Document created: 19 September 03
Air University Review, January-February
1974
Lieutenant Colonel
David N. Burt
The support we provide for our defense systems is greatly affected by the availability of suitable engineering reprocurement data. Additional procurement costs frequently arise when acquiring replenishment spare parts as a result of the nonavailability of the right data. The Air Force acquires some half million new pieces of engineering data each year. These data are used as the basis of reprocurement of spares for support of our defense systems as requirements develop. The reprocurement problems resulting from nonexistent or inadequate data include additional procurement costs, manufacturing problems, and quality problems.
In this article we will examine some of the problems resulting from inadequate data, describe the data acquisition process, identify problem areas in the data acquisition, and advance possible solutions to our data problems.
The Dayton Daily News of February 22, 1972, reported that according to Representative Leslie Aspin (Democratic Congressman, Wisconsin) a General Accounting Office report had recently stated: “It cost the Air Force $56 million in markup to buy F-111 parts through the prime contractor, the General Dynamics Corp., instead of from subcontractors making the parts. A ‘significant’ portion of this amount could have been saved by direct purchase.”
Unfortunately, we frequently are not in a position to determine who the manufacturing subcontractor is for a given component because of faulty or incomplete data. For example, the information available to the Air Materiel Area (AMA) responsible for the landing gear on the C-5A does not identify the ultimate manufacturer of the various components. This problem, caused by inadequate data, results in cost increases of from 50 to 100 percent.
It is estimated that when we are able to use competitive procurement techniques we save an estimated 25 percent of the noncompetitive price.1 An extreme example of this recently occurred at Warner Robins AMA. Data required to “go competitive” were developed on an electronic module that had previously been procured “sole source” at a cost of $500 per unit. The competitive price was $94 each. Over $200,000 was saved on the first competitive buy!
Based on a number of interviews, Grant Flint and Franklin W. Jesser have developed a table depicting the range of possible dollar savings in each of the last four fiscal years had data adequate for competitive procurement been available. The calculations reflected in the accompanying table are based on the estimate of a 25 percent average savings resulting from competitive procurement over sole source. These calculations indicate that as much as $147 million in spare parts acquisition could have been saved if we had bought adequate data when we acquired the systems being supported!
manufacturing problems
Our experience with the purchase of spare and replacement items using contractor-furnished data has been very unsatisfactory. For example, in the late 1960s Sacramento AMA (SMAMA) bought some lower-wing skins in two separate orders for the F-100 fleet from North American Rockwell Corporation. Data for fabricating the skins were bought along with the skins. (Wing skins are the metallic coverings that fit on the ribs and spars of the wings. They are cut and formed to a standardized size, then attached to the ribs and spars during modification.) The tolerance allowed for fitting these skins (i.e., the amount of play allowed) was 3/32 inch. The skins received from North American in these two orders fitted properly. The third and fourth orders were placed competitively, using the data obtained from North American.
Generally, the skins received on these, competitively placed orders also fit
properly, but many of them were well out of tolerance. Some of them varied from
the standard by over an inch. Engineering at SMAMA investigated the problem and
found that it resulted from a designation that had been placed on the drawings
by North American Rockwell. This designation indicated that “hand pressure”
could be used during quality control checking to bring the skins into
alignment; i.e., if the skins could be brought within the allowed 3/32-inch
tolerance by applying hand pressure, they were acceptable. Unfortunately the
interpretation of “hand pressure” by the source under the competitive buys was
different from the North American interpretation of “hand pressure.” Production
of the unsuitable skins occurred because the competitive source’s
interpretation was “looser” than the North American interpretation. No
arbitrary measurement of this designation (e.g., x number of pounds of hand
pressure per square inch) exists; therefore, the contractor was legally
justified in using the “looser” interpretation. The Air Force was obliged to
pay for unusable skins.2
One stopgap solution to this problem has been to require suppliers who use such data in manufacturing to submit preproduction samples or the first article from the proposed production line. Such procedures have had a significant effect on the acceptability of the items. Obviously, these procedures do increase both the time and cost required for spares procurement.
quality control problems
Interviews with personnel assigned to the Materiel Management Directorate at various AMA’s indicate that much of our “quality problem” on replacement items is based on inadequate data being used in Procurement Data Packages. The magnitude of data’s contribution to the quality problem is not known, but there can be little question that technical data constitute a factor in the problem.
