With Trainers Scarce, Military Tries Civilians

When cadets in the Kuwaiti air force show up for flight training next year, they will be greeted not by Kuwaiti military instructors but by American civilians who are employees of McDonnell Douglas.

Kuwait, an emirate about the size of New Jersey, has 50 combat jets, but its air force does not have an academy to train its pilots. So, the Persian Gulf monarchy recently turned to Douglas Aircraft in Long Beach to set up and staff a military flight training institute.

In a similar program, Douglas, a subsidiary of McDonnell Douglas, is bidding to have its instructors teach U.S. Air Force pilots to fly the new C-17 cargo jet. And the Navy has contracted with Douglas to provide T-45 jet trainers and everything the service needs to teach its cadets how to fly the new plane.

These programs are part of a major new business growth area that Douglas has targeted with hopes of capturing industry leadership. They also mark a shift in military culture--the privatization of training.

Although the market is still in its infancy, aerospace contractors are leaping at what is developing into a multibillion-dollar business for armed services training. So far, the virtually untapped U.S. military is the target of greatest opportunity.

“The budget pressures on the Department of Defense lead them more and more to put labor intensive services outside,” Douglas President William T. Gross said. “The market will grow.”

Under its current authorization from Congress, the military services are allowed to have 2,174,250 people in uniform on active duty. But this limit on the military forces has not grown nearly as fast in recent years as the Pentagon budget.

As a result, the Pentagon is strapped for manpower and it is increasingly turning to private contractors for services such as equipment maintenance, military base support and, most importantly, training.

“Let’s say there is enough in the budget for 1,000 men in naval aviation,” Gross said in a recent interview. “It is much better from the Navy’s standpoint to have 1,000 of them be trained pilots, rather than have 800 of them be trained pilots and 200 of them doing the training. That’s the principle.”

This represents a big change, because military training in the United States has historically been the exclusive province of the military itself. Training is a cornerstone in the creation of the military mind, which traditionally views humans as weak and in need of organization.

“There is an element of the neophyte getting inculcated into the fraternity,” said Capt. Bruce Marshall, program manager for the Navy’s T-45 training system. “In training, the student needs to see a naval aviator wearing wings at the podium.”

The Navy is trying not to change that--at least initially--but at the same time is taking an innovative approach to improve its flight training systems and reduce costs, Marshall said.

Meanwhile, aerospace contractors are aggressively looking for new growth opportunities, now that the Reagan Administration arms buildup has reached a plateau. Selling services instead of weapons to the military is an attractive, stable, low-risk and very long-term business.

Knowing the Product

Industry executives believe that there are virtually no limits on the scope of technical training they can sell to the military, owing to what they see as their superior knowledge of the increasingly complex weapons they make and their greater efficiency.

“Who knows the product best?” Gross asked rhetorically, and answered: “The person who invented the product. The company that designed the product.”

In addition, there is the legendary inefficiency of military organizations, a subject defense executives are careful to avoid. Although the military has improved, in some cases it continues to lag years behind private industry in utilizing modern management methods and computerization. It appears that contractors will be able to train recruits at dramatically lower costs than the military.

Although the industry’s role is limited so far, Gross believes that some day private contractors may provide instructors that will ride in the back seats of jets on advanced training missions.

“It is not quite there yet, but I don’t see any reason why it couldn’t be there,” Gross said in the interview.

Just this month, Douglas won an Air Force contract to provide classroom and aircraft simulator training for Air Force pilots on the F-15 fighter, the nation’s most advanced fighter. The company will use retired Air Force pilots to conduct the training, which maintains a military flavor and has the added advantage of freeing active-duty Air Force officers from the classroom.

Nonetheless, such prospects are troubling to some military officials, who worry whether military discipline and behavior will be affected by a commercial approach to training, especially in something as sensitive as in-flight combat training.

“The next step would be for us to contract with these firms to fight the war,” quipped Lawrence A. Skantze, a recently retired four-star general who commanded Air Force research and procurement, “Of course, we would want a firm fixed-price contract on that.”

But so far that is not a possibility taken seriously by either the military or the aerospace industry.

Will Conduct Ground Training

“We don’t provide drill sergeants,” Gross said. “What we provide is knowledge. The cadets who are taking air-crew training with our system will still be barracked and led by people who are employed by their arm of the service. What we provide is the classroom training and the management of that training.”

Nonetheless, military officials are sensitive about the issue and are careful to set down limits.

“We are not running an airline. We are preparing for wartime missions,” said Capt. Ronald Ladnier, program manager for the Air Force’s training program for the new C-17 cargo jet. “We are not preparing to land at LAX. We are going to fly in wartime conditions.”

