AIR 9000 Phase 7 May 2012

The competition is really fierce for the billion dollar Helicopter Aircrew Training System (HATS) contract, where six teams of experienced suppliers and integrators of aircrew training systems have been attracted by the opportunity.

4th May 2012


 AIR 9000 Phase 7


HATS on for a fierce competition

Byline: Geoff Slocombe / Victoria


The competition is really fierce for the billion dollar Helicopter Aircrew Training System (HATS) contract, where six teams of experienced suppliers and integrators of aircrew training systems have been attracted by the opportunity.

The starting line up for HATS includes Raytheon/Bell Helicopter, KBR/Elbit/QDS, AgustaWestland/CAE/BAE Systems, Australian Aerospace, Lockheed Martin/Bristow Helicopters, and Boeing/Thales. Members of these teams all have a substantial presence and significant defence contracts in Australia. If this was a horse race, a bookmaker would have difficulty setting winning odds for each of the contending partnerships.

The AIR 9000 Phase 7 Request for Tender (RFT) was published on 6th January 2012 and tenders closed on 23rd April 2012. Tender evaluations and short-listing are occurring now. For the short-listed consortiums - probably only two - there will be a detailed Offer/Definition phase later in 2012, before Defence considers contract terms with the preferred team during 2013.

The teams all have strong credentials and a lot will depend on how well each has absorbed several years of pre-RFT discussions with Defence. A draft RFT was circulated to industry in August 2011, with a month allowed for comments, and according to Defence this has limited the number of final RFT clarification requests.

The HATS RFT was unusual for Defence because it was not a prescriptive document, but rather sought to capture the benefit of exchanges of innovative training ideas with industry, combined with their local and international experiences.

Team interpretations of capability requirements, key performance indicators, and the most effective training mix between classroom, synthetic and actual flight experiences will be very important. They need to propose convincingly how they will deliver and sustain their solution in a timely manner. Costings will reflect how keen each consortium is to win the business, how good they believe their competitive chances are, what risk premium to apply, and what synergies exist with their other contracts.

For the HATS Tender Evaluation Board (TEB) analysis, predicted total cost of ownership over the contract’s life will be extracted from tender documents and validated by a Tender Evaluation Working Group (TEWG). This will have a heavy weighting on each tenderer’s score card.

RADM Mark Campbell, Head of DMO’s Helicopter Systems Division, is particularly known for seeking improved relations with contractors, identifying and reducing unwanted bureaucracy, improving contract management especially by embedding Strategic Reform Program (SRP) principles in new contracts, and understanding risks for all parties. He believes that dealing with DMO does add to contractor costs and that some contractors routinely add 10-20% risk premium to their contracts. If he can save some of this risk premium he says he can generate a substantial proportion of the SRP savings he is required to find.

AIR 9000 Phase 7

According to the latest Defence Capability Plan ‘HATS is intended to provide rotary wing training capability for the Navy and Army to meet the future rotary wing training needs of the ADF. The project aims to deliver a system that encompasses elements of live, synthetic and classroom aviation instruction, to overcome the broadening gap between the current rotary training systems and the advanced operational helicopters in the current and planned future ADF inventories.’

It is looking for initial material release by 2014-15, with initial operating capability to be reached no later than 2017. Predicted to be at the high end of the $500m - $1b range, the project is seen as posing only moderate risks to timely achievement on budget.

There will be numerous opportunities for Australian industry in terms of solution components, facilities, infrastructure, and the delivery of through life support. When APDR asked about industry opportunities a Defence spokesperson said “The AIR 9000 Phase 7 RFT requires tenderers to develop an Australian Industry Capability plan to maximise the cost effective involvement of Australian industry in the acquisition, delivery and ongoing sustainment of the Helicopter Aircrew Training System. The value of each tenderer’s proposed Australian Industry Capability plan will be assessed as a weighted element of the overall evaluation.”

HATS ties-in with the AIR 5428 Pilot Training System (see ‘Pilot Training System tender still in the clouds’ APDR April 2012) since helicopter pilots will still pass through flight screening and initial fixed wing flying training before progressing to rotary wing training. The current delay in declaring the exit point of AIR 5428 will affect planning the entry point to HATS. Tender responses have had to allow for two different entries to HATS, one following the current fixed wing training systems and another one for AIR 5428 graduates. When asked about this by APDR, a Defence spokesperson said “There is open and frequent communication between the AIR 9000 Phase 7 and AIR 5428 project teams. The AIR 9000 Phase 7 tender evaluation and short listing process is not dependent on AIR 5428 tender activities.”

