Magazine article National Defense

Buying Simulations: Congress Says Service Contracts No Longer Allowed

Magazine article National Defense

Buying Simulations: Congress Says Service Contracts No Longer Allowed

Article excerpt

A new law that effectively bans the Defense Department from outsourcing the operation of flight simulators is casting serious doubts on military plans to expand the use of these devices.

Following a congressional investigation of the Air Force and Army practice of buying training as a service, lawmakers concluded that these contracts are a bad deal for taxpayers, and directed the Defense Department to only purchase training simulators under the traditional rules of military procurement.

"The secretary of defense may not enter into a service contract to acquire a military flight simulator," states the fiscal year 2007 defense authorization bill.

The widespread use of simulation service contracts for years has been lauded as smart business, supporters say, because it allows the military to spread out the cost over many years, rather than pay for the hardware upfront. Military officials also like the arrangement because it shifts to contractors the responsibility of maintaining the simulators and of keeping the technology up to speed with commercial advances.

Many members of Congress, however, dislike service contracts, as they make it more difficult to track expenses and itemize costs. The oversight of simulation service contracts is made uniquely complicated by the lack of a standard method of measuring costs and performance, according to the Government Accountability Office.

In a September report, the congressional watchdog agency denounced the use of simulation service contracts as currently structured, and called for the Defense Department to exercise more oversight over these projects.

The GAO findings and subsequent move by Congress to outlaw service contracts are particularly bad news to the Air Force. They deal a potentially deadly blow to a decade-long effort, known as the "distributed mission training" program. DMO began in the late 1990s, at a time when the military was downsizing, and the outsourcing of services was all the rage.

Under DMO contracts, companies were awarded long-term deals to provide state-of-the-art simulator training on-demand at the location of the trainee, with the ultimate goal of networking different sites together to create more realistic flying scenarios. Plans called for each fighter unit eventually to be equipped with high-fidelity simulators.

When the DMO program was launched, the Air Force was operating obsolete simulators and its procurement dollars were dwindling. Simulator services from contractors could be funded by operations and maintenance dollars, rather than from acquisition accounts. Another key selling point for the Air Force was the reliance on contractors to keep the simulators concurrent with aircraft upgrades.

The simulators in the DMO program include the F-15C, F-16, Airborne Warning and Control System (AWACS), and F-15E.

In 2003, the Army followed the Air Force lead and awarded a service contract to obtain simulator training for the helicopters in its Flight School XXI program. The approximate value of the Air Force and Army contracts, GAO estimated, is nearly $2 billion. For fiscal year 2006, the Air Force budgeted $200 million for DMO services.

Current DMO facilities include five F15C, five AWACS and six F-16 sites. The Boeing Co. operates the F-15 simulators; Plexsys Interface Products is the contractor for the AWACS simulators; and Lockheed Martin runs the F-16 training centers.

In each of the DMO contracts, GAO concluded, the Air Force is not getting its money's worth. "The decision to use service contracts was not supported by a thorough analysis of the costs and benefits of this approach versus alternative approaches."

As an example of the pitfalls associated with service contracts, GAO cited the F-16 training program. As early as May 2001, Lockheed Martin notified the Air Force that it was unable to provide simulator services as originally agreed and wished to restructure the contract. …

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