The Army Contracting Command-Redstone, Patriot Directorate, Patriot Advanced Capability-3 missile production team provides contracting support for the Army's PAC-3 missile program, which falls under the Program Executive Office for Missiles and Space. This past year, the PAC-3 team, under the leadership of Rebecca Weirick, the principal assistant responsible for contracting, worked directly with the Office of the Secretary of Defense and the director of defense pricing, Shay Assad, to analyze production program costs, risks and potential savings.
Through utilization of the Better Buying Power policies initiated by the Office of the Undersecretary of Defense, Acquisitions, Technology and Logistics, the team negotiated the fiscal years 2014 and 2015 PAC-3 production contract for a target price of $2.5 billion -- saving the government over $550 million.
Additionally, the team's use of a Fixed Price Incentive Firm contract type for the prime and two major subcontracts may yield additional savings by sharing cost efficiency with the contractor. The FPIF contract type is a departure from the traditional use of firm fixed price. The team plans to leverage the success of the FY 2014 and 2015 negotiations by adding priced options for the FY 2016 PAC-3 production requirements to the contract, combining three production year efforts under a single procurement.
By combining three procurements into one, the team will avoid an estimated $48 million through use of tailored cost reporting and a reduction procurement lead time by one year. The experience and institutional knowledge gained through the application of these advanced contract methods will yield enduring savings and efficiencies to the taxpayer, foreign military sales partners and, ultimately, the war fighter by achieving dominant capabilities through acquisition excellence and innovation.
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