SEAPOWER, By RICHARD R. BURGESS, Managing Editor, 15 June 2017
ARLINGTON, Va. — The commander of Naval Air Systems Command (NAVAIR) said that the Navy could save millions of dollars by use of a seven-year multiyear procurement of the V-22 Osprey tiltrotor aircraft and “pulling forward” advance procurement of materials for the F-35 Lightning II strike fighter.
Regarding the idea of an economic order quantity (EOQ) for the F-35, Vice Adm. Paul A. Grosklags, testifying June 13 on the fiscal 2018 budget proposal before the Senate Armed Services seapower subcommittee, said, “What we’re specifically asking for is taking approximately 4 percent of the [fiscal] ’19 and 4 percent of the [fiscal] ’20 EOQ and pulling it forward and executing with the [fiscal] ’18 EOQ. It’s a total across all the services, about $660 million, that we would pull forward.”
Grosklags said the move would enable “Lockheed and the other vendors to buy those long-lead materials and get the economic order quantity cost savings. What outside agencies have told us is the savings associated with pulling that money forward would be about $800 million across the three services, with the reduction in aircraft unit cost. So, it’s not additional money.
“It’s money that would already be spent in [fiscal] ’19 or [fiscal] ’20 for those lots of airplanes,” he said. “It does not commit the services nor the Congress to actually buying a set number of aircraft in those years. So, it is not a multiyear procurement. We are committing to absolutely nothing, other than a cost savings.”
Grosklags also touted the savings that could accrue with a seven-year multiyear program to complete the procurement of the Osprey.
“Typically, we ask for five years for a multiyear,” he said. “Seven years would enable us to buy the remaining total of 67 Navy, Marine Corps and Air Force aircraft that are currently in the three services’ plans, notwithstanding increasing the Marine Corps requirement. Otherwise, if we just got the five-year multiyear, we would have about 20-plus aircraft hanging out two years.
“The savings get us to 10 percent per aircraft,” he said. “We’re looking at about $650-plus millions of savings across that seven-year multiyear. It is a bit unusual to ask for seven vice five, but we think it’s justifiable giving the savings and the fact that if we leave two years hanging out at the end, those aircraft will certainly cost us more than if we were able to include them in the multiyear.”