Now that we have shown how inadequate data affect our ability to support our
defense systems, let us briefly describe the data acquisition process.3
The basis for establishing data requirements is the Data Call, which is thus defined: “The formal procedure used by the Data Management Officer to acquire data requirements for any given program/project from appropriate Government activities.”4 Prior to letting the contract for a major program, the Data Management Officer for that program issues a Data Call to all government participants. The procurement activity is included as one of the prime participants. Each of the participating activities carefully screens and prepares its data requirements during this period. All requests must be documented and fully justified before being submitted to the program’s Data Management Officer (DMO). The DMO consolidates all data requests on a contract Data Requirements List (DD Form 1423). He also organizes his personnel to begin review of the proposed data requirements.
|
|
Total |
Computed Possible |
|
1972 |
873,851 |
$34,954,000 |
|
1971 |
641,745 |
32,087,000 |
|
1970 |
1,016,028 |
42,334,000 |
|
1969 |
1,233,545 |
38,540,000 |
*Based on a 25 percent savings that would have resulted if adequate data had been available to enable competitive purchase, but which had to be purchased “sole source” because adequate data were not available.
Computation of possible savings by increasing the number of air Force Logistics Command competitive procurements by 50 percent when adequate data are available
data review
To insure that unnecessary or duplicate data are not being requested, a Data Requirements Review Board (DRRB) is assembled by the project or program manager to review data requirements. The DRRB is composed of representatives from each of the major functions requiring data on a certain project. The objective of the review is to procure data on the basis of need for a specific intended use and only when requirements can be economically justified. Data review in the precontractual stage normally involves three phases.
The first-phase review is to combine data requirements and make sure they are essential to the present and future management of the project. Future management is an important consideration. If a “breakout” for broader base procurement is intended, more comprehensive data may be required. Once data requirements have been established, they are consolidated and listed on the DD Form 1423, which is to be included in the Request for Proposal (RFP).
During the second phase of review, the DMO insures that data requirements listed on the DD Form 1423 are consistent with the contract statement of work. The DMO also insures that the DD Form 1423 is included in the RFP.
The third phase of precontractual review commences after the contractors have submitted proposals on the program. Certain members of the DRRB are again assembled to review data requirements. This review is to evaluate the estimated price of acquiring the data versus its application. Various alternatives are studied. During this final phase, the DD Form 1423 is modified as necessary to be included in the final contract.
contractor involvement
After the contract has been awarded, the, DMO must be constantly alert to changing requirements for data. When changes occur, the DD Form 1423 is modified as necessary, with coordination from the requiring activity. The DRRB may be reconvened if necessary to establish new requirements.
Acquiring data is an extremely complex process. It directly interfaces with many other DOD programs, such as Procurement Method Coding and the High Dollar Spare Parts Breakout Program. The interrelationship of these programs is so complex that it is difficult to discern which processes precede the others. We will now attempt to integrate the programs by providing a general analysis of the entire data acquisition process.
After a contractor has been selected, he must present a list of all items represented in the contract. This list will include items with federal stock numbers. The list is sent to the Defense Logistics Service Center (DLSC) in Battle Creek, Michigan. At the DLSC the list of items is run through a computer to isolate all the items with federal stock numbers.
The government must now decide whether to buy from the prime contractor or furnish certain items. A list of the items to be purchased is returned to the prime contractor. These are the items that may require data to be furnished.
Procurement Method Coding (PMC) is the determination of the procurement
method to be used on a certain item. This program is concerned primarily with
the purchasing of spare parts, which are defined as “spares and reparable
parts, reparable and consumable, purchased for use in the maintenance,
overhaul, and repair of equipment such as ships, tanks, guns, aircraft, etc.”5
Once a contract is awarded, the contractor is required to furnish Contractor Recommended Codes (CRC) on specific items. These codes designate the method of procurement recommended by the contractor. The three established CRC’s are:
(a) CRC 6. This spare part is recommended for procurement by open competition.
(b) CRC 7. This spare part is recommended for procurement only from selected source(s) for reasons indicated by the suffix code.
(c) CRC 8. This spare part is recommend for procurement only from the prime contractor for reasons indicated by the suffix code.
There are eleven alphabetic codes that may be used as suffixes to the CRC. These are support codes included by the contractor to justify his recommended method of procurement.
After CRC’s have been submitted, a verification meeting is held at the
screening contractor’s facility. This meeting is to review and substantiate the
contractor’s submitted code. The review normally culminates when the reviewing
DOD component assigns Procurement Method Codes to the item reviewed.6
Procurement Method Codes are assigned by the reviewing DOD component after studying the screening contractor’s recommended codes and substantiating data. These PMC’s denote the method to be employed in procuring spare parts. Anyone of the five following PMC’s may be assigned:
(a) PMC 1. Spare parts screened and found to be already competitive.
