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The Secretary of Defense Performance-Based Logistics Awards Program For Excellence in Performance-Based Logistics In Life Cycle Product Support Section 1 Nomination Nominating Organization: Naval Inventory Control Point 5450 Carlisle Pike Mechanicsburg, PA 17055 POC: Mr. Neil Hanniford Phone Number: DSN 430-5212, Commercial (717) 605-5212 Email: [email protected] Award Category: System Award Year: 2010 Date: 4 June 2010

Nominee: PHALANX Close-In-Weapon System (CIWS) Performance-Based Logistics (PBL) Team NAVICP Mechanicsburg POC: Don Siko, Program Manager, Code 85353 Phone Number: DSN 430-2683, Commercial (717) 605-2683 Email: [email protected] Team Members: Naval Inventory Control Point (NAVICP) Mechanicsburg, PA Neil Hanniford, Director, HM&E, Communications, Surveillance and Combat Systems Gary Willow, Supervisor, Combat Systems Donald Siko, Program Manager Gary Hughes, Program Manager Bruce Willier, Inventory Manager James Clark, Provisioner Timothy Albright, Technical Sandra K. Jackson, Project Manager Robert Wolfe, Director, PM Division, Logistics Execution & Plans Department Madeline Moore, Contracting Officer Eric Krieder, Supervisory Contract Specialist Mike Furry, Senior Contract Specialist

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Jerome Burston, Senior Contract Specialist Judy Mahoney, Director, Material Budget Jane Wagner, Financial Management Analyst Michael Troy, Financial Management Analyst Meagan Consedine, Legal Representative Kelly McKallagat, Legal Representative Gary Waldrop, Price Fighters Raytheon Missiles Systems Company (RMS) Tucson, AZ Kathleen Muse, Program Director Robin Featherston, Contracts Administrator Michelle Denning, Contracts Administrator Raytheon Missiles Systems Company Louisville, KY Matt Atkinson, PBL Program Manager Rick Basham, Deputy Director Mission Support Programs Brandon Briscoe, Logistic Engineering Heather Craven, Item Manager Patty Embry, Transportation Coordinator Marc Inman, Logistic Engineering Team Lead Dorothy Kuyk, Logistics Analyst Mike Lamb, Life Cycle Support Lead Glynn Neal, PBL Team Lead / Supplier Manager Ronda Nuanez, Item Manager Kevin Savage, Item Manager John Sexton, Logistics Engineering Lance Tincher, DCS Spares NAVSEASYSCOM -- PEO-IWS3B Washington DC Dave Dutton, CIWS Deputy Program Manager Robert Grahovac, CIWS Acquisition Manager CAPT Jack Noel, CIWS/RAM Program Manager Derek Millis, CIWS Program Manager Naval Surface Warfare Center (NSWC) PHD DET Louisville, KY Tim Morris, Maintenance Planning Branch Head Rodney Snellen, Tech Support

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The Secretary of Defense Performance-Based Logistics Awards Program For Excellence in Performance-Based Logistics In Life Cycle Product Support Section 2 Summary of Criteria Accomplishments Warfighter-Based Capabilities and Outcomes Mission Success: The PHALANX Close-In-Weapon System (CIWS), shown in Figure 1, is a self-contained and versatile defensive weapon system proven to meet the shifting At-Sea and now Ashore Missions of on-going U. S. Overseas Contingency Operations. CIWS mounts a M61A1 Vulcan (Gatling-type) gun firing 20mm, high-density, penetrating projectiles with a 4,500 rounds per minute rate of fire. The system features closed-loop, advanced radar and computer technology, to provide an autonomous, automatic terminal defense weapon system designed to detect, track, and engage fast-moving targets, thereby protecting ships and their crews against an increasing number of threats including small, fast gunboats; standard and guided artillery; helicopters; mines and a variety of shore-launched, anti-ship missiles. CIWS has recently been configured with the added shipboard agility to train onto and neutralize close proximity waterborne threats. The U.S. Army is successfully operating 31 Land-Based PHALANX Weapons System (LPWS) platforms, shown in Figure 2, on dedicated, mobile carriages. In March 2000, the performance-based supply support function was awarded under a five-year, fixed price Performance Based Logistics (PBL) contract to Raytheon Missiles Systems (RMS), the developer and Original Equipment Manufacturer (OEM), with a follow-on five-year contract awarded on 1 April 2006. Because Raytheon has performed in an outstanding manner during the successful, prior contracts, a renewal initiative is anticipated for award in March 2011.

