Boilers - Enclosure 1 - May 2018 Category Intelligence Report.pdf

Category Intelligence Report (CIR) HVAC and Controls

U.S. Air Force

Air Force Installation and Mission Support Center (AFIMSC)

Air Force Installation Contracting Agency (AFICA)

Air Force Civil Engineer Center (AFCEC)

Version 1.0

30 May 2018

APPROVED:

__________________________________________signed/date Lt Col Michael Brannon Category Lead and CIR Team Lead, Deputy Director, Operations, AFCEC/CO2

DOCUMENT CONTRIBUTERS

Lt Col William McLaughlin Operations Maintenance Division Chief, AFCEC/COO

SMSgt Mark Morgan and MSgt Edson Andrade HVAC Force Development Manager, AFCEC/COF

Mr. Tom Adams and Mr. Hugo Gutierrez HVAC and Mechanical Systems Subject Matter Expert, AFCEC/COSM

Mr. Andrew Carmean and Mr. Paul Townsend HVAC Sub-Activity Manager, AFCEC/COAF

Ms. Patricia Perrine Acquisition Program Manager, AFCEC/CPE

Mr. Rafael Hervas Strategic Sourcing Project Manager, AFCEC/CPE

Ms. Monica Monfette Strategic Sourcing Liaison, AFCEC/CPE

Mr. Russell Weniger Enterprise Manager, AFIMSC/IZBS

Mr. Randall Parker Civil Engineer Division Chief, AFIMSC Det 6

Capt Sean Marshall Civil Engineer, AFIMSC Det 6

Mr. Edward Young Civil Engineer, AFIMSC Det 6

Ms. Shanae Miller Acquisition Program Manager, AFICA 771 ESS/EGA

Mr. Gary Koenig

6 June 2018

Program Manager, AFICA 771 ESS/EGB

Mr. Steve Brady Category Management Program Support Office Branch Chief, AFICA/KA

Mr. Darin Ashley Category Management Program Support Office Research Analyst, AFICA/KA

Table of Contents

ABSTRACT ……………………………………….....…………………………………. 5

EXECUTIVE SUMMARY …………………….....…………………………………….. 5

INTRODUCTION ………………………………………………………………….....… 7

BACKGROUND ……………………………………………………………….....…….. 7

CIR PROCESS ……………………………………………………………….....………. 8

CHEVRON 1 – SPEND ANALYSIS ……………………………………......………

HISTORICAL SPEND ANALYSIS ………………………………......……………. 10

DATA SOURCES

CONTRACT DATA

IWIMS DATA

DERIVED CATEGORIES

TOTAL SPEND SUMMARY

YEARLY SPEND

CATEGORICAL SPEND

WORK DESCRIPTION

MANUFACTURERS

SUPPLIERS AND SOCIO ECONOMICS

CATEGORY MANAGEMENT, PSC AND NAIC

IN-HOUSE SPEND SUMMARY

IWIMS

SPEND ANALYSIS CONCLUSION

CHEVRON 2 SUBJECT MATTER EXPERT ANALYSIS

TECHNICAL GUIDANCE AND MANAGEMENT

TOTAL COST OF OWNERSHIP MODEL

CURRENT USE ANALYSIS

BUILDER DATA ANALYSIS

SME ANALYSIS OF PROCUREMENT FACTORS

2012 BASE’S OBSERVATIONS AND ANALYSIS

SME ANALYSIS RECOMMENDATION

CHEVRON 3 MARKET ANALYSIS

CHILLERS AND CONTROL SYSTEMS MARKET DATA REPORT

CHILLERS INDUSTRY REPORT

CONTROLS INDUSTRY REPORT

INDUSTRY SURVEYS

LARGE PORTFOLIO MANAGERS OUTSIDE THE USAF

MANUFACTURERS OF CHILLERS

MANUFACTURERS OF CONTROLS

DISTRIBUTORS OF CHILLER AND CONTROL PRODUCTS OF THE USAF ... 47

MAINTAINERS OF USAF FACILITIES

CHEVRON 4 GAP ANALYSIS

CHEVRON 5 COURSES OF ACTION

CONCLUSION

APPENDICIES

ATTACHMENTS 54

ABSTRACT

The Air Force spends significant money on Heating, Ventilation, and Air Conditioning (HVAC) purchases; it is a major expense in overall building maintenance and energy costs. This analysis will provide all readers with a high level overview of how the Air Force procures HVAC; what we buy, how we buy it, and where we buy it from. Moreover, the primary goal of this analysis is to provide an “As-Is” look at HVAC costs; thereby providing the HVAC Category Management (CM) Category Intelligence Report (CIR) team a solid baseline prior to conducting analysis of market conditions and approaches by purchasers similar to the Air Force. The analysis concludes by identifying gaps and courses of action that can close the gaps.

EXECUTIVE SUMMARY

This report is a joint initiative between Air Force Installation and Mission Support (AFIMSC), Air Force Civil Engineer Center (AFCEC), and Air Force Installation Contracting Agency (AFICA) to gain practical knowledge and experience in how the Air Force manages HVAC systems. The CIR is a detailed analysis that includes historical spend analysis, Subject Matter Expert (SME) data analysis, market analysis, gap analysis, and course of action recommendations.

The HVAC subject matter is extremely broad. Following the Spend Analysis and initial SME interviews, the HVAC analysis focused toward HVAC Chillers and Control Systems. These two items represented the largest spend (Chillers) and the largest growth area (Control Systems). For both these sub-systems the Air Force owns and operates the equipment for its entire lifecycle, provides personnel training, logistics support, and cyber security protection for the long-term operations and maintenance required for optimal system life. Acquisition of the systems has been managed as part of the initial construction of a facility or as part of a Sustainment Restoration and Maintenance (SRM) project for a facility. System requirements were required to be generic to allow for full-and open competition amongst all vendors and manufacturers.

