Calhoun: The NPS Institutional Archive Theses and Dissertations Thesis Collection 1988-06 How Miniature/Microminiature (2M) repair capabilities can reduce the impact of No Evidence of Failure (NEOF) among repairables on the Navy's operations and maintenance account Barr, Robert C. Monterey, California. Naval Postgraduate School http://hdl.handle.net/10945/23255
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Calhoun: The NPS Institutional Archive
Theses and Dissertations Thesis Collection
1988-06
How Miniature/Microminiature (2M) repair
capabilities can reduce the impact of No Evidence of
Failure (NEOF) among repairables on the Navy's
operations and maintenance account
Barr, Robert C.
Monterey, California. Naval Postgraduate School
http://hdl.handle.net/10945/23255
NAVAL POSTGRADUATE SCHOOL
Monterey , California
THESIS
HOW MINIATURE/MICROMINIATURE (2M) REPAIRCAPABILITIES CAN REDUCE THE IMPACT OFNO EVIDENCE OF FAILURE (NEOF) AMONG
REPAIRABLES ON THE NAVY'SOPERATIONS AND MAINTENANCE ACCOUNT
by
Robert C. Barr
June 1988
Thesis Advisor: Dan C. Boger
Approved for public release; distribution unlimited
T238683
UNLLAbblt 1LUSecurity ci-ASS.PiCATiON of fj s jagT
REPORT DOCUMENTATION PAGE
la. REPORT SECURITY CLASSIFICATION
UNCLASSIFIEDlb RESTRICTIVE MARKINGS
2a. SECURITY CLASSIFICATION AUTHORITY
2b DECLASSIFICATION /DOWNGRADING SCHEDULE
3 DISTRIBUTION /AVAILABILITY OF REPORT
Approved for public release
distribution is unlimitedd PERFORMING ORGANIZATION REPORT NUM8ER(S) 5 MONITORING ORGANIZATION REPORT NUMBER(S)
6a NAME OF PERFORMING ORGANIZATION
Naval Postgraduate School6b OFFICE SYMBOL
(If applicable)
54
7a NAME OF MONITORING ORGANIZATION
Naval Postgraduate School
6c. ADDRESS (City. State, and ZIP Code)
Monterey, California 93943-5000
7b ADDRESS (City. State, and ZIPCode)
Monterey, California 93943-5000
8a. NAME OF FUNDING • SPONSORINGORGANIZATION
8b OFFICE SYMBOL(If applicable)
9 PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER
8c. ADDRESS (City. State, and ZIPCode) 10 SOURCE OF FUNDING NUMBERS
PROGRAMELEMENT NO
PROJECTNO
TASKNO
WORK UNITACCESSION NO
11. title (include Security classification) How Miniature/Microminiature (2M) Repair Capabilities Can Reduce
the Impact of No Evidence of Failure (NEOF) among Repairables on the Navy's Operations and
Maintenance Account12 PERSONAL AUTHOR(S)
Barr, Robert C.
13a. TYPE OF REPORT
Mas ter ' s Thesis13b TIME COVEREDFROM TO
4 DATE OF REPORT ( Year. Month, Day)
June 198815 PAGE COUNT
83
16. supplementary notation "The views expressed in this thesis are those of the authorand do not reflect the official policy or position of the Department of Defens<
or the U.S. Government."17 COSATI CODES
FIELD GROUP SUB-GROUP
18 SUBJECT TERMS (Continue on reverse if necessary and identify by block number)
Repairables, Failure RatesMiniature/Microminiature Repair CapabilityUses of 3-M Documentation
19 ABSTRACT (Continue on reverse if necessary and identify by block number)
Today with technical advances and cost reductions in electronics, it has become possible to
recategorize many FLRs and DLRs as progressive repairables. This thesis covers the growing
problem of No Evidence of Failure (NEOF) among repairables and how Miniature/Microminiature
(2M) repair capability can be used to correct this problem. The major objective is to
demonstrate how 2M repair capability can save O&MN funding and decrease the Repair Turnaround
(RTAT) for repairables. Two NSNs were chosen from the Support and Test Equipment Engineering
Program (STEEP) tests performed by SIMA San Diego duringl987. A statistical analysis and a
Level of Repair Analysis (LORA) were run on both. Research was also conducted on possible
changes and uses for shipboard 3-M documentation. The main conclusion of this thesis is that
with proper training and implementation, 2M repair capability can save O&MN funding, decrease
RTAT for both FLRs and DLRs, and enhance fleet Operational Availability (Ao).