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The Government needs CIWS to support our war fighters. The current PBL contract is a fiveyear base with a price of $240M. The contract covers approximately 1,172 line items and performs a broad range of functions, including requisition support. Material Availability: Since the inception of the NAVICP CIWS Raytheon PBL contract, customers have enjoyed unparalleled levels of support. Raytheon provides Total Logistics, all maintenance and repair to the CIWS systems, world-wide, while sustaining delivery availability standards of less than 24 hours for CASREPS, while all other requisitions must be made available for shipment or actually shipped within the contractually identified metric timeframes 90% of the time. Through the CIWS team's collective and well-orchestrated efforts, Raytheon's performance has achieved steady improvement and outstanding support to the Fleet by sustaining greater than 93% operational availability (A o ). Since the inception of the joint government/industry PBL supply chain management, backorders were reduced dramatically from 300+ to an average of nine per year (and those only on unforecasted demands), thus exceeding performance metrics. Material Reliability: Over the course of the CIWS PBL contract, Raytheon's approach to design for supportability is a continuous, closed-loop process that results in high-quality products optimizing reliability and maintainability. Currently, 270 PHALANX systems are installed on 210 U.S. Navy and Coast Guard ships. With roughly 25 ships and more than 20,000 sailors deployed in the CENTCOM area of operations, these requirements are critical for our Navy war fighters. The CIWS is also in use in 20 foreign Navies. Although a discreet performance metric is not cited for Mean Time Between Failure (MTBF)/reliability enhancement, Raytheon has the opportunity for improvements in reliability and maintainability via approved Government configuration changes as part of the PBL CIWS program. The list of items would be dynamic as

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MTBF is improved and items are dropped and more added. Reliability is inherent in the fixed price nature of the contract. Ownership Cost Management: The Naval Inventory Control Point's business case analysis estimates that the CIWS Raytheon PBL is projected to provide a cost avoidance of approximately $2.2M over the five-year contract period. Savings are attributed to Raytheon's drastic inventory reorder level reductions, which are achieved through time-sensitive inventory modeling. This PBL performance strategy seeks low risk yet streamlined operation, which not only reduces the Government's inventory investment but also has the capability to provide an integrated product life cycle approach to lower the cost of ownership over time. Sustainment of War Fighter Capabilities: Within a year of the award of the 2005 CIWS PBL contract, the Army deployed the Land-Based PHALANX Weapons Systems in support of Operation Iraqi Freedom and Operation Enduring Freedom, resulting in an initial increase in demand of 18% over fleet use only. As deployments of the Land-Based system continued, demand rose to a level 32% above previous, Fleet use. Despite the substantial increase in demand, SMA continued to improve to the current, 93% fill rate. Public Private Partnering: The NAVICP Mechanicsburg government/industry relationship with Raytheon began in March 2000, and has afforded the Fleet stable and excellent Supply Support performance. Raytheon Louisville functions as the Inter-service, Integrated Material Support Provider and Configuration Manager. Raytheon is no longer just a supplier of parts; the company is a government partner in supply chain management, with responsibilities shifted from the usual, government activities to Raytheon. As part of the PBL, Raytheon Louisville partnered with United Parcel Service (UPS) Supply Chain Management Group to provide a range of logistics functions, including inventory decisions made on the basis of a self-developed