Graduates from the training scheme delivered by AIR 5232 (see ‘Training Aircrew Officers for Mission Command’ APDR March 2012) will also have to be accommodated. A fact sometimes overlooked is that HATS is a full aircrew training system so as well as pilots, Navy aviation warfare officers, Army tactical coordinators, sensor operators, and general aircrew personnel all have to be trained.

Raytheon Australia/Bell Helicopter

When interviewed by APDR for this article Michael Ward, managing director of Raytheon Australia, said “We believe that the AIR 9000 Phase 7 RFT is a mature document which reflects a long process during which Defence refined their requirements. They have been consistent in this and their dialogue with industry over these last five years has helped each of the parties understand accurately what is required. As a consequence, we have had to make fewer RFT clarification requests than would be usual for a project of this size and complexity.”

Apart from Raytheon, this HATS team includes Bell Helicopter, Milskil, Nova Systems and Virtual Simulation Systems. Their solution includes platforms, simulators and training devices as well as courseware certified and maintained to exacting Defence standards.

“Our proposal outlines a mature, deliverable and sustainable training solution which maps precisely to the Commonwealth’s training requirements. Providing a strong growth path with the necessary flexibility for future training, we also offer the strongest commitment to safety and a solution which is designed for support through the best possible sustainment solution,” Michael Ward said

From 2007 to early 2012, Raytheon provided three AW109E helicopters to be operated by 723 Squadron at HMAS ALBATROSS as a Retention and Motivation Initiative (RMI). Over 6,000 hours experience were gained in four and a half years, with general agreement that the AW109s provided an excellent introduction to the sophisticated helicopters coming into service with the ADF. For the continuation RMI2 contract, these were replaced in April 2012 by Raytheon with three Bell 429s, also tendered for HATS, which now have ADF military certification and service release.

Michael Ward finished by saying that because Raytheon’s only business is defence, which they understand very well, they do not have a risk premium. They start the risk identification process early in the project definition and progressively eliminate risks as they build their bid. They end with a residual risk analysis which, through statistical techniques, enables clear identification of these risks and their consequences, which they share with the Commonwealth. He made the point that Raytheon have already done quite a lot of the HATS de-risking and understanding of resourcing requirements through RMI and RMI2.

KBR/Elbit Systems of Australia/Qantas Defence Services

Seen as a ‘dark horse’ in the HATS contest, KBR’s profile has been raised with Defence because its methodologies align well with those of the Strategic Reform Program. KBR’s HATS credentials have come to the fore with their successful training program for the ADF’s Tiger ARH ground technicians and aircrew. To date this program has graduated 496 Army personnel in ground trades, plus 105 aircrew. In this consortium they will take the project lead, with special responsibility for designing and integrating the complete training system.

Elbit Systems are experienced developers and implementers of computer-based trainers, part task trainers and full mission simulators through to complete training centres equipped with mission planning systems, simulators and debriefing systems. Elbit are well known to Defence, having recently won a $331 million contract for the LAND 75 Phase 3.4 Battle Management System and LAND 125 Phase 3 programs.

Qantas Defence Services see their core competency being ‘Intelligent sustainment to complex aircraft and systems’. The HATS helicopter sustainment is a natural and logical extension of this philosophy. With their extensive resources they will provide services and through life support for HATS.

AgustaWestland/CAE/BAE Systems Australia

Responding to questions from APDR, Philip Smith, Head of Region for AgustaWestland said “AgustaWestland and CAE have a mature and proven joint venture partnership in delivering rotary wing training to both military and civil customers. Additionally, both companies have extensive experience in delivering training to military flying training through their own organisations.”

When asked about the specific roles the three firms will take, Philip Smith replied “AgustaWestland, will provide the helicopter platform, associated platform-specific training material and associated OEM engineering and logistics support. CAE is a global leader in modelling, simulation and training for civil aviation and defence organisations, and will provide the Training System, OEM delivered synthetic training capability and general courseware. BAE Systems will provide ‘on aircraft’ maintenance, local logistics support and engineering management services, leveraging AgustaWestland’s standing global support solution. “

Answering questions about Australian industry involvement with their bid, Philip Smith said “AgustaWestland will increase the work flowing to the helicopter Transmission Repair and Overhaul facility that is being delivered under Project AIR 9000 Phases 2, 4 and 6. This will not only include work from Australian military helicopters but will expand the scope of work to regional commercial and military customers across a range of helicopters. A number of SMEs have been identified to provide training system components and also contribute to through life support efficiencies by undertaking local repair and overhaul work. This allows for more immediate response offering cost reductions through shortened component repair times and subsequent reductions in spare parts holdings. Due to the sensitive nature of the market it is not possible to identify these companies at this stage.”