Acquisition was treated as if the only cost was the initial purchase, similar to a disposable commodity purchase. The analysis of Total Cost of Ownership (TCO) shows the past focus on initial purchase price and unrestrained competition has led to a higher TCO when the training, logistics, and security costs for owning disparate systems are added. Additionally, it was found that there is no enterprise program management for facility real property installed equipment commensurate with weapons systems that would have similar life-cycle. Cyber security of the control systems being installed throughout the Air Force is also highlighted as an immediate need where costs and risk increase with manufacturer variability. SME Analysis concluded that local (base/installation-level) attempts for Justification and Approval (J&A) were denied due to lack of justification or refusal to accept the justification by local Contracting Officers (CO) for the relatively small dollar system purchases. However, when the justification is aggregated at the Air Force-level, it becomes much more defensibly justified with the TCO.

The Air Force Energy Flight Plan and the Air Force Materiel Command Energy Assurance Campaign Plan lists the various Control Systems (HVAC and beyond) as a critical mission components that are vulnerable to, and targets for attack. Attacks can cause mission failure, extended operational impacts, and physical damage to critical infrastructure, as well as provide a foothold for additional attack vectors into other Information Technology (IT) systems.

Operational Technology (OT) is IT adapted to directly monitor and/or control physical devices, processes, and events. In OT systems, availability, also known as “uptime” is the primary concern versus traditional IT, which place a higher value on confidentially. Legacy Control Systems were never designed to operate in a contested environment, thus it is imperative to secure these systems through retrofit or replacement. The market analysis shows that choosing a standard system to install will result in the best system to train, secure, and operate.

The final recommendation is to standardize HVAC Chiller and Control System manufacturers by base to significantly reduce the Air Force’s TCO. Implementing standardization based on TCO at the installation level allows for small-business vendor competition to remain the primary source for purchase. The analysis shows that the Air Force is already near-standardized to three manufacturers’ systems, and could reduce spend by making a formal announcement of the intent to allow standardization at the installation level. The method for this action could be a policy memo form the AFICA/CC or SAF/AQC. There are many positive expected outcomes anticipated after standardization covered in detail in the Courses of Action section of this report, with a savings estimate topping $250M over 10 years being realistic. Additionally, this TCO analysis should be applied to all long-lifecycle Real Property Installed Equipment, essentially treating or Air Force Installations as a weapon system.

Facility Related Control Systems (FRCS) should be analyzed to a point where an authorized products list is created and maintained as part of the Unified Facility Criteria. The Air Force Civil Engineer Center is prepared for this follow-on effort, and an authorized products list will further enable fielding of FRCS and cybersecurity of the networks and data connected to the controls.

INTRODUCTION

The purpose of this document is to report the findings of the category intelligence report (CIR) team for PSC Code 4120, Air Conditioning Equipment to Support Air Force (AF) interest and value in addressing the acquisition and maintenance of Heating, Ventilation, and Air Conditioning (HVAC), systems. A CIR is a robust, 360-degree analysis of history, consumers, and markets to determine AF opportunities to increase the capability per dollar spent. The CIR is executed by a multifunctional team with the following skillset; program/acquisition management, business analytics, contracting, operations research, and functional domain subject matter experts.

BACKGROUND

The Air Force owns, operates and maintains thousands of Real Property Installed Equipment (RPIE) HVAC systems, that are vital to AF mission success.. These systems facilitate control of the interior environment of facilities in terms of temperature, humidity, and air quality. Control of these environments is vital, as there are many primary mission processes, ranging from the application of low-observable (“stealth”) coatings to aircraft to the cooling of satellite communications nodes, which rely on a strictly controlled interior environment to continue to function. Failure of the HVAC system at one of these key facilities leads to failure of the mission itself, warranting an examination of HVAC as an extension of the weapons systems it enables.

HVAC systems are composed of a variety of types and components that are designed to work in concert to control the interior environment of the facility. As the name suggests, the systems are comprised of components that perform heating (i.e. boilers, furnaces, heating coils), ventilation (i.e. duct work, vents, air handlers, fans), and air conditioning (i.e. chillers, split unit systems, package unit systems, window AC units) for the facility (or multiple facilities in the case of central steam plants) to which they are assigned. Also, included in the overall HVAC system are the various control systems needed to operate and optimize this equipment; which may be stand-alone or is commonly networked and remotely operated.

Currently, HVAC systems are purchased and maintained by the Civil Engineering (CE) Community as individual items. Category Management allows an opportunity to consider HVAC on all installations/bases as one “larger system”; with the goal of gaining efficiencies in cost, performance, and resilience. Large cost reduction opportunities are found when the focus broadens from only the initial procurement of the HVAC system(s), and expands to consider the maintenance and repair cost of HVAC systems as well. Proper maintenance and repair will reduce system downtime (increasing uptime and reliability) and will result in life-cycle cost efficiencies. Through historical analysis, the CIR team will show that, although “initial” cost of an HVAC system is undoubtedly important, the overlooked maintenance and repair cost throughout the lifecycle of the system often costs at least 5 times more than the initial price;

therefore, the team examined those costs. The team developed actionable business intelligence based upon a historical spend analysis, subject matter expert (SME) data analysis, market analysis, and gap analysis. The CIR team then used the business intelligence to formulate potential courses of action (COAs). Potential COAs should consider initial costs; however, the savings will be increased if the COA helps optimize HVAC system performance, as well as the performance of the HVAC technicians responsible to maintain and repair the systems. The main focus of the CIR Team is to reduce total cost of ownership to effectively maximize the positive impact every AF dollar spent on HVAC systems.

CIR PROCESS

The CIR process is divided into 5 steps; Historical Spend Analysis, SME data analysis, Market Analysis, Benchmarking and Gap Analysis, and Develop Courses of Action. Figure 1, below, depicts the AF CIR process.

Historical Spend Analysis is intended to produce a comprehensive understanding of the AF historical spend patterns with respect to HVAC systems. This step will provide an increased knowledge of the consumptions patterns, historic supply base, current acquisition strategies, top suppliers, and regional requirements for HVAC systems.

Analysis of SME Data will develop a comprehensive view as to how the Air Force functional area plans, specifies, prioritizes, manages, acquires, and tracks requirements of the goods or services.

