Although generally regarded as the ‘poor cousin’ to acquisition contracts, sustainment opportunities can be just as, if not more rewarding for a business. While large Defence acquisitions seem to get all the attention, where a capability really comes together is in the management of its long term sustainment. While these terms can be foreign to some, those in Defence circles would be familiar with ‘acquisition’ and ‘sustainment’: acquisition being the design, development and introduction into service of a new capability, whereas sustainment refers to the long term maintenance, repair and upgrade of a capability while in service.
This week Defence has provided notice for the upcoming Landing Helicopter Dock (LHD) Sustainment contract, which will also include the 12 LHD Landing Craft. This will be a two stage procurement commencing with an Invitation to Register Interest (ITRI) allowing for the creation of a shortlist to bid on the final Request for Tender (RFT). It is anticipated that the ITR will be released May/Jun this year with the aim of a final contract being signed by the end of 2018.
Similarly, the ITRI for the Offshore Patrol Vessels (OPV) has been released also offering a long term sustainment opportunity via a two stage procurement. The first of the OPVs is expected to come into service by late 2021, with the following 11 vessels being delivered at 9 month intervals. This allows for a structured ramp up of a sustainment program for the managing contractor. The final contract is expected to be performance based and utilises a new sustainment concept for Defence that requires the contractor to play a greater role in the transition between acquisition and sustainment. The ITRI is due 18 May 18.
These sustainment contracts usually run for up to 15 years and allow for effective workforce planning and cash flow as the pricing structure works around fixed monthly payments for recurring tasks. In terms of staffing, companies can develop in-house skill sets over this time providing opportunities for graduates and junior staff. While these contracts are more suited to large companies to act as a prime, they do involve a large number of the SME community as part of the broader supply chain.
Maritime sustainment contracts are an area of particular expertise for Engineering Business, so if you are after specific advice on this topic or any other opportunity listed below, feel free to contact us. You can also subscribe to this newsletter for regular weekly updates.