The senior civilian overseeing the U.S. Air Force says the service is spending too much money on support contracts, and some of this work may be subject to fixed price contracts in the future or be shifted back to government entities for execution to contain costs.

In the 1990s the trend was to contract out services, including maintenance or oversight of some aircraft fleets, to contractors. The assumption then--the era of the total system performance responsibility (TSPR) contract--was that commercial industry could maintain aircraft or provide services, such as grounds care, at less expense.

TSPR has since been largely scrapped for giving too much oversight to the contractor for development programs, which exposes the government to unwanted cost growth. The government is now embracing more fixed price contracts in an attempt to shift some risk to the contractor and reduce cost overruns.

Now data is in on this trend from the 1990s. Air Force Secretary Michael Donley says "the pendulum has swung the other way" because in some cases "our business case tells us that we are spending more than we should be spending in some of those areas."

The major Pentagon contractors--from Lockheed Martin to L-3 Communications to Boeing--have been structuring their organizations to capture lucrative services contracts, but the business case may have to change.

"We have some cases where we have come back after 15 or 20 years and there has been cost growth in some areas where we have concluded from our business case analysis we could actually do the work in-house," Donley said during an interview with Aviation Week. "We think we could be working harder to contain costs. I think this is something that deserves closer attention on our part."

With regard to fleet maintenance, the military services are subject to a law--dubbed the 50/50 law--that requires no more than 50 percent of its maintenance be executed outside their own depot facilities. Donley says the service is not in jeopardy of breaching this law. In the early 2000s the Air Force waived its compliance to the rule and breached it multiple times. But this law is not driving Donleys interest in reviewing service contracts. Rather, he says he is concerned about efficiency.

Donley declined to identify specific programs that may be subject to a change in maintenance approach. However, he said he is looking at depot and program management functions. "If you look back about 10 or 15 years, we started contracting out because we felt like the contractor could do the work more efficiently than we could internally," he said, noting that is no longer the assumption in the Air Force.

Photo credit: USAF