Market Analysis will analyze the market to discover who the major suppliers are and to better understand the market conditions for HVAC systems.

Benchmarking and Gap Analysis guides the team through a process of understanding the current state of HVAC systems in the AF and provide a desired future state. Attributes and

Figure 1 Category Intelligence Report Process performance levels as they exist in the current state should have been determined in the Historical Spend Analysis and the Analysis of SME Data modules (Benchmarking). The Market Analysis will help the team understand what, if anything, is being done differently in the private sector or among similar consumers. Gap analysis is the examination of states of being, both current and desired, to help tailor the steps to be taken in order to get the Air Force from where it is, to where it hopes to be.

Develop Courses of Action provides the process to develop, screen, and prioritize potential COAs in response to the gaps identified in the previous step. The team will synthesize all of the information collected in previous modules to this point to provide concise, specific courses of actions for senior leadership. This includes identifying relevant information while filtering out irrelevant data, developing specific COAs to address known gaps between the AF and industry, and evaluating COAs based on feasibility, risk, and cost-benefit analysis.

CHEVRON 1 – SPEND ANALYSIS

INTRODUCTION

The first chevron step in the Category Intelligence process is to gain insight from our current procurement methods and spending patterns for HVAC across the AF through a Historical Spend Analysis. The scope of this analysis is Construction Specifications Institute Master format Division Twenty-Three (23), HVAC involving the acquiring, operating, maintenance and repair of HVAC systems across the AF. The basic questions to be answered are:

• What is the data quality for HVAC systems?

• How much did the Air Force Spend in HVAC over a 5 year period (FY 2012-2016)?

• What HVAC systems/components/services does the Air Force buy?

• Who is buying HVAC for the Air Force?

• From whom is the Air Force buying HVAC products? (vendors/suppliers)

• What manufacturers and models is the Air Force buying?

PURPOSE

The team examined a five-year historical period (Fiscal Years (FY) 2012-2016) of both contract and in-house procurement spend data to better understand the “As-Is” state of how CE currently procures and manages HVAC systems. The data revealed to the team current HVAC vendors, manufacturers, and components purchased. Then the spend analysis findings are combined with SME Analysis to round out the “As-Is” state. While compiling and combining the Spend Analysis and SME Analysis, the CIR team simultaneously conducted market research to benchmark with industry and improve cost, quality, and performance.

HISTORICAL SPEND ANALYSIS

The greatest challenge the data sets present is a lack of consistency in entry either with a lack of naming conventions or detail for many actions. Therefore, filtering data by searching with the term “HVAC” routinely produces entries/instances where the exact commodity or service purchased is still unknown. For example, “Repair HVAC System for Building 1” describes that “some” type of HVAC repair occurred; however, it is not clear what component of the HVAC system(s) in Building 1 was repaired.

Product Service Codes (PSC) and Federal Supply Codes (FSC) are also known to be a challenge, in part for similar reasons. These codes are selected based on the contracting officer’s opinion on which fits best. Some contracts should or could have multiple codes to annotate various services/commodities that were purchased; however, often only a single code that represents the predominant work is used. For example, a contracting officer procuring cooling for a server room, while this would fall under HVAC, may aggregate the cooling components with the IT spend (since the IT was the preponderance of the project). This example shows how HVAC data may be absorbed in different code/categories. To avoid unreasonable delays in the report process, the team accepted that the majority of the HVAC contract spend has been correctly categorized under Facilities and Construction category.

Some items have names (pump, piping, etc.) that cross over into different crafts/trades and the details may not clearly identify if the contract was truly a HVAC related purchase. For example, “purchase pump” offers no distinguishing factor that allows the item to be classified under HVAC, as it could be plumbing, or some other craft/trade that would also use a “pump.”

Despite these known challenges, and based on the large volume of data the team collected and analyzed, there is high confidence that the trends and patterns revealed, and influencing the proposed COAs, is representative of actual current state.

DATA SOURCES

The team used data from three major IT database systems to perform this spend analysis:

• BUILDER – the facility-related Sustainment Management System (SMS) used to track the condition of facilities and attempt to predict degradation to enable investment decisions. The program has an inventory of facility systems and components and allowed the team to examine patterns of usage and procurement; particularly, the number of each manufacturers’ systems on a given base showing both concentration and variety.

• Interim Work Information Management System (IWIMS) – the work management and procurement system used by the Base Civil Engineers to manage the government work force (military and government civilian technicians) performing maintenance and repair work on a base. IWIMS includes materiel control functions that allow it to capture data pertaining to the procurement of parts and supplies, including those used for HVAC work. IWIMS does not, however, reliably attribute labor cost; therefore, reported costs would need to be increased by a factor of two to three to account for labor performed for maintenance.

• Air Force Business Intelligence Tool (AFBIT) - AFBIT is an interface that allows users the ability to analyze, categorize, characterize, display and report AF contract obligations in an interactive environment. The tool includes a Structured Query Language (SQL) database that is a repository for contracting data elements from various systems as illustrated in Figure 2, AFBIT Data Structure.

Figure 2 below displays the sources that feed the larger AFBIT structure. Two of the contract data elements used to complete this analysis were pulled from AFBIT, the specific tables are as follows:

• Federal Procurement Data System – Next Generation (FPDS-NG). This is the authoritative data source for the Federal government. It was used to determine dollar values and actions. FPDS-NG provides the contract level data overview. It rolls up all line items and only reports the full contract dollar amount, offering no details at a Contract Line Item level (CLIN) level.

• Contracting Business Intelligence Service (CBIS) CLIN data - these data are used to help determine what was purchased in a contract and is able to provide a greater level of detail than FPDS-NG alone.

The AFBIT data will capture nearly all new installations of systems and major repair actions where the work was accomplished by contract.

CONTRACT DATA

Contract data captured the installation and major repair spends for HVAC. The data pull was done using a SQL query on AFBIT. Through research on outreach systems, it was found that PSC “4120 Air Conditioning Equipment” would be used for the primary PSC code. AFBIT was then searched for all data including the assumed pre-dominate NAICS code “238220 – Plumbing, Heating, and Air Conditioning”.