(b) PMC 2. Spare parts screened and determined for the first time to be suitable for competitive procurement.
(c) PMC 3. Spare parts screened and found to be procured directly from the actual manufacturer or vendor.
(d) PMC 4. Spare parts screened and determined for the first time to be suitable for direct purchase from the actual vendor rather than the original prime contractor who is not the actual manufacturer.
(e) PMC 5. Spare parts screened and determined not suitable for competitive
procurement or direct purchase and which, therefore, continue to be procured
from a prime contractor who is not the actual manufacturer.7
The PMC assigned to each spare part determines the type of data required from the prime contractor concerning that spare part. For example, if an item is coded suitable for competitive procurement for the first time, considerably more data are required than if a code of 5 is assigned.
The screening contractor’s recommendation or agreement with the reviewing DOD component on CRC’s constitutes a requirement for the contractor to provide data under that item listed on the DD Form 1423. For each designated item, a procurement data package is developed. Various kinds of data/information and levels of detail (information on purchasing, manufacturing, verification, etc.) could be contained within a procurement data package, depending upon the item and its identified method of procurement. Procurement data packages are prepared for:
(a) Competitive (open competition) acquisition of identical items.
(b) Competitive (open competition) acquisition of interchangeable items.
(c) Competitive (negotiated) acquisition of items from selected qualified sources.
(d) Noncompetitive (sole or directed source) acquisition of items.8
The specific data included in each data package vary with the item itself and the selected method of procurement.
acceptance and inspection of data
One of the primary objectives of the DOD program for the management of technical data is to insure that effective quality assurance (QA) programs and procedures are established. Emphasis must be given to the acquisition, inspection, and handling of data for spare parts. It is critical that data be inspected to assure compliance with the terms of the contract prior to acceptance and payment.
Contractors normally submit their prepared data through the Air Force Plant Representative Office to the Administrative Contracting Officer (ACO). The ACO is the signature authority for the DD Form 250, Materiel Inspection and Receiving Report. He is responsible for insuring that the general format of the data is adequate. His signature on the DD Form 250 represents acceptance of the data by the Air Force. Once the data have been accepted, they are sent to the Data Depository at Wright-Patterson AFB. Copies are often forwarded to the supporting AMA’s at this time.
Several points in the data acquisition process appear to contribute to the conditions described in the first section of this article:
(a) The Procurement Method Code process,
(b) The degree of clarity of the directives and instructions provided to the contractors responsible for the preparation of data,
(c) Government quality assurance of the data preparation process and inspection of the actual data.
Procurement Method Coding is the first key point in the process. The personnel involved in this process tend to be risk averse. There is a natural tendency to code an item for procurement from the prime contractor if the slightest doubt exists as to other firms’ being able to produce a satisfactory item.
The second key problem area is the quality of the guidance we provide the contractors. Both contractor and contract administrators believe that the governing directives and instructions are a key cause of the problem. This contention is supported by subjective comments received from AMA personnel (e.g., which indicate that the rules and regulations dealing with the preparation of data are not specific enough for new contractors).
To investigate the possibility that the levels at which the applicable directives are written are not compatible with the levels at which they must be used, a fog count test9 was applied to a selected sample of directives provided to contractors. It was found that the publications in the sample are not suitable, so far as reading level is concerned, for an individual who has not reached the equivalent of the third year of college in reading comprehension. Yet the contractor personnel working in this area are generally the least experienced and lowest paid.
The quality assurance of the data preparation process and the inspection of the completed data are perhaps the most challenging of the three cited problem areas.
Lack of agreement among personnel of AFLC, AFSC, and DCAS with regard to
assignment of responsibilities for quality assurance of engineering data is one
familiar aspect of this problem. The Data Management Officers’ Handbook,
published by the Aeronautical Systems Division (ASD) of AFSC, recognizes this
problem in a sketch captioned, “Who Is Responsible for Data?” The sketch shows
the Program Manager, the Data Management Officer, and the ASD Technical Manager
all pointing to the AFLC Functional Manager. The AFLC Functional Manager is
pointing to the using command representative, who is in turn pointing to the
Program Manager.10
The quality assurance function associated with contractor generated reprocurement data is composed of two basic tasks: (1) to assure compliance with all the specifications, standards, or other contractually referenced directives that describe how the data are to be compiled, presented, an displayed; and (2) to assure the best possible technical adequacy of the data.