In the C-17 training program, the contractor will conduct ground classes but will turn over actual in-flight training to Air Force officers, Ladnier said. Still, that is as significant a role as any contractor has had in training Air Force pilots.

Douglas, United Airlines and Singer Corp. are competing for the $800-million C-17 air-crew training program. Douglas is the prime contractor for production of 210 C-17 cargo aircraft, which will cost $26.4 billion (not including additional costs resulting from future inflation).

An innovative feature of the C-17 crew-training program, Ladnier said, is that the contractor will be required to guarantee to the Air Force that students will succeed on their proficiency tests to fly the C-17.

“We are getting a guaranteed product,” he said. “When you look at the bottom line, people are convinced this is a good value.”

Fixed-Price Contract

But Douglas’ most significant thrust into the training market is its Navy T-45 program, estimated to have a value of $5 billion to $6 billion (including the effects of estimated future inflation) during its 13-year life.

Under this unique program, according to Jack E. Crosthwait, Douglas vice president and general manager for the T-45, Douglas will sell the Navy--at a fixed price--302 of the aircraft, which are derivatives of the British Aerospace Hawk.

“It is the way of the future,” Crosthwait said about the program.

British Aerospace will build components for the aircraft amounting to 50% of its value. Douglas is undertaking substantial modifications to bolster the aircraft’s structural strength so that it will tolerate the stress of landings on an aircraft carrier--comparable to dropping a plane off a two-story building. Douglas will build T-45 components at its Torrance and Long Beach plants and assemble the aircraft at a small facility in Palmdale.

In addition to the aircraft, Douglas will provide aircraft simulators, textbooks, course work, a computerized training management system and maintenance services for all the hardware.

Moreover, Douglas may eventually be in a position to take over some ground training and flight simulator training as the T-45 program matures.

Douglas’ “hard sell” for the T-45 program is the assertion that the system will reduce the Navy’s training costs by about 50% per student.

The company estimates that savings in maintenance, spare parts, personnel and fuel consumption during training flights will cut the Navy’s cost of training 600 aviators a year to $255 million from $500 million.

Aided by Computers

One efficiency of the new system is that the T-45 will replace two existing aircraft that provide basic and advanced jet training, according to Marshall, the program manager. Another important change is the introduction of computerized management of training flight schedules.

Crosthwait, a former Naval aviator, recalled that during his flight training 30 years ago, flights were scheduled by an instructor who would write out every flight number, departure time and mission description on a large board for hundreds of flights. Today, things are still done much the same way, he said.

As large as the Navy program is, Douglas has a gleam of hope in its eye that the T-45 system can eventually be sold to the Air Force, as well.

The Air Force was forced to cancel its own T-46 trainer earlier this year after the program experienced technical problems, schedule delays and cost overruns.

The T-45 is not a perfect replacement for the T-46, because the Air Force wants a basic trainer, according to Skantze, the retired Air Force general. The T-45 is considered a “more sporty” aircraft. In addition, the Air Force had wanted a side-by-side seating arrangement, whereas the T-46 has a tandem seating arrangement, Skantze said.

Nonetheless, many observers say that Congress is likely to reject another Air Force effort and instead force the T-45 on the Air Force.

“It isn’t obvious what the Air Force will do,” Gross said. “I think we have a good shot.”

The Douglas president said a decision is still a few years away, but that the company would consider submitting an unsolicited proposal to sell the T-45 to the Air Force at some future time. An Air Force commitment to buy the T-45 could improve production efficiency enough to cut the price of the plane by as much as 10%, but Navy officials are being careful to not antagonize the Air Force by actively advocating the T-45.

Faces Stiff Competition

If the Air Force does buy the T-45, it would more than double the program’s size, putting it into double-digit billions of dollars. Already, Douglas’ training systems revenue is estimated to be several hundreds of millions of dollars annually.

Eventually, Gross hopes that the T-45, C-17 and Kuwaiti systems will become models that can be marketed to air forces all over the world.

Although it is a fertile new market, competition is tough. Singer’s Allen Division, Flight Safety International and United Airlines are all in the flight training market. The Singer division has won a number of contracts to produce training course work for such military aircraft as the F-18, EA-6B, CH-46, SH-60B and others. United has extensive operations in pilot training. And Flight Safety operates 29 flight training centers for pilots around the country.

Meanwhile, Douglas has a number of training operations that have been consolidated under its control. The company acquired the flight training operations of American Airlines, Dallas, Tex., in 1986, as well.

Despite the stiff competition, Gross said Douglas hopes to take leadership of the industry and sees the current C-17 system as a key turning point.

“If we win the C-17, we believe we can be in the leadership position,” Gross said. “That is our next major goal. We haven’t lost any major competitions in the very young life of our (training) division.”