and the BACN team was able to compete the contract. This enabled the BACN team to realize significant savings based off its previous projected five-year cost estimate. Savings: $498 million
HC/MC-130 Recapitalization Program SCI
C-130J Multiyear Procurement II: The C-130J Multiyear Procurement, or MYP II, contract uses a combination of Economic Order Quantity and Advance Procurement funding to provide the U.S. government maximum savings in price and delivery schedule. EOQ refers to the order quantity that minimizes the total holding costs and ordering costs. AP makes an exception to the full funding policy that allows early acquisition of long lead time items that must be funded in advance to maintain a planned future production schedule.
The MYP II resulted in savings for bulk purchases of materials and components to reduce materials costs, and for investments in productivity enhancements which reduce labor costs. This cost initiative is associated with 25 MC-130J, 13 HC-130J and five AC-130J aircraft. Savings: $135 million
Joint Direct Attack Munitions Program SCI
JDAM Learning Curve for Lot 21: After the contract negotiation team completed negotiations for quantities up to 15,000 JDAMs, operational needs made it necessary to add scope and quantity to the contract. This opened the opportunity to negotiate even further savings for the price of tail kits. Based on the negotiated pricing of the first five price bands, target prices for bands six to 12 with quantities up to 36,500 were able to be determined. Savings: $68 million
KC-46A Tanker Modernization Program SCI
Production – Aircrew Training Systems Contract Competitive Source Selection: The KC-46 Program completed a competitive source selection for the Aircrew Training Systems. A contract was signed on May 1, 2013, resulting in significant savings to the KC-46 Program as compared to the Air Force’s official cost estimate that resulted in a recommendation to return more than $100 million dollars through the fiscal 2015 budget process. Savings: $67 million
Joint Direct Attack Munitions Program SCI
JDAM Certified Cost and Pricing Data for Lot 21: The acquisition strategy shifted to require Certified Cost or Pricing, or CCP, data, which put downward pressure on contractor pricing. The Defense Contract Audit Agency will audit the submitted CCP data. The prediction is that the CCP data and associated audits will result in lower unit prices. Savings: $55 million
Source: AFLCMC Acquisition Excellence Directorate & AFMC Financial Management Directorate
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