Millville, N.J.–The current budget environment coupled with conflict winding down in Iraq and Afghanistan means platforms–U.S. and internationally–are expected to stay in service longer, which is something fueling more service and support business for Boeing [BA] rotorcraft support, company officials said.
“The business has been growing exponentially,” said Peri Widener, vice president rotorcraft support at Boeing, during a media visit to CH-47 facilities here in Millville, N.J. This is where final Army modifications are installed before the Chinooks head off to their unit.
The whole support effort is about partnership with the customer, listening to them and getting it right in a way that optimizes their budget and the service they need, she said.
The rotorcraft support business is anchored by the AH-64 Apache, CH-47 Chinook and V-22 work domestically, and much work on international rotorcraft. For example, the operation in the United Kingdom has grown so much that it has been spun off as BD UK.
Right now, rotorcraft support has about 1,000 people at 24 locations, eight major sites, and has 20,025 active contracts and eight performance based logistics (PBL) contracts.
The business is “up close and personal,” Widener said. They know the military users, the pilots by name and their faces. “It makes a difference in how we do our work and see the impact.”
The business leverages lessons learned on the commercial aircraft side of Boeing, as well as capitalizing on the synergies among platforms. This allows the company to do such things as investing one time in modeling and forecasting where there are a lot of similarities, then tailoring can be done for a specific platform.
“We give the customer more for less, and capitalize on the complete enterprise,” she said.
The joint Boeing-Bell Helicopter [TXT] PBL for V-22 is in the fourth year of a five-year first phase, and there’s a “handshake” on phase 2 to support the entire platform, from depot maintenance to obsolescence management.
Total system support is part of a 20-year agreement with Canada for their Chinook fleet. “We’ll do everything,” she said.
In the United Kingdom, a 34-year agreement is in place.
The United States typically doesn’t have such long agreements, in part because of how the government does business, she said. Additionally, there’s also concern that tying up the budget for a number of years reduces the government’s flexibility to respond to changes in the environment.
However, flexibility can be structured as part of the contract, Widener said. For example, pricing periods are built in to contracts with both Canada and the United Kingdom. The pricing periods come after a period of three to five years–which the company thinks is optimal–they sit with the customer and assess contract performance and government needs, make adjustments and then renegotiate the price at that point based on what was learned.
There are some “glimmers” of interest in exploring how V-22 might do some innovative support work, she said.
For the Chinook and Apache fleets, particularly internationally, going to PBL contracts are the only economic way to support their fleets. Domestically, the company sees more interest in looking at PBL platform level support.
Rotorcraft support recently completed a second pricing period in the United Kingdom. After the first pricing period, the “dollars per flight hour went down,” and those costs went down again in the second pricing period.
The multi-year PBL approach also allows the supply chain economically so small companies can make a business case to invest in improvements that might be difficult to justify over a two-year contract, but potentially can recoup investment funds over five years.
PBL contracts allow the customer to “get more for less, get higher quality and increased readiness,” Widener said.