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October 31, 1999

The Army had planned to invent a new inventory control system for Apache spare parts to be known as the Prime Vendor System, but these efforts have collapsed. (It had been expected that other programs and services would adopt the system if it had worked.) The original idea was for a contract team of industry officials and defense companies to manage the purchase, storage, and shipment of Apache spare parts. This would allow industry to use its management skills and cost incentives to keep the prices as low as possible. Why the talks failed is hard to pin down (and the industry officials remain convinced that talks are simply being revamped and did not fail). The contractors wanted to take control of the Army's existing $200 million stockpile of spare parts, and the Army was concerned that this treasure trove would simply disappear into the system. Industry officials insisted that for the system to work, it had to be the only system for spare parts, as duplicate systems would simply work against each other, and the Army spare parts stock would be used up in a couple of years anyway. Industry complained that the Army was giving it the wrong incentives to make the deal work, and wanted the Prime Vendor System to handle not just replacement parts for existing systems, but the purchase of advanced systems such as the new Second Generation Forward-Looking Infrared Radar.--Stephen V Cole

The US Congress is taking a tough line on the new multi-year funding policy of the Pentagon. The Pentagon insists that multi-year funding is the best way to keep programs moving efficiently, by ensuring that funds will be there in future years. Congress, on the other hand, is concerned that multi-year funding commitments may exceed the ability to determine if systems will work as advertised or will even be needed. Focus of the debate remains the F-22 Raptor, since the Air Force wants to ensure that the plane moves forward and many in Congress are determined to shut down the program.--Stephen V Cole