20 DISTRIBUTION /AVAILABILITY OF ABSTRACT
5D UNCLASSIFIED/UNLIMITED SAME AS RPT D DTlC USERS
22a NAME OF RESPONSIBLE INDIVIDUALDan C. Boger
21 ABSTRACT SECURITY CLASSIFICATION
UNCLASSIFIED2imTffi&$ft6™
cod9) 22c OFF BOL
DO FORM 1473. 8d mar 83 APR edition may be used until exhausted
All other editions are obsoleteSECURITY CLASSIFICATION OF THIS "AGE
« U.S. Gmimmtnt Prlntlrn 0»let- Hl«-«0«-2'
UNCLASSIFIED
Approved for public release; distribution unlimited
How Miniature/Microminiature (2M) RepairCapabilities Can Reduce the Impact ofNo Evidence of Failure (NEOF) among
Repairables on the Navy'sOperations and Maintenance Account
Robert C. BarrLieutenant, United States Navy
B.S., Southeastern University, 1978
Submitted in partial fulfillment of therequirements for the degree of
MASTER OF SCIENCE IN MANAGEMENT
from the
NAVAL POSTGRADUATE SCHOOL^.TTTNF IQftft
ABSTRACT
Today with technical advances and cost reductions in
electronics, it has become possible to recategorize many
FLRS and DLRS as progressive repairables. This thesis
covers the growing problem of No Evidence of Failure (NEOF)
among these progressive repairables and how Miniature-
Microminiature (2M) repair capability can be used to
correct this problem. The major objective is to demonstrate
how 2M repair capability can save O&MN funding and decrease
the Repair Turnaround Time (RTAT) for repairables. Two NSNs
were chosen from the Support and Test Equipment Engineering
Program (STEEP) tests performed by SIMA San Diego during
1987. A statistical analysis and a Level Of Repair Analysis
(LORA) were run on both. Research was also conducted on
possible changes and uses for shipboard 3-M documentation.
The main conclusion of this thesis is that with proper
training and implementation, 2M repair capability can save
O&MN funding, decrease RTAT for both FLRs and DLRs, and
enhance fleet Operational Availability (Ao)
.
111
c f
TABLE OF CONTENTS
I
.
INTRODUCTION 1
A
.
PURPOSE 1
B
.
METHODOLOGY 3
C
.
ORGANIZATION 4
II
.
BACKGROUND 6
III. MINIATURE/MICROMINIATURE REPAIR CAPABILITY 15
A. BACKGROUND 15
B. NO EVIDENCE OF FAILURE TESTING 18
C. REGRESSION ANALYSIS AND FINDINGS 20
IV. LEVEL OF REPAIR ANALYSIS 28
A. BACKGROUND 28
B. NAVSEA'S LORA MODEL 29
C. LEVEL OF REPAIR ANALYSIS AND FINDINGS 32
V. 3-M AND ENSURING REQUIREMENT JUSTIFICATION 42
A. BACKGROUND 42
B. USES OF 3-M DOCUMENTATION 51
VI
.
RECOMMENDATIONS AND CONCLUSION 53
A. GENERAL COMMENTS 53
B. RECOMMENDATIONS 53
1 . Stock Number Groupings 54
2 . ATE and 2M Deployment 55
3 . Which Items to Screen 56
4 . Parts Availability 57
iv
5 . Uses of 3-M Documentation 57
C. CONCLUSION 58
APPENDIX A: ACRONYMS AND MEANINGS 59
APPENDIX B: THIRD POSITION MAINTENANCE CODES 62
APPENDIX C: FOURTH POSITION MAINTENANCE CODES 63
APPENDIX D: RECOVERABILITY CODES 65
APPENDIX E : COMMONLY USED MCCs 67
APPENDIX F: NSN INFO BY EQUIPMENT TYPE 68
LIST OF REFERENCES 71
INITIAL DISTRIBUTION LIST 73
LIST OF FIGURES
Figure Page
1 . Logistic Support Analysis 7
2 . Level of Repair Analysis 8
3 . Ship s Maintenance Action Form 48
4. VIDS/MAF (OPNAV 4790/60) 49
5. Work Request Customer Service (OPNAV 4790/36A).50
VI
LIST OF TABLES
Table Page
1. Organic and Commercial Repair Totals 11
2 . Numbers of DLRs by Classification 16
3 . Cost and Savings Statistics 18
4
.
NOEF Results from August 1987 Test 19
5
.
NOEF Results from December 1987 Test 19
6
.
Repair Costs at SIMA San Diego 20
7. Regression Analysis Data NSN 5845-00-450-1852 23
8. Regression Analysis Data NSN 5825-00-321-0671 23
9. Regression Analyses Results 23
10
.
Yearly Surcharge Rates 2 5
11. Basic Cost Categories for Economic Level of RepairModels 29
12 . LORA Exception Criteria 30
13. Level III LORA Inputs NSN 5825-00-321-0671 33
14. Level III LORA Inputs NSN 5845-00-450-1852 33
15. Summary of Initial Output StatisticsNSN 5825-00-321-0671 34
16. Summary of Initial Output StatisticsNSN 5845-00-450-1852 34
17. Effects of Assembly Cost on Life Cycle Cost forNSN 5825-00-321-0671 35
18. Effects of Assembly Cost on Life Cycle Cost forNSN 5845-00-450-1852 36
into the design effort in order to obtain reliable,
maintainable, transportable, and supportable equipment at a
minimum cost of ownership throughout the equipment's life
cycle." [Ref. 9:p. III-3]
In the Program Management Office (PMO) , the Logistics
Manager (LM) is responsible for the direction of the ILS.
He is guided in this task by numerous directives from
higher authority that affect a wide range of supply and
maintenance functional areas. Item classification and
maintenance level determination are made for each item of
supply during the acquisition process.
