BOLSTERING THE BASE


FIGURE 1


Te strategy developed for SCAAP is an example of the need to balance gov- ernment-owned industrial base capacity against cost and competitive factors in an environment of declining federal spending.


HIGH COST OF FACILITY OPERATION, MAINTENANCE Te government spells out its require- ments for maintenance, care of government property in possession of a contractor, environmental protec- tion, safety, antiterrorism measures and security, and occupational health and industrial hygiene in performance work statements (PWS) as part of the property management contract.


Te government does not directly pay the costs of carrying out these facility PWSs. Te operating contractor must build the costs into overhead prices for products and services. While each GOCO facility


Number of munitions produced


100,000 200,000 300,000 400,000 500,000 600,000


0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Number of Employees 450


400 350 300 250 200 150 100 50 0


SCRANTON PLANT’S WANING FORTUNES As SCAAP’s output declined over the past 13 years, so did its workforce, from a high of roughly 400 in 2005 to just one-quarter of that 10 years later. (SOURCE: SCAAP)


As the Army continues to operate under a constrained budget, we need to continu- ally assess what capabilities and assets need to be sustained.


124 Army AL&T Magazine July-September 2016


is different, most need to compete for production work, including GD-OTS at the Scranton plant. Tere is no guaran- tee that government work awarded to the facility will cover the cost to operate it.


When there is a large amount of work at the facility, the overhead is easily shared over many programs. However, as pro- duction requirements drop, the programs need to support a larger share of the over- head expense.


Additionally, these facilities, including SCAAP, are built to be efficient at large production rates. When demand for ammunition is low, there is a lot of excess capacity, which may be needed again in the future. It generally costs less and is less risky to maintain that capacity through the lean years than to have to rebuild capacity quickly when needed.


NOT ENOUGH WORK Te metal ammunition parts produced at SCAAP dropped to a 15-year low in 2014. (See Figure 1.) Te number of employees at SCAAP has dropped more than 70 per- cent over the past decade.


A number of factors have driven this shrinkage, viability:


straining SCAAP’s financial


• Since the end of the war in Iraq in late 2011, the demand for ammunition has significantly decreased. For example, the demand for conventional 155 mm artillery dropped 75 percent in the years after the end of the war, com- pared with the previous decade. The 2013 sequestration resulted in a 20 per- cent cut in the amount of ammunition being procured, further exacerbating the situation.


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