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inventory model for the repair and/or manufacture of all items in order to meet the availability requirements. Through this partnership, Raytheon stocks, repairs, stores and ships serviceable equipment directly to the user, upon demand. System Engineering Approach: Raytheon's Logistics Engineering group develops the maintenance concept for CIWS. The group is responsible for developing and maintaining Provisioning Technical Documentation (PTD), and has been the exclusive design agent since the inception of the program--Raytheon's engineering and manufacturing skills place the company in a unique position to identify and resolve hardware problems in a proactive manner. Raytheon has designed and manufactured three major configurations of CIWS that continue to meet emerging, offensive Fleet threats. Because of the credibility established by Raytheon through superior performance, Raytheon is authorized to incorporate Class II changes without the usual governmental chain of approval. The Raytheon PBL team developed a repair production line software program which enabled them to identify high failure piece parts replaced during the repair process, allowing Raytheon to focus on true failure modes and determine what reliability improvements were required. Footprint Reduction: With the CIWS Raytheon PBL contract, the government/contractor team is able to fully focus on supporting Fleet requirements and reducing the administrative processes employed under traditional support. Prior to PBL, there were lengthy administrative delays for orders, as the government and contractor team participated in research, proposals, negotiations and awards. The nature of the PBL long-term contract allows the contractor greater decision making authority, thereby decreasing administrative time. Changes in demand no longer require a new contract or delivery order; the PBL contractor has the sole authority to make the requirements determination.

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Obsolescence Management: Raytheon is required to support all valid CIWS requisitions, including instances where Diminishing Manufacturing Sources (DMS) and obsolete piece parts issues delay or prohibit acquisition of necessary parts. As the OEM, Raytheon has the ability to apply long range insight to obsolescence issues. The PBL contract tasks Raytheon with the following roles and responsibilities which were previously governmental functions: receive, warehouse and track government owned assets; perform requisition processing, requirements determination, customer delivery tracking, and supplier management; final assembly inspection and all aspects of inventory management; and obsolescence management. Reliability, Maintainability and Supportability Improvements: The integration of engineering and logistics disciplines allows Raytheon to be proactive in accomplishing configuration changes and software updates. Raytheon initiated an upgrade to the repair process for the CIWS High Power Amplifier (HPA), a high-cost, fleet replaceable unit. Steps were taken to improve the reliability of the major sub-assembly of the HPA, and changes to the final test procedures were implemented. A reduction of Fleet requisitions was anticipated as more of the improved units were introduced via routine attrition. Raytheon's analysis became an ongoing process with the introduction of the production line software monitoring system. Since the initial award of the PBL contract, the Fleet has been very enthusiastic regarding the substantially improved support realized through Raytheon's efforts.

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Figure 1: PHALANX CLOSE-IN-WEAPON-SYSTEM (CIWS)

Figure 2: LAND-BASED PHALANX WEAPON SYSTEM (LPWS)

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The Secretary of Defense Performance-Based Logistics Awards Program For Excellence in Performance-Based Logistics In Life Cycle Product Support Section 3 Nomination Endorsements Approval Endorsements:

_______________________________________ Commander, NAVSUPSYSCOM

__________________ Date

_______________________________________ Office of Asst Secretary of Navy (RD&A)

__________________ Date

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The Secretary of Defense Performance-Based Logistics Awards Program For Excellence in Performance-Based Logistics In Life Cycle Product Support Section 4 Achievements

The over-arching objective of the CIWS PBL is to improve supply material availability and contractor response time, which intrinsically improves readiness and availability support to our War Fighters. The CIWS PBL five-year period of performance is considered optimal to afford the Fleet the stability and excellence of PBL support through allowing Raytheon to make discretionary reliability enhancements and amortizing the associated costs, improving efficiency and responsiveness to the fleet by incorporating rapid technology changes. The Government realizes cost savings through efficiencies and single source of support. To date, performance has consistently exceeded the NAVSUP goal of 85% with a Fill Rate of 93% or higher. Through an integrated engineering and logistics approach, the CIWS PBL team has developed a responsive and flexible supply chain with a long history of innovative supply support solutions and outstanding Fleet support. The CIWS PBL Team has established a world class PBL program providing exceptional performance and global support to both U.S. and Foreign Military Navies. The CIWS Supply Support Program is truly an acquisition reform success story and underscores the value of teamwork. This PBL strategy seeks low risk yet streamlined operations, reducing the Government's inventory investment with the capability to provide integrated product life cycle management lowering the cost of ownership over time.

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