A key step in the ILS is the Logistic Support Analysis
(LSA) . The LSA serves as "...a continuing dialogue between
the weapon system designer and the logistician. . . " with the
prime objective of ensuring "...the acquisition of
operationally effective and supportable equipment at a
minimum (or optimal) cost through the system's life cycle."
[Ref. l:p. 2-10] Figure 1 portrays the primary elements of
the LSA process.
SYSTEM REQUIREMENTSI
VDEFINE QUALITATIVE/QUANTITATIVE
LOGISTIC SUPPORT OBJECTIVESV
DEVELOP DESIGN PARAMETERS FOR USE IN:DESIGN COST/OPERATIONAL AVAILABILITY/CAPABILITYTRADEOFFSDEVELOPMENT OF LOGISTIC SUPPORT CAPABILITIESRISK ANALYSES
VEVALUATE THE EFFECTS OF ALTERNATIVE HARDWARE DESIGN ON:SUPPORT COSTS; OPERATIONAL READINESSIDENTIFY: KNOWN SCARCITIES; CONSTRAINTS; LOGISTIC RISKAPPRAISE DESIGN AND HARDWARE TO VERIFY:SUPPORTABILITY FEATURES
(I.E. ACCESSIBILITY AND COMPATIBILITY OF TEST EQUIP.
1
VPROVIDE (AS DESIGNS BECOME FIXED)TIMELY/VALID DATA FOR ALL ILS AREAS
VIMPLEMENT LOGISTICS ACTIONSMAINTENANCE PLANNING FACILITIESPROVISIONING STORAGE/STOWAGEPERSONNEL AND TRAINING ALLOWANCE LISTS
TECH PUBS MANNINGFUNDING
Figure 1. LSA Process [Ref. 9:p. III-5]
A specific trade-off analysis undertaken as part of the
LSA is the Level of Repair Analysis (LORA) . "The purpose of
the Level of Repair Analysis is to aid establishment of
least cost maintenance actions and to influence equipment
design." [Ref. l:p. 2-11] Using the LORA, the LM decides:
"...(a) if an item should be repaired; (b) if so, at what
maintenance level (organizational, intermediate, or depot);
or (c) if the item should be discarded." [Ref. 9:p. III-7]
Figure 2 depicts the steps in conducting a LORA.
ILS PLANNING POLICY
VLSA DATA ELEMENTS
UNIT COST. SUPPORT EQUIPMENT. PERSONNELI
VREPAIR |
LORA/CONTRACTOR RECOMMENDATIONS|
| I NAVY ECONOMIC/NONECONOMIC CRITERIA I
-
I
VREPAIR CATEGORY
I I I
|IMA |
DEPOT| |
| |ORGANIZATION
y y y > INPUT TO LSA <
DISCARD1
I
VDISCARD
I
I
-V
I
VFINAL HARDWARE DESIGN
I
VLSA RECORD
OPERATIONAL HARDWARE
Figure 2. Level of Repair Analysis [Ref. 9:p III-8]
Information gathered on equipment concerning
reliability, availability, and maintainability factors in
these early phases of the acquisition process are used by
the LM to create the overall system maintenance plan and
the Source, Maintenance, and Recoverability (SM&R) codes
for the different parts comprising that system.
SM&R codes communicate maintenance and supplyinstructions to logistics support echelons and usercommands. Specifically, Joint Service uniform SM&R codesidentify the manner of acquiring support items for themaintenance, repair, or overhaul of end items; indicatethe maintenance levels authorized for performing therequired maintenance functions; and prescribe thedisposition action for unserviceable support items. Theinitial assignment of SM&R codes takes place prior toprovisioning to permit the procurement of a range ofspares and repair parts to support new weapons, systems,and equipment. The SM&R code is made up of a six-digitcode. The first two positions consist of a two-positionsource code. The source code indicates the manner ofacquiring an item for maintenance, repair or overhaul ofend items. The second two positions represent amaintenance code. The maintenance code indicates thelowest maintenance level authorized to remove, replace,and use the item. The fifth position is held by therecoverability code. The recoverability code amplifiesthe information provided by the maintenance code andindicates the lowest level of maintenance authorized toperform all possible repair actions and to dispose of theunserviceable support item. The sixth position of theSM&R code is reserved for service options. In the Navy,it is used to provide special instructions and forinternal management purposes. [Ref. 9: pp. 111-12-16]
The combination of a parts maintenance coding and
recoverability coding identifies the material as either a
consumable, Field Level Repairable (FLR) , or Depot Level
Repairable (DLR) . A consumable is a part that cannot be
economically repaired (i.e., it is less costly to replace
than repair) . Material is designated as a FLR when it is
less costly to provide the required training, equipment,
and expertise at either the organizational or intermediate
level to make repairs to an item. DLRs have been so
designated because it has been determined that it is more
economical to repair at either an organic (Navy owned) or
commercial repair depot. Appendices B, C, and D list the
most frequently used third, fourth, and fifth position SM&R
codes used today to identify an item's maintenance and
recoverability by the ICPs.
Material is further segregated by the Inventory
Managers (IMs) through the use of Material Condition Codes
(MCCs) . The MCCs group items together into specific
categories for reporting purposes. Appendix E lists
commonly used MCCs and their meanings.