Keywords are also established to help pull all data that could fall outside of the two selected codes. The keywords are searched through five data fields in AFBIT:

• Description of requirements – this field is a contract level field that is used to describe what is being purchased on the entire contract.

• CLIN Description – this field is used to shortly describe a contract line item

• Extended CLIN Description – this field is a long description for a contract line item

• AFBIT CLIN Description – this field is created by AFBIT to correct undescriptive contract line items from the CLIN Description field, such as “Funding For” items.

• AFBIT Extended CLIN Description – this field is created by AFBIT to correct undescriptive contract line items from the Extended CLIN Description field, such as “Funding For” items.

If the keyword matched any word in the described five fields then the record was included.

The keywords that were used match the Derived Categories as described in the Derived Categories section of this analysis. Six data pulls were completed and derived data improved with each pull. The SQL query is available in Appendix 1.

IWIMS DATA

Figure 2 AFBIT Data Structure

IWIMS data captures the costs of commodities used in maintenance and minor repairs of systems by the in-house (military and/or government civilian) workforce. The data will not directly correlate to contract costs, nor will it reflect work done by Base Maintenance Contracts.

Five years of IWIMS data was consolidated from FY 2012 – 2016; the consolidation returned 1,025,208 records pertaining to HVAC. The columns of the data pull included fiscal year (FY), base (BASE), noun (NOUN), Adjective 1 (ADJ1), Adjective 2 (ADJ2), Adjective 3 (ADJ3), Adjective 4 (ADJ4), Manufacturer’s Name (MFG-NAME), Manufacturer’s Part Number (MFG- PART), number of parts used (USED), Unit of Issue (UI), Current Unit Price (CURR U/P), Extended Cost (EXTENDED COST) which is CURR U/P * USED, and Name of Vendor

(NAME).

DERIVED CATEGORIES

The first attempt to categorize the data was done by using a frequency analysis from the CLIN level of the data for PSC 4120. The CIR Team used frequency analysis to better understand the terms buyers are using to describe HVAC, or specifically in this case PSC 4120.

This helped create categories of spend, to further define future examination of the data. The results of this frequency analysis can be seen in Figure 3 below.

Figure 3 – Two Token Frequency Analysis for PSC 4120 Fiscal Years 2012 – 2016 AFBIT CLIN data

The data provided in the frequency analysis, helps to understand what type of items the Air Force is buying on contract, and shows a spikes in categories with the descriptive term “chiller”.

As the vast majority of the terms have a frequency of fewer than 25 occurrences, the CIR team also employed a manual approach to assist in categorizing these data. The overall analysis lead to the identification of 8 derived categories and 10 requirement/work descriptions that were used to guide analysis of the spend.

The category list below represents descriptive terms used for HVAC contract purchases.

These items include products, services, and projects.

• General HVAC

• Boilers

• Air Handler

• Chillers

• Cooling Tower

• Chilled Water

• Ventilation

* Note the General HVAC category is used for actions that are simply described as “HVAC” or have multiple categories assigned to them.

The following work descriptions are derived from commonly used terms to describe the purchase. For example, if a line item says repair chiller, it will be classified as a repair work description.

• Replace

• Repair

• New

• Parts

• AE Services / Design

• Maintenance

• Rental / Lease

• Retro Commission

• Study

• Upgrade

TOTAL SPEND SUMMARY

A summary of the total spend is represented below in Figure 4, Figure 5, and Figure 6 provided for context with the categorical spend analysis that follows. The marked reduction in spending in FY13 is attributable to the Sequestration that took place that year and the spike in FY14 as a reaction to and recovery from the former. Figure 2-4 displays the mean of those two years combined to show a more representative, steady state pattern.

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Grand Total

Spend $146,428,295.87 $111,774,532.37 $220,579,619.64 $180,475,968.67 $139,406,875.24 $798,665,291.79

Actions 824 813 973 777 788 4,175

Contracts 821 813 967 774 785 4,160

Suppliers 369 320 353 324 329 914

Figure 4 – Fiscal Years 2012 – 2016 Spend Summary

YEARLY SPEND

CATEGORICAL SPEND

The following figures presents spend in terms of the derived categories the team discovered with the frequency analysis. While General HVAC does include the vast majority of the contract spend, this set “General HVAC” tends to skew the data analysis. It is important to understand spend within the other profile groups; removing the General HVAC group will help depict what is being bought and when. As shown in Figure 7, Chillers is a major spend area. This conclusion is also consistent with what was discovered during the SME Analysis Phase.

Figure 7 – Categorical Spend Fiscal Years 2012 - 2016

Figure 6 – Yearly Spend with FY13/14 combined and averaged

Figure 5- Yearly Spend

Figure 8 below also agrees with conclusions derived from SME analysis; repair costs far outweigh the initial (or replacement) costs. The totals for “New”, “Upgrade” and “Replace” represent the procurements of new systems while “Repair” and “Maintenance” stand for sustainment costs for these systems. When added with a labor-adjusted IWIMS-based maintenance costs, spend in maintenance and repair are more than three, and as much as 10, times higher than initial (or replacement) spend. Unfortunately, most program management focuses on gaining savings on initial costs without considering the maintenance and repair cost in the outlying years.

WORK DESCRIPTION

Figure 8 – Type of Work

Figure 9 – Maintenance vs. Repair

Again, Figure 9 shows that repair cost is a greater proportion of the total cost of ownership than maintenance cost. The hypothesis derived from these data is: Life cycle cost can be reduced if repairs become more efficient. That proper maintenance has been shown to reduce the need for repairs is at the heart of the AF’s adoption of asset management principles for infrastructure.

COAs that manage and enhance the ability to do both would have a profound positive impact on the value provided by the systems.