The first task is relatively straightforward for both contractor and the government activity responsible for quality assurance The second task, assuring technical adequacy, of engineering data that will be used as basis of reprocurement of spares, poses great problems. The design contractor can only be expected to provide adequacy and completeness in relation to what his needs were, based on his production techniques. The only activity capable of determining if the data are adequate for reprocurement is the prospective new contractor, who must produce from the data package. Unfortunately, this prospective new contractor is unknown at the time the data are acquired by the government. The responsibility for final inspection and acceptance of the data is assigned to the office having engineering cognizance of the hardware item which the data represent. The inspection of the data may be delegated to the agency having inspection cognizance over the contractor.11 This delegation must not extend to determination of engineering/technical adequacy of the data being inspected.12 Unfortunately, it appears that the activity responsible for determining the adequacy of the data has neither the time, the orientation, nor the personnel qualified to determine if the data will be suitable for reprocurement purposes. Thus, many of the engineering data intended for use on future reprocurements enter our inventory without adequate quality assurance. And history has shown that many of the data are unsuited to be the bases of reprocurement of spares.
Three unusual or “way out” solutions to our data problems may be of interest:
(1) In-house engineering of all systems.
(2) Single manufacturer responsibility for a given type of system (e.g., firm X would develop and produce all fighters for Air Force, Navy, and Marines), with all replenishment spare parts purchased from this source.
(3) A contract provision making the contractor pecuniarily liable for all defects in data.
The author neither endorses nor defends these solutions; they are mentioned to stimulate the reader’s thinking.
More feasible solutions include:
(4) Improved control of the Procurement Method Coding process.
(5) Improved guidance on contractor’s responsibility in preparing data.
(6) Assignment of engineers to live with the data during their development and through their acceptance and use by the AMA. (This concept is similar to the assignment of the future Systems Manager as Deputy Program Director for Integrated Logistics Support.)
(7) Emphasis on and improvement of the quality assurance (QA) responsibility of the Administrative Contracting Officer (AFPRO, NAVPRO, DCAS).
(8) Assignment of quality assurance responsibility on reprocurement data to AFLC.
(9) Review of existing high-value item data at the responsible AMA in an effort to upgrade the quality of data required to support existing systems.
Suggestions 4, 5, and 9 are not controversial. To some extent, efforts are under way to implement all three of these approaches. For example, the author recently discussed these approaches with members of the PMC team for the F-15.
Some attention is currently being paid to the area of guidance to the contractor on preparation of data. It would appear that more emphasis should be placed on this area.
Review of the data after acceptance can be accomplished and is being accomplished to assure that the data can properly be used for reprocurement purposes. Oklahoma City AMA (OCAMA), for example, maintains a DOD High Dollar Spare Parts Breakout Program whose purpose is to enable the buyer to procure spare parts as competitively as possible or from the ultimate manufacturer by taking action to obtain and examine reprocurement data, drawings, and specifications. This program implements the provisions of AFR 57-6, which emphasize competitive procurement of spare parts.13 Vigorous pursuit of the objectives specified by this program, in conjunction with implementation of the Competition with Confidence Program prescribed by AFLCP 70-2,14 has brought about a significant reduction in the percentage of dollars spent through sole source procurement and a corresponding increase in the percentage of dollars spent for direct purchase and competitive procurements.
The other suggestions—6, 7, and 8—deal with different approaches to answering the question, How do we best control the quality of data on items destined to enter our inventory?
The concept of assigning engineers to live with data during their development is now being tested by OCAMA. Engineering personnel from this AMA are now at the B-1 System Program Office (SPO). If these individuals are permitted to influence the Administrative Contracting Office personnel in the surveillance of data preparation, this may be a highly successful approach. As with any longitudinal approach, though, personnel and TDY problems are present.
Emphasizing and enlarging the QA responsibility of the Administrative Contracting Office (ACO) is a possible solution to the data quality problem. However, a thorough review of the ACO’s responsibilities and capabilities in this area is essential. There is some indication that the ACO’s motivation may be a hurdle in making this approach successful.