As present-day military hardware has developed into
highly complicated weapon systems, engineers have relied
more and more on the concept of repairable modules to meet
requirements for systems availability and component
reliability goals. Modularization has greatly facilitated
the ease of maintenance and repair at the organizational
level. However, this trend towards modularization has
resulted in a corresponding increase in the number, value,
and significance of repairable items. Repairables today now
comprise an important segment of the workload of all major
Navy industrial activities. Quick and accurate component
rework is a major contributor to the effectiveness,
10
support, and readiness of Navy ships and aircraft. However,
this augmented demand for DLR repairs has outstripped the
organic depot capabilities, and the Navy has had to resort
to commercial activities to maintain DLR Repair Turnaround
Times (RTATs) . Predetermined forecasts of RTATs is a
dominant force affecting the operational availability and
life cycle cost of a weapon system. Table 1 below reflects
the growing trend towards commercial contracts for DLR
repair at one of the Navy's Inventory Control Points
(ICPs) , Ships Parts Control Center (SPCC)
.
TABLE 1. ORGANIC AND COMMERCIALREPAIR TOTALS [Ref. 12 :p. 1]
In response to public outcry against perceived wasteful
government spending and the exorbitant cost of today's
weapon systems, coupled with pressure from the CNO to
attain advertised systems operational availability goals,
the Navy has sought to improve its contracting and
logistical support processes. The massive increase in the
number of DLRs in the Navy's inventory has necessitated
streamlining and improvement in all facets of DLR
management.
One change that has occurred in the past few years has
been in the way DLRs are handled at the organizational
11
level. There is the new Advanced Tracking and Control
(ATAC) program for central management of DLRs and the new
signature control incentives involving all repairables
movement. However, one of the most aggressive of all the
new incentives dealing with DLRs is the move toward
progressive repairs of DLRs. Prior to this concept,
repairables were divided into the groupings of FLRs and
DLRs. Under the progressive repair concept, organizational
and intermediate level activities have been outfitted with
Automatic Testing Equipment (ATE) , Test Program Sets
(TPSs) , and Miniature/Microminiature (2M) repair stations.
This has allowed these facilities for the first time the
ability to inspect and repair repairables which before
could only have been tested at a higher maintenance level.
Progressive repairables are determined by analyzing the
fourth and fifth positions SM&R codes assigned. Items which
are considered progressive FLR are coded with an F, G, H,
or in the fourth position of the SM&R code and either a G
or a H in the fifth position of the SM&R code. Progressive
DLRs carry a fourth SM&R position of G, H, or and a fifth
position of D.
The confusion concerning repairables results mainly
because the information is not readily apparent to the
repair technician and storekeeper. All information dealing
with an item's SM&R code is located in one and only one
location, and that is the command's COSAL. An item coded
12
1HD is known to be a FLR from its COG and MCC, and an item
coded 7HH is known to be a DLR from its coding. In fact,
both items may be progressive repairables, but this would
never be known unless their SM&R codes are reviewed.
To correct the ambiguity among FLRs, on 10 April 1985,
Commander, Naval Supply Systems Command (NAVSUP) authorized
the establishment of the new cognizance symbol 3H for use
at SPCC and ASO. 3H material would still be FLRs just as
they had been as 1H material, but the ambiguity of the MCC
D would be placed to rest. The technician would now be able
to look at the COG and tell whether he had condemnation
authority or not (i.e., 1H yes, 3H no).
Continued improvements and addition of new TPSs,
technological advances in electronics, and the lowering of
costs to the point where each ship can be provided with
digital test equipment has furthered the abilities of
organizational and intermediate commands to test and repair
DLRs at below depot level. The equipment presently being
provided by Naval Sea Systems Command (NAVSEA) to all
afloat units for this purpose is the AN/USM-465, also
known as the GENRAD 2225 Portable Service Processor (PSP)
.
The 4 65 is presently capable of testing hundreds of
different Printed Circuit Boards (PCBs) from twenty-nine
different weapon systems. The only requirement for the
afloat units is the changing of the test program, which
gives the test parameters for the PCB being tested and at
13
times certain hardware changes. Intermediate Maintenance
Activities (IMAs) , in addition to the AN/USM-465, have been
issued PHOENIX-530 units and analog test units. The
PHOENIX-530 is capable of checking PCBs for an additional
nine weapon systems.
While Miniature/Microminiature (2M) repair at the
organizational level has been highly effective in
decreasing Repair Turnaround Times (RTAT) and reducing cost
to TYCOMs and field level OPTAR accounts, there has been an
alarming increase in the number of No Evidence of Failure
(NEOF) material appearing at repair depots among those DLRs
which can be screened and often repaired at the
organizational and intermediate levels. This situation has
had several effects:
1. It has reduced local OPTAR accounts for materialturned in that is Ready For Issue (RFI)
.
2
.
It has added work to repair depots which are alreadyoverworked.