MANUFACTURERS

Figure 10 – Contract Manufactures

Not many contracts list a manufacture for the equipment being provided as indicated by the total spend encompassed by Figure 10, above. One reason for this condition is that it is standard industry practice to purchase HVAC equipment from an independent vendor as opposed to directly from the manufacturer (this structure will be more fully discussed in the Market Analysis section). The trend indicated by the figure, however, is that there are a few dominant manufacturers who produce HVAC products purchased by the AF. Analysis of manufacturer fields for individual assets in BUILDER corroborates this trend. Further, the BUILDER data showed that, while individual installations have a variety of manufacturers represented among their inventory, most had a preponderance of units from one manufacturer. There are regional and policy considerations that illuminate each of these finding that will be discussed.

SUPPLIERS AND SOCIO ECONOMICS

Duns number Vendor name Spend % of

Total

793477758 TINKER SUPPORT SERVICES JV $48,018,433.99 6.01%

690619705 AMERICAN ENGINEERING CORPORATION $18,792,276.50 2.35%

111027277 FRAWNER CORPORATION $15,761,234.28 1.97%

956520274 DWG & ASSOCIATES, INC $8,536,235.23 1.07%

DWG & ASSOCIATES, INC. $3,830,885.50 0.48%

831845016 SB CONSTRUCTION, JOINT VENTURE $12,187,574.25 1.53%

78361779 ACCEL PACIFIC JV $10,929,677.00 1.37%

28484363 HGL CONSTRUCTION INC $10,134,807.55 1.27%

138440149 RCA CONTRACTING COMPANY

INCORPORATED

($5,878.01) 0.00%

RCA CONTRACTING COMPANY, INC ($103,302.94) -0.01%

RCA CONTRACTING, INC. $10,164,406.61 1.27%

690567938 NIPPO CORPORATION $9,510,308.28 1.19%

6970453 OMAHA PUBLIC POWER DISTRICT $9,392,471.00 1.18%

132516969 E-CORP. $9,373,574.78 1.17%

796527799 A PLUS INDUSTRIES, INC. $9,021,024.24 1.13%

808037373 TDR CONSTRUCTION CO., INC. $8,813,503.00 1.10%

306749560 PILEGAARD-HENRIKSEN A/S $8,739,800.03 1.09%

962485939 CREW MW II, LP $8,155,507.80 1.02%

Grand Total $201,252,539.09 25.20%

Figure 11 - Top 20 Suppliers Fiscal Years 2012 - 2016

Figure 11 shows a break out of the top 15 suppliers from AFBIT data, of note is that there is no single dominant supplier and also suppliers are vendors and wholesalers, not manufacturers. The categories and work description can be found in Appendix 3. Below, Figure 12 shows that a preponderance of spend is with small businesses, a consequence of the majority of purchases being made through independent dealers and not from manufacturers.

Spend % of Total

Other than Small $215,009,507.87 26.92%

Small Business $583,655,783.92 73.08%

Figure 12 - Business Size Fiscal Years 2012 -2016

CATEGORY MANAGEMENT, PSC AND NAIC

Figure 13 breaks out spend in the various categories. They also show that HVAC; as well as HVAC maintenance and repair can be found in many areas, but over 80% is in Facility Related Services.

Figure 13 – Category Management

Another important factor indicated by this spend distribution is that HVAC “Services”, which would include maintenance, repair, and other sustainment activities performed by a trained workforce, account for a much greater proportion of spend than HVAC “Materials”, which would include the initial purchase of systems. Adding Construction Related Services and Materials with the Facility Materials, to account for the purchase of new systems for construction requirements, the Facility Related Services spend overshadows it by a margin of nearly five to one.

Figure 14 – Top 20 PSC/FSC codes

Similarly, aggregating the PSC/FSC codes, in Figure 14 above, dealing with, maintenance, repair, rebuild, and facility operations, versus those that deal with construction and equipment purchase produced a similar five to one ratio of the maintenance to repair.

IN-HOUSE SPEND SUMMARY

IWIMS

FILTERING IWIMS DATA

IWIMS data was filtered, as shown in Figure 15 below, using the “noun” data filter. The data was filtered with the same terms that have been found in the Contract Spend Analysis portion of this report. Figure 16 and Figure 17 show a breakdown of the internal spend by fiscal year as well as by category. As IWIMS is an internal, maintenance management tool, all spend reported can be assigned to system sustainment costs. Evident here is that chillers are a major source of sustainment cost among HVAC categories and, therefore, presents itself as a worthy area of focus.

Figure 15 – IWIMS Filtering

SPEND SUMMARY

Extended Number of Records Distinct count of Base

FY12 $12,330,032.30 1,381 70

FY13 $12,347,643.72 1,210 68

FY14 $11,840,414.75 1,492 71

FY15 $17,722,931.03 1,654 75

FY16 $11,157,183.81 1,319 64

Grand Total

$65,398,205.61 7,056 109 Distinct Bases

Figure 16 – IWIMS Spend Summary

CATEGORY SUMMARY

Noun FY12 FY13 FY14 FY15 FY16 Grand Total

AC $850,143.58 $783,069.87 $660,538.35 $1,329,393.09 $1,836,833.15 $5,459,978.04

AHU $567,023.83 $340,044.48 $181,348.51 $299,431.96 $383,856.48 $1,771,705.26

BOILER $2,495,004.23 $1,976,941.17 $2,472,243.20 $2,477,351.70 $1,138,030.79 $10,559,571.09

CHILLER $6,499,661.25 $7,649,326.50 $6,696,779.87 $11,367,646.59 $6,054,217.38 $38,267,631.59

COOLING

$3,717.72 $23,803.63 $27,521.35

HEATER $1,778,210.73 $1,598,261.70 $1,764,855.30 $2,245,389.97 $1,712,366.11 $9,099,083.81

HEATERS

$121.80 $121.80

HVAC $139,988.68

$62,269.52

$7,954.47 $210,212.67

HVACSVS

$2,380.00

$2,380.00

Grand Total $12,330,032.30 $12,347,643.72 $11,840,414.75 $17,722,931.03 $11,157,183.81 $65,398,205.61

Figure 17 – IWIMS Fiscal Year Categorical Spend Manufacturers

MANUFACTURERS

Data found using the “MFG-Name” data field forms the basis of a summary of the various manufactures that are in use by the Air Force. The data are based on user input, so initial data require some processing to become more usable. For example, “Trane” is also known as “Trane HV”, “Trane CO”, and “Trane-Proposal” among others. The data were cleaned to combine the manufacture names of identical companies with different inputted data. The data cleanse is broken up into two areas, manufacturer name and then all others. The all others category for manufactures is a combination of all other companies that did not have a significant amount of spend alone. This result is consistent with the Contract and BUILDER data pulls in that it shows a trend in spend with certain manufacturers.