The alternative which is most attractive to the author for better
controlling the quality of data is that of assigning quality assurance
responsibility for insuring technical adequacy for reprocurement to Air Force
Logistics Command. This is the command that will have to live with the data for
the life of the system. Thus, this activity has the motivation and orientation
to best insure that data adequate for maintenance, reprocurement, and
manufacture are produced by the contractor and accepted by the government. Leon
R. Reed and William F. Furr estimate that fifty data engineering specialists
would be required by AFLC for this task. These individuals would be located at
the contractors’ plants during the preparation of the data.15
The estimated annual cost for salaries and travel for this group of data engineers is $1.4 million. As mentioned earlier in the article, when we are able to use competitive procurement techniques, it is estimated that we save 25 percent of the noncompetitive price. Based on projections for expenditures for replenishment spare parts procurement for FY74 thru FY76, a two percent increase in competition for these procurements will more than compensate for the salaries and expenses of the required data engineers. Obviously, the benefits from improved quality assurance will grow as older systems leave the inventory and a larger share of our replenishment spare parts procurement is in support of systems for which we have adequate data.
Data Acquisition is not an easy or a popular topic, but we have shown the importance of this process. It affects the dollars spent on spare and replacement parts, the manufacturing process, the time required to purchase spares, and our ability to monitor contractor quality.
After describing the data process, we proposed several solutions to our problems. The basic recommendations include: (1) giving better indoctrination to members of the Procurement Method Coding process on the effect of their decisions; (2) improving the comprehensibility and quality of instructions provided to our contractors; (3) reviewing existing data that may be required for future spare parts buys, to increase the prospect of buying either from the ultimate manufacturer or competitively; and (4) improving the quality assurance process.
School of Systems and Logistics, AFIT
Notes
This article is based largely on two master’s theses completed at the School of Systems and Logistics, Air Force Institute of Technology. These theses, Inspection and Acceptance of Contractor-Prepared Engineering Data, by Grant Flint and Franklin W. Jesser, and The Impact of Quality Assurance on the Adequacy of Data for Air Force Reprocurement, by Leon R. Reed and William F. Furr, provide considerably more insight into the area of data acquisition. Copies of the theses may be obtained from the Defense Documentation Center.
The author of this article is responsible for the selection of material made from these two theses, its integration, and the resulting article.
1. U.S. Department of Defense, High Dollar Spare Parts Breakout Program, March 1969, para 3-201.13(b).
2. Robert Price, SMAMA engineer, Interview at Wright-Patterson AFB, Ohio, April 1972.
3. Much of the material contained in this section was obtained from an unpublished paper by Captain Robert N. Lutz entitled “Determination of How Information Is Acquired, Stored, and Transmitted to the Support AMA on the Ultimate Manufacturer of Components of a Major System.” School of Systems and Logistics, Air Force Institute of Technology, Wright-Patterson AFB, Ohio, June 1972.
4. U.S. Department of the Air Force, Management of Contractor Data, 30 June 1969, p. 3.
5. U.S. Department of Defense, High Dollar Spare Parts Breakout Program, March 1969, p. 3.
6. U.S. Department of Defense, Procurement Method Coding of Replenishment Spare Parts, MIL-STD-789B, 15 May 1970, p. 10.
7. Ibid., p. 5.
8. U.S. Department of Defense, Procurement Data Package, MIL-STD-885B, 22 October 1971, p. 4.
9. The fog count is a very simple, yet quite effective, device for determining the readability of a publication. Complete details for use of this device are given in Air Force Pamphlet 10-1, Guide for Air Force Writing, pp. 155-59.
10. Data Management Officers’ Handbook, AFSS, WP AFB, Ohio, 1971, p. 1.
11. ASDM310-1, para 6-1, 2, pp. 6-1, 6-2.
12. AFR 310-1, para 7.d. (2), p. 7.
13. OCAMA-TAFB Regulation 57-I, OCAMA DOD High Dollar Spare Parts Breakout Program, Tinker AFB, Oklahoma, 1971, p. 1.
14. The Competition with Confidence Program stress obtaining engineering data that will facilitate procurement of spare parts with as much competition as possible.
15. Leon R. Reed and William F. Furr, The Impact of Quality Assurance on the Adequacy of Data for Air Force Reprocurement, master’s thesis SLSR-21-73A, 7 March 1973, pp. 109-11.
Lieutenant Colonel David N. Burt (Ph.D., Stanford University) is Assistant Professor of Logistics Management, Graduate Education Division, School of Systems and Logistics, AFIT. He has contributed articles to Journal of Purchasing, Michigan Business Review, and The American City, and presented papers at symposiums of the Air Force and the Society of Logistics Engineers. Colonel Burt is the 1972 recipient of the Society of Logistics Engineers’ Field Award.
Disclaimer
The conclusions and opinions expressed in this
document are those of the author cultivated in the freedom of expression,
academic environment of Air University. They do not reflect the official
position of the U.S. Government, Department of Defense, the United States Air
Force or the Air University.
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