3. It has increased the RTAT for many progressiverepairables.
14
III. MINIATURE/MICROMINIATURE (2M) REPAIR CAPABILITY
A. BACKGROUND
In Fiscal Year (FY) 1978 Commander, Naval Sea SystemsCommand (COMNAVSEASYSCOM) initiated the Support and TestEquipment Engineering Program (STEEP) to test thefeasibility of screening, testing, and repairingElectronic Modules (EMs) and PCBs. The pilot programinvolved screening, testing, and repairing of EMs/PCBsfor both COMNAVSEASYSCOM and Commander, Naval ElectronicSystems Command by using Automatic Test Equipment (ATE)located at selected shore intermediate maintenanceactivities. [Ref. 4:p. 5]
Since 1978, one hundred forty-eight ATEs and
approximately six hundred seventy TPSs have been purchased
for the fleet and intermediate repair levels. An additional
one hundred ATEs have been authorized but have not as yet
been placed in service. Two types of TPSs are presently in
use at the organizational and intermediate levels. The
first type of TPS is a screening only TPS . "Screening only
IPS identify whether the EM/PCB are ready for issue or
defective (i.e., go/no-go)." [Ref. 4: p. 2] The second type
of TPS is called a diagnostic TPS. "...Diagnostic TPS not
only to identify whether EM/PCBs are go/no-go, but also
fault isolate defects to enable technicians to make
necessary repairs." [Ref. 4:p. 2]
Miniature/Microminiature repair technicians can carry
four different Navy Enlisted Classifications (NECs) .
Miniature repair technicians carry a NEC of 9527, and
15
microminiature repair technicians carry the NEC 9526. A 2M
repair technician carries both NECs. 2M inspectors carry
NEC 9503, and 2M instructors carry NEC 9509. Presently, 2M
NECs are considered secondary NECs and are not mandatory
for ship's repair personnel being assigned to a ship with
either a 2M repair station or an AN/USM-465 test set.
Afloat requests for either an ATE (AN/USM-4 65) or a 2M
repair station are forwarded to NAVSEA code 06Q for
consideration. 2M repair stations presently cost
approximately $6,000.00 to supply, and an AN/USM-465 costs
approximately $55,000.00.
According to the 1983 Western Region Navy Audit Report,
The dominant cost savings were attributable to majorreductions in supply pipeline costs resulting from alowering of false removal rates applicable to EMs/PCBsambiguity groups. Ambiguity groups of EMs/PCBs within aprinciple electronic system usually consist of three tofive EMs/PCBs; and when one EM/PCB fails, the entiregroup is considered defective.... [Ref. 4:p. 5]
Repairable material at SPCC is presently classified as
shown in Table 2
.
TABLE 2. NUMBERS OF DLRs BY CLASSIFICATION
Applicable No. ofSM&R Codes Line Items
Depot Level DD 17,678
Progressive 2D, 3D ,GD, HD, OD 136,917Depot Level 2L, 5D, 6D, 3L
In August 1987, NAVSEACOMSYSENGSTA Norfolk, Virginia
reported that average 2M repair actions totaled $243.91.
"Supply cost and labor cost are based on standardized
costing factors. Supply cost is based on $60.24 per
requisition or supply actio. The supply cost for the
typical 2M action is based on an average of one
requisition, therefore the typical supply cost is $60.24.
Labor cost is based on $13.48 per man-hour. For the typical
2M action the labor cost is the 11.9 M-H average labor per
2M action times $13.48 which is $160.41." [Ref. 5:p. 9]
"...A conservative estimate is a savings per 2M action of
approximately five times the cost calculated per 2M action.
A more significant advantage of the 2M repair is the
ability to repair items and return a system to service
expeditiously when otherwise there would have been a delay
awaiting parts." [Ref. 5: p. 10]
C. REGRESSION ANALYSIS
In order to run a regression analysis, one must have at
least two sets of data which can be correlated against each
other. Appendix F lists the ten NSNs which comprise the
20
original pool from which the two NSNs for the regression
analysis were chosen. Each DLR data base contains five main
sets of data which were considered as possibilities for the
independent and dependent variables required to conduct a
regression analysis. These data sets are:
1. Standard price. The standard price is the pricewhich SPCC considers as its replacement cost. It isbased on the latest price paid for a new unit plus asurcharge. Unfortunately, new orders are notperformed every year so the standard price at timesis based on pricing which may be several years old.This causes a problem for SPCC when commands whoorder DLRs without a carcass turn-in are charged thestandard price and this price is not sufficient tocover the cost of a new item or it is discovered tohave been too high of a replacement price estimate.
2. Repair price. There are two types of repair pricingused at SPCC today. The first is the historicalprice which is the cost of the last repair action tobe made on a DLR. The second is the current repairprice which SPCC would currently have to pay forrepairs on the item today. It is this second type ofrepair pricing which is used for the regressionanalysis.
3. Net price. The net price of an item is based on thehistorical cost to repair the item plus a surcharge.The repair cost figure, however, is once again thecost of the last repair action performed on thatNSN. This, too, has caused problems for SPCC.
4. Demand quantity. The demand quantity is thehistorical number of items requisitioned by endusers of an item. This figure can be unduly affectedby either the fact that an item has a high NEOF rateor by the fact that it is a progressive DLR and hasa high IMA repair accomplish rate. In either case,the demand quantity registered by SPCC can be in
error. A high NEOF rate causes an inflated demandreading, and a high IMA repair accomplishment rateon progressive DLRs can rob SPCC's data base of
demand information. This is because at present SPCCcan only use procurement data to determine demandfrom the fleet. Chapter five of this paper willdiscuss a possible solution to this problem.
