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Friday, May 6, 2016

Defence Asset Procurement Policy - Logistical Consideration

In the prior article, we have discussed about non-conventional threats. While non-conventional threats are strictly police matters, in many situations, military will be called in to assist police operations.

In this installment, we will look into how logistics consideration can influence defence procurement decision.

A key factor in defence procurement is logistics.  As defined by Merriam Webster English dictionary, logistics is "the aspect of military science dealing with the procurement, maintenance, and transportation of military matériel, facilities, and personnel."

In operational context, there are 2 level of logistics that would need to be concerned with; at the first level is spare parts and consumables, and at level 2, transportability of assets.

Spare Parts and Consumables
Purchasing a defence asset is only the beginning of a long journey. 

For an asset to be operated at optimum level, the asset needs to be supplied with sufficient spare parts and having access to consumables (ammunition and fuel). 

Both spare parts and consumables are cost and require substantial fund. 

For a country like Malaysia, where most of our defence assets are imported, consumables is the nightmare that haunts our armed forces.  Let us look into several very familiar examples.

Malaysian Army - Adnan Spare Part Fiasco
In 2005 - 2006, Malaysian Army was plagued with insufficient track pads for the ACV15 (previously designated as ACV300) Adnan Infantry Fighting Vehicles.  The intense training that the Army had put the 4th Div resulted in the spare pads being burned up like water.  (Technically, the Army could still operate the Adnan, but the tracks will damage the road surface).

Adnan ACV - lack of spare parts once grounded these vehicles
Another nightmarish example is the RMAF as a whole.

In the mid-90's, then Prime Minister Tun Dr Mahathir had decided that Malaysia should procure Russian-made MiG29 for RMAF.  18 units comprised of 16 single-seater MiG29N and 2 twin-seater MiG29NUB were purchased with payment made part in cash and commodities.

The decision to purchase the MiG29N were attributed to Tun's concern that Malaysia would not be able to effectively defend Malaysia using Western-made jets when facing potential enemies (read - Singapore) which use similar western made jets.  The Gulf War had just ended then and the world was made to awe the intelligence of US military equipment that can identify friends or foe (most people do not understand how the IFF or identify friends or foe interrogator works).

Another (unstated) reason why he selected the aircraft was his increasing antagonism towards Singapore.  He was believed to be concerned that Singapore would want to invade Malaysia.  While his fear is not unfounded (Singapore did begin to view Malaysia as a possible belligerent nation and this probably convinced Singapore to come out with the Mersing Line plan, which unfortunately matches Tun's view of a Singapore with ulterior motive, ie motive of invading Malaysia). 

However, the operation of MiG29N was not as smooth as it was hoped for.  With Malaysia buying only 18 units, RMAF could not afford to maintain a large supply of spare parts.  

With RMAF unable to maintain a sufficiently large quantity of spare parts, reliability of the supply from the vendor was also problematic at best.  

This in turn resulted in RMAF not being able to efficiently operate all the MiG29N.  It is believed both MiG29 that crashed in the late 90's were due to reliability of the spare parts supplied by the vendors. 

Today, it is believed only 10 MiG29N can still be flown.

Overall, RMAF queer habit of purchasing assets from different countries rather than to build up the number of assets for any particular class is forcing itself to increase its expenditure on spare parts warehousing for its various types of jets (American, Russian, British, Italian)

Lessons Learnt
As a whole, Malaysian Armed Forces (MAF) should strongly look into the ability of defence equipment supplier to service logistics requirement.  In fact, this should be made a key requirement. 

The duties of defence equipment supplier should not and must not stop the moment the warranty period for the defence equipment lapse.  Therefore, MAF must continue to work with these defence equipment supplier throughout the service life. 

When discussing about defence equipment spare parts, one can't forget how with the intervention of then Defence Minister, Datuk Seri Zahid Hamidi, RMAF managed to halve the price for some of the spare parts.  Thus increasing the lifespan of the MiG29N.

This is also an option that Malaysian Govt should consider putting into any of our procurement contract.  In the event cost price for spare parts and consumables become too expensive (this should be defined on annual basis), the Govt should be given option to approach either the OEM or national representative of the supplying nations to obtain the necessary material (this should help to prevent profiteering by defence equipment supplier's local agent).

Two other ways to ensure high level of operational availability are to increase number of quantities purchased and to have in-house local maintenance and refurbishing facilities.

With bulk purchases, the effect of having units being disabled due to enemy action or maintenance can be ameliorated.  To illustrate, the effect of losing ten units of jets to enemy action has lesser effect when you have 100 units (loss of 10% of strength) as compared to losing losing 10 jets when you only have 18 units (more than 50% reduction in strength).

Having in-house maintenance would also helped to increase operational availability by reducing the time spent to maintain the same equipment.  We do not need to send our assets overseas for refurbishing and maintenance.

The first method would also allow for improved logistics lines as the military would only need to stock up one type of spare parts from one key supplier rather than from different suppliers.

Both methods are not mutually exclusive.  However, both methods are very costly.  The first method will result in high purchase price due to large number of units procured, while the second method is expensive as the military will need to pay for the maintenance centre.

Not that it could not be done.  RMN's 15-to-5 is an example of a well thought-out plan to consolidate its assets to improve its logistics requirement and training costs by having a proper assets replacement policy.  Simplified logistics line, simplified training, cheaper cost.

Transportability of Assets
Another key consideration that should be considered when purchasing military assets are the ability of the military's current capability to transport an asset from 1 location to another location.

On this aspect, understanding from the ground is that MAF does include this requirement in any of their planned assets purchases.  All proposed Army assets needs to be able to be airlifted using RMAF current available workhorse, ie Hercules C130 and A400M.
Airbus A400M

In fact, the purchase of Airbus A400M was said to be for filling up certain planned specific requirement.

While the current RMN does not have sufficient capability to meet with MAF strategic lifting needs since the loss of KD Inderapura in 2009, this is expected to be resolved under the new 15-to-5 plan.

In the next article, we will look into involvement of local companies in defence industry.  While I have been covering this from time to time, be it in my writings to Perajurit or Gempurwira, I would like to cover this once more in view in the recent changes in the local defence industry, which to my view is getting more vibrant.  

This would be followed (ideally) with an article on involvement of politics and foreign affairs in military procurement practice.  

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