Mfg-Name (group) Extended Number of Records

Other $24,115,774.28 5,441

Trane $16,912,840.35 520

Carrier $16,218,895.58 373

American Engine $1,833,597.12 12

Lochinar $1,740,390.59 129

A O Smith $1,202,555.15 361

Raypak $1,096,366.78 84

Daikin $946,188.00 73

York $740,296.77 42

Aerco $302,768.86 9

Raypack $288,532.13 12

Figure 18 - IWIMS Manufactures

SPEND ANALYSIS CONCLUSION

Spend analysis identified several important trends that helped guide the subsequent chevrons.

First, both by frequency of mention and by the amount of spend identified in association with them, chillers are a specific subset of HVAC equipment which would have a significant impact if it was brought under better management. Second, the amount of funds expended on post-initial-purchase service, repair, etc. is several times higher than initial purchase spend, indicating that shifting focus to a total cost of ownership (TCO) model, as opposed to the current focus on initial purchase price, would be vital in bringing more of the total HVAC spend under management.

These trends were further explored in future chevrons, starting with Chevron 2, Subject Matter Expert Analysis.

CHEVRON 2 SUBJECT MATTER EXPERT ANALYSIS

SME ANANLYSIS EXECUTIVE SUMMARY

The SME analysis examined the current state of Air Force management for HVAC Chillers and Control Systems. The analysis determined that the Air Force has been procuring these infrastructure systems as a disposable commodity, with the purchase decision placed on the initial cost. Historically Low-Price Technically Acceptable (LPTA) was the acquisition award methodology. However, HVAC Chillers and Control Systems are long-term infrastructure systems, with lifespans of 15 or more years, and are operated and maintained throughout their life cycle by Air Force engineer craftsmen and technicians. As shown in the Spend Analysis (Figures 8 and 9), Maintenance and Repair costs are five times higher than initial purchase costs.

Additionally, the Air Force invest heavily in its operations and maintenance workforce training, as well as the supply and logistics to maintain systems. These and the costs of Security and Acquisition should all be considered to determine the Total Costs of Ownership (TCO) of the systems. The SME data analysis leveraged new Sustainment Management System (SMS) capabilities to pull inventory data at each Air Force base. The data proves the Air Force is largely standardized by manufacturer at each base, which confirms past limited data pulls and anecdotal reports by maintainers. Control systems are expanding in use and represent a growing risk for cyberattack. Now is the opportune time to put protective measures in place using the best procurement practices to enable long-term cyber security by determining approved products and limiting the number of disparate systems to manage and secure.

SME ANALYSIS INTRODUCTION

The purpose of this chapter is to introduce readers from outside the installation and mission support enterprise to the issues and challenges involved in managing HVAC systems, specifically, chillers and controls. This chapter will focus on Chevron 2 of the Category Intelligence Report construct, Subject Matter Expert (SME) Analysis. The information in this chevron is an analysis of a combination of data derived from experts in every aspect of the Air Force Civil Engineer enterprise and various Air Force information databases. Additionally, we will address previous attempts by the Air Force to tackle the growing costs of facility maintenance and repair.

Traditionally, facility construction and procurement are treated as one-off, unique projects with high emphasis on the initial build price and little thought given to the total life-cycle cost or total cost of ownership (TCO). Treating each facility or facility component acquisition as a unique purchase without a thought for long-term sustainment leads to massive inefficiencies when aggregated across the Air Force enterprise. By contrast, weapons system procurement is protected from this kind of portfolio threat by a Program Management Office (PMO) concerned with life-cycle costs and long-term sustainment. To reduce TCO, weapon systems and their components have tightly controlled requirements that the PMO manages to reduce complexity and maintain standardization across the enterprise.

Unfortunately, the Air Force has devoted minimal time examining the TCO of infrastructure and facilities. The concept of a main operating base or installation is key to the mission of the Air Force. Our weapons system launch from and recover to the base, communication and cyber systems rely on uninterrupted energy and cooling to operate, and satellite and surveillance operations are controlled through systems supported by critical engineering utilities. All these high-tech weapon systems rely on facilities and facility systems, and each is more reliant on power and cooling than anything comparable from the 20th century. Thus, components of energy supply and HVAC are now critical parts of the weapon systems and must be managed under the same level of mission assurance. The ultimate goal for the CE enterprise would be for the AF to manage infrastructure as a weapons system. In the interim, the Category Lead will apply System Engineering principles from the Defense Acquisition University to facility systems. Based on the Chevron 1 Spend Analysis results, and the most emergent needs of the Air Force the following analysis will focus on HVAC Chillers and Control Systems.

Figure 19: System Model representation of Lifecycle Reviews for Acquisition Programs

TECHNICAL GUIDANCE AND MANAGEMENT

Facilities are a system of systems. The lifecycle of the components in these systems each follows a similar cycle. The figures below are graphical demonstrations of the models.

The Department of Defense (DoD) follows the Unified Facility Criteria (UFC) and Unified Facility Guide Specifications (UFGS) for facility construction specifications. These standards can be found at on the Whole Building Design Guide (WBDG) website, https://www.wbdg.org.

The UFC facility mechanical system documents are located within the 3-4XX series and the UFGS HVAC documents are within the 23 XX XX series (Master Format).

HVAC is considered a “critical” facility system where temperature and humidity control is essential to the operation of systems, equipment, and personnel. The technical specifications to condition a space can be meet by any number of HVAC equipment. To differentiate the best from the worst systems, the views of maintenance and repair personnel should be considered, especially regarding the reliability and maintainability of various systems. This is especially important when considering the facility occupants and mission in the event of an HVAC component outage. Using unreliable systems that require constant maintenance will negatively affect both the facility users and the success of the mission linked through that facility.