21
5. Repair quantity. Repair quantity is the number ofitems which are repaired during a period of time.Here, too, there have been some problems. SPCC doesnot repair the same number of items each year ashave been ordered and turned in. Instead, acomplicated math model is used to forecast thequantity of an item which will be required, andrepairs and reorders are based on this quantity. Anyremaining Not Ready For Issue (NRFI) carcasses arestored until required for repair processing.
The items considered as eligible for the regression
analysis were limited to those items selected by SIMA San
Diego for their two repair tests in August and December of
1987. All pertinent information on these items is listed in
Appendix F. As discussed earlier, IMAs are supposed to
possess repair capability for progressive repairables, and
as a result progressive DLRs were eliminated from the pool
of items available for analysis. Therefore, the items
considered as eligible were those which were SM&R coded as
depot/depot repairables and had a proven repair capability
by SIMA San Diego. The two NSNs 5845-00-450-1852 and 5825-
00-321-0671 fit the above requirements. Both of these items
are coded as depot/depot level repairables, and both had
been repaired by SIMA San Diego during their December 1987
test.
With the NSNs selected, only the independent and
dependent variables were left to select. For the purpose of
the regression analysis, the yearly net pricing and depot
repair pricing for the two NSNs were chosen as the
dependent and independent variables respectively. The
22
reasoning behind this is that net pricing is built upon the
repair pricing plus a surcharge. Therefore, a positive
correlation was expected. The data used for both items in
the regression analysis are displayed in Tables 7 and 8,
and the findings of the regression analyses are shown in
Table 9 on the following page.
TABLE 7. REGRESSION ANALYSIS DATA NSN 5845-00-450-1852
Constant 1,042.549Std Err of Y Est 202.377r 2 (Coefficient of Determination) 0.22337511r (Coefficient of Correlation) - 0.4726258No. of Observations 4
Degrees of Freedom 2
X Coefficient (s) Std Err of Coef.- 1.78215 2.349729
For NSN 5825-00-321-0671
Constant 1,038.639Std Err of Y Est 88.06084r2 (Coefficient of Determination) 0.1182317r (Coefficient of Correlation) - 0.3438483No. of Observations 4
Degrees of Freedom 2
X Coefficient (s) Std Err of Coef.- 0.67202 1.297716
23
Note that the Coefficients of Correlation for both NSNs
are (-.47) and (-.34) respectively. The fact that both NSNs
have negative Coefficients of Correlation means that as
their depot repair prices have increased, their net prices
have decreased. The Coefficient of Determination for NSN
5845-00-450-1852 shows that only 22.34% of the variation in
price for a depot repair can be explained by the different
net prices charged to the fleet each year, and for NSN
5825-00-321-0671 only 11.82% of the change in the net
price can be explained by the movement in the NSN's repair
pricing.
With such poor correlation between their net and repair
prices, the regression formulas for these two NSNs will not
give very accurate predictions for future prices. A
discussion with personnel in the contracting and pricing
departments at SPCC shed the following light on the above
findings:
1. The standard price charged to customers is based onthe most recent purchase price paid for a new item.
2. The net price, however, is based on the historicalprice for repair of the NSN plus a surcharge. Inmany cases, this price may be very old or come fromseveral different repair sources, and because oftheir different methods of billing for repairs it isoften difficult for SPCC to have a set repair priceon which to base an item's net price.
3
.
The repair contract types used at SPCC includeunpriced orders, Firm Fixed Priced (FFP) orders, andCost Plus Profit (CPP) contracts. Any combination ofthese may be used on an NSN during its life cycle.Therefore, the prices stated are most oftenestimates of what a repair is expected to cost.
24
With the above in mind, it is now evident that little
if any information can be derived from performing a
regression analysis using pricing information from SPCC's
data base. The negative correlation, however, was
unexpected and a discussion with SPCC personnel showed this
to be irregular. A positive correlation should always exist
between the net pricing and the repair pricing for an item,
since the repair pricing plus a surcharge is the basis for
the net pricing. Further investigation, however, with SPCC
pricing specialists led to the possible explanation of part
of this negative trend due to the varying of the yearly
surcharge charged to SPCC customers. In fact, the surcharge
has fallen almost every year since 1985. The surcharges are
listed in Table 10 below. It was also discovered for NSN
5845-00-450-1852 that the net pricing has been developed
from both commercial and organic depot repair pricing.
Further, the commercial depot used CPP, and the organic
depot used FFP contracting. In fact, the only repair
pricing variance which SPCC looks for is a variance between
SPCC's most current historical repair price and the current
net price. This once a year report is called the "Repair
History File." [Ref. 17]
TABLE 10: YEARLY SURCHARGE RATES
Fiscal Year Surcharge % Rate1985 59%1986 40%1987 42%1988 36.8%
25
One reason for the fall in the surcharge rates has been
the improvement in the contracting techniques in the
military. These newer methods have lessened the variance
observed from year to year in the price paid for purchases
of new material and for repairs to older material. Another
cost which has decreased in the past few years is that of
inflation. This has also helped reduce the cost of
conducting business for the military.
