Cover: Management of U.S. Air Force Aircraft Contractor Logistics Support Arrangements

Management of U.S. Air Force Aircraft Contractor Logistics Support Arrangements

Summary of Findings and Recommendations

Published Apr 17, 2024

by Thomas Light, Dwayne M. Butler, Michael Boito, Vikram Kilambi, Kristin J. Leuschner, Sheng Tao Li, Abby Schendt, Sunny D. Bhatt

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Research Questions

  1. What are the drivers of growth in CLS support costs?
  2. What can the Air Force do to manage the growth of these costs?
  3. Are CLS arrangements cost-effective relative to organic aircraft support?

Between fiscal years 1996 and 2017, U.S. Air Force (USAF) spending on contractor logistics support (CLS) grew from 6 percent to 21 percent of aircraft operating and support costs. Although CLS constitutes one of the fastest-growing elements of aircraft operating and support costs, USAF leadership has had limited visibility into the drivers of those costs, leading to uncertainty about what the Air Force can do to manage the growth and whether such arrangements are cost-effective relative to organic support. RAND Project AIR FORCE analyzed cost data for CLS and organically maintained fleets, reviewed product support business case analyses, synthesized findings from reports published by the U.S. Government Accountability Office and Department of Defense (DoD) Inspector General on CLS, and interviewed subject-matter experts within DoD.

Key Findings

CLS costs have risen with CLS use

  • Since the mid-to-late 1990s, the USAF has opted to use CLS to support most new fleets, explaining much of the growth in CLS costs.
  • After controlling for fleet mix, size, and flying activity, rates of cost growth for organically and CLS-maintained aircraft are similar, averaging around 4 percent per year more than economy-wide inflation (as measured by the GDP deflator) from 1996 to 2017.

CLS may cost more than organic support arrangements but can have offsetting advantages

  • CLS was found to be more costly than organic support arrangements in seven of nine product support business case analyses (PS-BCAs) reviewed. Many PS-BCAs also noted, however, that CLS is likely to offer higher performance and/or lower risk than organic support arrangements.

The Air Force has limited power to control costs on large CLS contracts

  • Lack of technical data and suitable competitors, as well as limited tools to create incentives for efficiency and innovation, limits the Air Force’s ability to control costs on large CLS contracts.

Recommendations

  • Formally track and disseminate lessons learned and best practices related to CLS.
  • Consider transitioning some CLS arrangements to multiple-year contracts.
  • Provide additional training focused on managing CLS contracts.
  • Provide resources to stand up an independent, organic capability to conduct PS-BCAs.
  • Establish a process for deciding the timing and extent of PS-BCAs.
  • Ensure the integration of processes to manage and evaluate public-private partnerships with weapon system product support.

Research conducted by

The research reported here was commissioned by the U.S. Air Force (USAF) and conducted within the Resource Management Program of RAND Project AIR FORCE.

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