The controls systems used to monitor the operating conditions, energy usage, and efficiency of HVAC are critical to cost-effective operations and predictive maintenance. However, the control systems also operate on and communicate through connections over a local area network, which makes them susceptible to cyberattack. Manufacturers maintain many proprietary components of control systems, both hardware and software, which make operating and maintaining them difficult and cross-connections expensive to create between competitors. This incompatibility; also, affects the efficiency of HVAC models if users need to have multiple interfaces to operate and manage facility components.

Figure 20: At the basic level, a Facility is a collection of sub-systems that must all work in harmony for the facility to effectively fulfill its mission

Figure 21: Actions completed in the lifecycle of a facility system like HVAC are depicted above; however, there are more costs associated to do these actions, see Figure 22

TOTAL COST OF OWNERSHIP MODEL

Total cost of ownership (TCO) is a calculation designed to assess both direct and indirect costs related to an equipment purchase. The intent is to arrive at a final figure that will reflect the effective cost of purchase, all things considered. As depicted in Figure 22, the TCO includes the initial purchase cost as well as all of the costs associated with operations and maintenance of a system. When making a financial comparison between multiple choices, smart buyers should look at the total cost of ownership and not just the initial purchase price. A simplified cost model for HVAC and control systems using the TCO method may be depicted in the following equation:

𝑇𝑇𝑇𝑇𝑇𝑇 = 𝐼𝐼𝐼𝐼 + 𝐼𝐼𝑃𝑃 + 𝑆𝑆𝑆𝑆 + 𝐸𝐸𝑆𝑆 + 𝑃𝑃𝑇𝑇 + 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 + 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝐴𝐴𝐴𝐴𝐴𝐴𝐼𝐼𝐼𝐼𝐴𝐴𝐴𝐴𝐴𝐴 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑦𝑦𝑃𝑃𝐼𝐼𝑃𝑃𝐼𝐼𝑃𝑃

+ 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑦𝑦𝑆𝑆𝐼𝐼𝑆𝑆𝑃𝑃𝐼𝐼𝑆𝑆𝐴𝐴 + 𝐴𝐴𝐴𝐴𝐴𝐴 + 𝑆𝑆𝑆𝑆𝐴𝐴𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑦𝑦 + 𝑆𝑆

Where, 𝑇𝑇𝑇𝑇𝑇𝑇 = 𝑇𝑇𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑇𝑇𝑜𝑜 𝑇𝑇𝑂𝑂𝑇𝑇𝑆𝑆𝑇𝑇𝐶𝐶ℎ𝑆𝑆𝑆𝑆

𝐼𝐼𝐼𝐼 = 𝐼𝐼𝑇𝑇𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆 𝐼𝐼𝑆𝑆𝑇𝑇𝐴𝐴ℎ𝑇𝑇𝐶𝐶𝑆𝑆

𝐼𝐼𝑃𝑃 = 𝐼𝐼𝑇𝑇𝑆𝑆𝑃𝑃𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑃𝑃𝑆𝑆 𝑃𝑃𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝑇𝑇𝐴𝐴𝑆𝑆

𝑆𝑆𝑆𝑆 = 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆 𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇

𝐸𝐸𝑆𝑆 = 𝐸𝐸𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝑆𝑆𝑇𝑇𝐴𝐴𝑦𝑦 𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇

𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 = 𝐼𝐼𝑇𝑇𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆 𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇𝑇𝑇 𝑇𝑇𝑜𝑜 𝑃𝑃𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝑇𝑇𝐴𝐴𝑆𝑆 𝐼𝐼𝑆𝑆𝑇𝑇𝐶𝐶𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆𝑆𝑆

Figure 22: Total Cost of Ownership moves beyond the contract and commodity costs and includes the costs for supply systems, training, and proficiency in operating and maintaining a system

𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝐴𝐴𝐴𝐴𝐴𝐴𝐼𝐼𝐼𝐼𝐴𝐴𝐴𝐴𝐴𝐴 = 𝐴𝐴𝐴𝐴𝑃𝑃𝑇𝑇𝑇𝑇𝐴𝐴𝑆𝑆𝐴𝐴 & 𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆 𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑇𝑇𝑇𝑇 𝑇𝑇𝑜𝑜 𝑃𝑃𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝑇𝑇𝐴𝐴𝑆𝑆 𝐼𝐼𝑆𝑆𝑇𝑇𝐶𝐶𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆𝑆𝑆

𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑦𝑦𝑃𝑃𝐼𝐼𝑃𝑃𝐼𝐼𝑃𝑃 = 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑇𝑇𝑜𝑜 𝐼𝐼𝑇𝑇𝑇𝑇𝑆𝑆𝐶𝐶

𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑦𝑦𝑆𝑆𝐼𝐼𝑆𝑆𝑃𝑃𝐼𝐼𝑆𝑆𝐴𝐴 = 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑇𝑇𝑜𝑜 𝐼𝐼𝑇𝑇𝑇𝑇𝑆𝑆𝐶𝐶 𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑆𝑆/𝐵𝐵𝑆𝑆𝑇𝑇𝐴𝐴ℎ𝐶𝐶𝑆𝑆𝑇𝑇𝐴𝐴𝑠𝑠 𝐴𝐴𝐴𝐴𝐴𝐴 = 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑇𝑇𝑇𝑇𝐴𝐴 𝑇𝑇𝑆𝑆𝑆𝑆𝑆𝑆 𝑇𝑇𝑜𝑜 𝐹𝐹𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑆𝑆 𝐴𝐴𝐴𝐴𝐴𝐴𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴𝑆𝑆𝑆𝑆𝑇𝑇𝑇𝑇𝐶𝐶