Problems, however, still exist in the way business is
currently conducted at SPCC. If current work conference
pricing were used as the basis for the current net pricing,
less impact would be felt by the Navy Stock Fund (NSF) when
repair orders are placed by SPCC's item managers. There
should also be review of the base replacement price when
the old one is two or more years old. The following
information is connected with the current pricing of NSN
4845-00-450-1852.
1. Current net pricing - $108
2. Historical repair price - two in 1986 from acommercial depot for $68 and $128
3. Current work conference repair pricing - $400 forrepair at an organic repair depot as a FFP contract.
4. Current standard price - $323
5. Historical replacement pricing - $265 based on anorder for 35 in 1985.
6. Current replacement cost estimate - $500 to $700depending on the number ordered.
26
If this NSN were repaired today, a deficit of $292.00
would be charged to the NSF. If the same NSN was reordered,
the NSF would also take a loss. Current pricing policy at
SPCC does not allow charges to the fleet to reflect the
current cost of repair or replacement. Instead, the
surcharge is used as a buffer between what is really
required and what is charged to fleet customers. A change
to the pricing policy, therefore, would be most beneficial.
27
IV. LEVEL OF REPAIR ANALYSIS
A. BACKGROUND
Integrated Logistics Support (ILS) is part of every
major system acquisition performed by the Navy today. The
ultimate goal of the ILS is to make certain that proper
support is available for a system when it is deployed. One
of the main programs in this effort is the LSA. The LSA
ensures that the overall program objectives are cost
effective. The selection of the method for handling a new
or already deployed system over its expected or remaining
life is performed by the Level of Repair Analysis (LORA)
.
As stated in Chapter 2, a LORA is a trade-off analysis
undertaken as part of the LSA to determine the least cost
method of maintaining an item over its life cycle. This
idea of developing a Life Cycle Cost (LCC) for an item is
an important part in maximizing fleet readiness while
ensuring that limited defense funding is spent in the most
effective manner. LORAs are normally run on items when they
first enter into service or when an interested party
suspects that a change should be made in how an item is
presently handled. The most important outcome of the LORA
is the assignment of the SM&R codes. This SM&R code will
guide the support chain's handling of the item over the
items's Life Cycle (LC)
.
28
B. NAVSEA'S LORA MODEL
The LORA models used today are basically of two types.
The first uses a mathematical model and economic factors
such as those listed in Table 11 to determine the least
cost method of handling an item over its LC.
TABLE 11. BASIC COST CATEGORIES FOR ECONOMICLEVEL OF REPAIR MODELS [Ref. 9: p. III-ll]
A. Life Cycle1. Inventory2. Initial System Stock3. Allowance Quantity4
APPENDIX B: THIRD POSITION MAINTENANCECODES [Ref. 9:pp. 111-21/22]
Code Definition
D Support items that are removed, replaced, andused at depots only.
F Support items that are removed, replaced, andused at the intermediate level afloat.
G Support items that are removed, replaced, andused at both the afloat and ashoreintermediate levels.
H Support items that are removed, replaced, andused at the intermediate levels ashore only.
L (Restricted to SSPO only.)
Support items that are removed, replaced, andused at the organizational level ofmaintenance.
Note: To distinguish between the organizationalmaintenance capabilities on different classes of shipsthe following codes may be used (intra-Navy only) . Onjoint programs, Navy will receive and transmit an "0" toindicate organizational maintenance level.
2 Minesweeper, Yardcraft, Patrol Boat.
3 Submarines.
4 Auxiliary/Amphibious Ships.
5 Major Combatants (Destroyers, Frigates)
.
6 Major Combatants (Cruisers, Carriers, LHAs-Amphibious Assault Ships)
.
7 Organizational shore activity only; notauthorized for removal/replacement afloat.
S Support items that are removed, replaced, andused at designated intermediate levelspecialized repair activities only. Removalis not authorized below intermediate level.
Z Support items that are not authorized to beremoved or replaced at any level.
62
APPENDIX C: FOURTH POSITION MAINTENANCECODES [Ref. 9:pp. 111-22/24]
Code Definition
B Support item for which no repair isauthorized.
D Support item for which the depot level is thelowest level of maintenance authorized by themaintenance plan to return the item toserviceable condition from any failure mode.
F Support items for which the intermediatelevel afloat (only) is the lowest level ofmaintenance authorized by the maintenanceplan to return the item to serviceableconditions from some but not necessarily all,failure modes.
G Support items for which the intermediatelevel either afloat or ashore is the lowestlevel of maintenance authorized by themaintenance plan to return the item toserviceable condition from some but notnecessarily all, failure modes.
H Support item for which intermediate levelashore only is the lowest level ofmaintenance authorized by the maintenanceplan to return the item to serviceablecondition from some, but not necessarily all,failure modes.
L (Restricted to SSPO use only.)
Support items for which the organizationallevel is the lowest level of maintenanceauthorized by the maintenance plan to returnthe item to serviceable condition from somebut not necessarily all, failure modes.
Note: To distinguish between the organizationalmaintenance capabilities on different classes of ships,the following codes may be used (intra-Navy only) . Onjoint programs, Navy will receive and transmit an "0" toindicate organizational maintenance level.