Australian Aerospace

Confirming their HATS bid as prime contractor Dr Jens Goennemann, CEO Australian Aerospace, said “Australian Aerospace has a proud history of developing and implementing Army and Navy aircrew and technical training solutions for the ARH Tiger and MRH90 and has worked closely with Army to support the development of its pilot training framework. Our experience on these programs, coupled with the extensive training capabilities of the Eurocopter Group, allows us to provide the ADF with an optimised and effective training system.”

Australian Aerospace has offered a low risk COTS helicopter based on parent-company Eurocopter’s EC135 platform. The mature EC135 is part of successful training systems in Germany, Switzerland, Spain, and Japan, and used operationally in Australia by the Victorian and New South Wales police forces.

Lockheed Martin Australia/Bristow Helicopters Australia

A Lockheed Martin Australia spokesman explained that the focus of their team’s tender submission was on a holistic view of aircrew training requirements, not simply elements of the solution like the helicopter platform, which was not committed in the bid document.

Lockheed Martin’s pedigree with ADF contracts is well known and does not need to be repeated here. One of their most recent wins was for a package including training systems and 24 MH-60R naval combat helicopters to be based at Nowra. In 2006 they won the Republic of Singapore Air Force (RSAF) 25 year training systems integrator contract to provide basic fixed wing training at RAAF Base, Pearce WA.

Bristow Helicopters operate one of the largest civilian helicopter fleets in the world (490 and counting), and have vast experience in helicopter evaluation for designated tasks, procurement, running costs, global supply chain organisation, training for all helicopter aircrew roles, servicing and supporting operational fleets. For the submitted tender Bristow developed a matrix showing the characteristics, their operational evaluations, and the likely ongoing costs of all helicopter models which could be considered by Defence for HATS.

Bristow began operations in Australia in 1967 and is now the largest provider of helicopter transportation and maintenance services to the oil and gas industry, with 374 employees and 34 helicopters located here.

Boeing Defence Australia/Thales Group

Since 2007 Boeing Defence Australia has been delivering helicopter training services through its contract to train and support Army Aviation pilots and other aircrew at Oakey and Townsville in Queensland.

For the HATS contract Thales will provide simulation capabilities and together with Boeing is ready to deliver a robust ab initio rotary wing training system. This will optimise the use of instructors, flight simulators, computer-based instruction, and training aircraft.

HATS Location

The DCP HATS project description states categorically “A decision has been made by Government to home base HATS at HMAS ALBATROSS, Nowra NSW.” This is a logical choice given that Navy helicopter training and maintenance operations are the main activity there.

Naturally this alarmed the Toowoomba Regional Council who thought it might mean the end of Army Aviation training at Oakey. Defence replied to them that there are no plans to move Swartz Barracks to Nowra and “Defence expects that industry will provide a range of options for the delivery of the new HATS, including some elements which will continue to be delivered at Oakey.”

A bilateral meeting of the Defence Ministers of Australia and Singapore in March 2012 publicly welcomed the conclusion of negotiations to renew the treaty-level Oakey Agreement, which will enable the Republic of Singapore Air Force (RSAF) to continue to station a helicopter training squadron and conduct flying activities at the Army Aviation Centre in Oakey.

When asked very specifically about future plans for the Oakey base, where there are currently 438 Army and Navy personnel employed at the Aviation Centre, Defence responded “Following Australian Government’s consideration of the final report on the ADF Posture Review it is anticipated that work on the comprehensive Defence estate will resume later this year, taking account of the Force Posture Review as appropriate. No decisions have been made on the future of individual bases, including the Army Aviation Centre at Oakey.”

Moving forward

Amphibious expeditionary forces, which rely heavily on skilled helicopter operations, are one focus of the ADF’s future direction. The large amphibious ships, CH-47F, Tiger ARH, MRH-90 and MH-60R helicopters coming into service with the Army and Navy are huge investments that can only release their full capabilities through skilled aircrews.

The HATS contract, the key enabler to operate these sophisticated aircraft, is expected to remain in force for 25 years after it reaches final operating capability.

In the meantime each fiercely competing consortium has entered a critical phase in their sales campaign to convince the Commonwealth that they offer the most innovative, cost-effective, lowest risk, on-time and enduring solution, with the lowest total cost of ownership over the contract’s life.

But through RMI2 has Raytheon stolen a march on their rivals by their presence at Nowra, and by replacing competitor AW109s with their tendered Bell 429s?


 

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