𝑆𝑆𝑆𝑆𝐴𝐴𝑆𝑆𝑇𝑇𝑆𝑆𝑆𝑆𝑦𝑦 = 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑆𝑆𝑇𝑇 𝑆𝑆𝑆𝑆𝐴𝐴𝑆𝑆𝑇𝑇𝑆𝑆 𝑇𝑇 𝑆𝑆𝑦𝑦𝐶𝐶𝑆𝑆𝑆𝑆𝑆𝑆 𝑇𝑇𝑇𝑇𝐴𝐴 𝑇𝑇𝑇𝑇𝐶𝐶𝑆𝑆 𝑇𝑇𝑜𝑜 𝐿𝐿𝑇𝑇𝐶𝐶𝐶𝐶 𝐹𝐹𝑇𝑇𝑇𝑇𝑆𝑆 𝑇𝑇ℎ𝑇𝑇𝑆𝑆𝑇𝑇𝑆𝑆𝐶𝐶

Unfortunately, the most often measured metric in Air Force acquisition of facility systems has been initial purchase price. However, it is important to note that when building and planning for critical infrastructure, the most significant metric isn’t the initial cost. In these instances of “cannot fail” infrastructure, the cost of mission failure outweighs any material costs. The key metric for monitoring critical facility systems is to eliminate outages of components and to decrease down-time, or conversely, increase up-time of the system and mission capability. In order to maintain system up-time, a maintenance and repair schedule and properly trained personnel are essential. Any amount of system down-time in critical facilities severely hampers and degrades the Air Force’s capability to execute its primary missions. A description of each part of the TCO model follows, each portion of the TCO is essential to capture for all critical infrastructure owned by the Air Force.

Initial Purchase (IP) – Initial installation occurs when a facility is first built or when an old system has completely failed and is replaced. Initial installation cost is the single cost considered for Low-price, Technically-acceptable (LPTA) contract award, however it is not the largest life-cycle cost. Spend and Market Analysis have shown Maintenance and Repair cost are at least 5 times the initial purchase cost. When considering LPTA, it is important to acknowledge that for large projects, like Military Construction, the lead construction agent will be either the United States Army Corps of Engineers (USACE) or Navy Facilities Command (NAVFAC), not the Air Force. After construction, the facilities are transferred to the Air Force for occupancy, operations and maintenance. TCO is considered even less by USACE and NAVFAC because they are only involved in the initial purchase. For HVAC Chillers, many manufacturers can typically meet a technical specification. For control systems, fewer manufacturers are involved, however, competition and unique design are high. Because the AF is a large consumer and can influence specifications, the HVAC manufacturers work through their Congressional delegations to influence purchases. This should be considered when debating policy and guidance for systems, but should not outweigh the TCO benefits.

Preventative Maintenance (PM) – Systems require regular maintenance such as changing belts, fluids, and adding lubricants, in order to work to the manufacturer’s intended life span, and to keep warrantee coverage. Manufacturers specify different timelines, parts, materials, and procedures for preventative maintenance, which are added to work plans for technicians’ action.

PM has a high life-cycle cost, ranging from 3-5 times the installation cost (see Spend Analysis Figure 7, Type of Work and Table 7, IWIMS Fiscal Year Categorical Spend). The Air Force performs PM using Air Force personnel (military or civilians) or Base Operations Support Contracts. The TCO for systems is dominated by maintenance and repair. Personnel must be trained, have supplies and parts, and must have a good relationship with manufacturers. The Spend Analysis is not able to capture all of these costs; however, interviews with the Technical

Training School team at Sheppard AFB, and the AFCEC/COO Operations Maintenance team concluded the costs for multiple manufacturers will increase advanced training and PM supply costs in a linear way. Meaning the costs for training and supplies for two manufacturers’ equipment at a base is twice as much as one, and three is three times as much as one, etc. The Air Force’s schools, training plans, and skills-based promotion currently ignore specialized training because it is not achievable due to the high number of different manufacturers’ systems installed at bases.

Sustainment Repair (SR) – Sustainment Repair is work done ahead of an emergency, fixing problems early when the repair can be planned to reduce mission impact or down-time. To identify the need for a repair, the PM team must be proficient with the system, or the monitoring and control systems must be operating effectively to alert maintenance personnel of a problem.

Similar to PM, Sustainment requires knowledge of manufacture-specific systems, parts and supplies, and training and practice. The Air Force’s Goal is to have competency to do sustainment work in-house; however, in-house workers lack proficiency because of the various manufacturers’ installed equipment. Most sustainment repairs are contracted, as indicated in the spend analysis. The contracting process is lengthy and problematic. For example, in source selection when doing a Technical Evaluation, it is difficult to define a fully technically acceptable solution that best satisfies TCO. Technicians are not proficient working with contracting, which results in additional training and review, taking the technician’s time from doing the work of fixing the base. In the past, Justification and Approval (J&A) requests were attempted to procure systems the workforce was already proficient in maintaining. Today, the J&A packages are regularly rejected at the base-level. Therefore, contract reviews result in multiple bids from vendors, possibly using different manufacturers’ parts and any mismatch is not truly known until installation. Time and effort in creating and reviewing these contracts is a frequent complaint from base engineers. Failure to adequately maintain Air Force infrastructure is reported to Congress each year. In 2017, the Air Force reported a deferred maintenance backlog of $33B, a large increase from $24B in 2016. While adding funds for replacement is one avenue, the demand on engineers by having multiple disparate systems is a contributing factor to this backlog.

Emergency Repair (ER) – Emergency Repairs are required when a component breaks and must be repaired without any pre-planning or warning. This type of repair causes the greatest amount of down-time. Troubleshooting, fault diagnosis, parts ordering, remediation, and finally repair all occur after the outage has started. Emergencies require the highest workforce proficiency, and it is during emergency outages that the mission suffers the most. Missions either lose capability, must relocate, or may completely halt. Emergencies are by far the most costly repairs, because the mission of the Air Force will suffer and linked costs increase until the emergency is resolved. Availability of parts and knowledge of systems for rapid fault diagnosis are essential. As with Sustainment Repair the multitude of installed systems have created a lack of depth of knowledge; and the knowledge gap causes outages to be extended. Often emergency call-out for contractors is required, and expedited repairs require higher contract costs. If multiple bids are required, then the outage is further extended. The supply and logistics of receiving replacement parts or components will also extend the outage.