63
2 Minesweeper, Yardcraft, Patrol Boat.
3 Submarines.
4 Auxiliary/Amphibious Ships.
5 Major Combatants (Destroyers, Frigates)
.
6 Major Combatants (Cruisers, Carriers, LHAs-Amphibious Assault Ships)
.
7 Organizational shore activity only; notauthorized for repair afloat.
Support item for which a special intermediaterepair activity is the lowest level ofmaintenance authorized by the maintenanceplan to return the item to serviceablecondition from some, but not necessarily all,failure modes.
A nonrepairable support item. No repair isauthorized.
A Nonrepairable item; requires special handlingor condemnation procedures because ofspecific reasons (i.e., precious metalcontent, high dollar value, criticalmaterial, or hazardous material).
D Repairable item. Indicates the lowestmaintenance level authorized by themaintenance plan to return the item toserviceable condition from all failure modes.The level authorized to direct disposition ofan unserviceable item is the depot level.
F Repairable item. Indicates the lowestmaintenance level authorized by themaintenance plan to return the item toserviceable condition from all failure modes.The level authorized to direct disposition ofthe unserviceable item is the intermediatelevel afloat.
G Repairable item. Indicates the lowestmaintenance level authorized by themaintenance plan to return the item toserviceable condition from all failure modes.The level authorized to direct disposition ofan unserviceable item is the intermediatelevel, either afloat or ashore.
H Repairable item. Indicates the lowestmaintenance level authorized by themaintenance plan to return the item toserviceable condition from all failure modes.The level authorized to direct disposition ofan unserviceable item is the intermediatelevel ashore.
L (SSPO use only.)
Repairable item. Indicates the lowestmaintenance level authorized by themaintenance plan to return the item toserviceable condition from all failure modes.The level authorized to direct disposition ofan unserviceable item is the organizationallevel.
65
S Repairable item. Return to SpecialIntermediate Repair Activity. Condemnationand disposal not authorized below specialintermediate level.
W Repairable item. Item can be restored fromall possible failure modes by theorganizational level but must be returned tothe depot level for condemnation anddisposal
.
Y Repairable item. Item can be restored fromall possible failure modes by theintermediate level but must be returned tothe depot level for condemnation anddisposal.
Z Nonrepairable item. When unserviceable,condemn and dispose of at the level indicatedin position 3 of the uniform SM&R codeformat.
66
APPENDIX E: COMMONLY USED MCCs [Ref. 9: p. 111-27]
Code Definition
D Field Level Repairable.
E (1) IRAM program; (2) Material requiringlot and serial number control.
G FBM weapon system repairables.
H Depot level repairables.
L Local stock items or items awaiting NSNassignment.
Q FBM weapon system repairables requiring specialtest, special report, or periodic inspection.
W Ground support equipment end item.
X Special program repairables.
67
APPENDEK F: MSN INFO BY EQUIPMENT TYPE
The information listed below pertained to the ten NSNs which were
tested by SIMA San Diego during one or both its two test for NEOF rates
on repairables during calendar year 1987. Each subdivision lists the
pertinent information concerning the NSN such as its GOG, MCC, SM&R, net
1. Naval Supply Systems Command Publication 553. InventoryManagement .
2. Naval Sea Combat Systems Engineering Station, Norfolk,Virginia Engineering Analysis Report No. 33-85.Miniature/Microminiature C2M) Repair Piece Parts . 9
August 1985.
3. Naval Sea Combat Systems Engineering Station, Norfolk,Virginia Engineering Analysis Report No. 29-86.Miniature/Microminiature (2M) Program Evaluation , 8
August 1986.
4. NAVAL AUDIT SERVICE REPORT T10582 of November 1983.Repair of Shipboard Electronics .
5. Naval Sea Combat Systems Engineering Station, Norfolk,Virginia Engineering Analysis Report No. 13-87.Reported Usage Of Miniature/Microminiature (2M)Electronic Repair On Shipboard Systems . 26 August 1987.
6. Commanding Officer, Naval Weapons Station, Seal BeachLetter 3080, Serial No. 383/129, Cost of Fleet ReturnedNo-Failure Evident Printed Circuit Boards . 6 February1987.
7. SIMA San Diego CA Naval Message, Subject: Support andTest Equipment Engineering Program (STEEP) , 060440Z Aug87.
8. SIMA San Diego CA Naval Message, Subject: Support andTest Equipment Engineering Program (STEEP) , 100140Z Dec87.
9. Naval Material Command Instruction 4400. 14B. NavyReoairables Management Manual . 17 February 1982.
10. Commanding Officer, Naval Weapons Station, Seal BeachCA, Catalog of Automatic Testing Capability forelectronic Modules/Printed Circuit Boards. Revision A .
29 January 1988.
11. Naval Supply Systems Command Instruction 4423. 14B. NavyUniform Source. Maintenance and Recoverabilitv fSM&R)Codes . 10 April 1986.
71
12. Sincavage, J. S., Untitled Paper on DLR Contracting,Presented at Ships Parts Control Center MechanicsburgPA, 9 September 1987.
13. Naval Sea Systems Command, Level of Repair AnalysisLevel III User's Manual . 31 August 1982.