In the old Royal Air Force we had engine bays. An engine bay could be staffed by as many as 150 personnel but lets say this one has 40 staff. The section includes a Fg Off OC, a FS SNCO IC, a Chief Tech, 4 Sgts, 8 Cpls and 25 ORs making up the build teams and module cells. In support of the engine bay you’ll likely have a Test Bed, probably staffed by a CT or Sgt and perhaps a Cpl. This too requires power and maintenance. Then there’s the EFDC with either a Cpl or a Sgt. In brackets you have the actual cost to the RAF – capitation rates which cover health, welfare, admin, accommodation etc are approx the same as your wage so a FO who gets paid £24k costs the RAF £48k. All wages in the following calc' are estimates.
FO 24k x1 (48k)
FS 38kx1 (76k)
CT 35kx2 (140k)
Sgt 32kx4 (504k)
Cpl 28kx9 (504k)
OR 20k25 (1000k)
Total cost = £2,272,000. per year
The Engine bay is supported in part by Supply Sqn. This will include perhaps a Cpl and 5 ORs.
Cpl 28kx1 (56k)
OR 20kx5 (100k)
Both the Engine Bay and the Supply Sqn are supported by an IPT. This could include 3 civilians, a Flt Lt, a Sqn Ldr, a FS, and a couple of Sgts.
Sqn Ldr 38k x1 (76k)
Flt Lt 32k x1 (64k)
Sgt 32k x2 (128k)
Civvie 15k x3 (45k)
Total cost = £313k per year
Total cost so far = £2,585,000. per year
Right, lets look at the technical costs. The engine costs the RAF £100k in spares for a repair and £200k for a full overhaul. Throughout the year the bay carries out 10 repairs and 6 overhauls. Total cost in spares and materiel = 2200k
Total cost so far = £4,785,000 per year.
Not taking into account training of staff and the running costs of the buildings and facilities the cost to the RAF for supporting this engine over 10 years is approx $50m.
Ratio of officers to Airmen: 3 to 49
Ok, lets look at outsourcing to industry. You need a team to oversee the contract:
Sqn Ldr 38k x1 (76k)
Flt Lt 32k x1 (64k)
Sgt 32k x2 (128k)
Civvie 15k x3 (45k)
Total cost = £313k per year
Cost of contract = £45m
Saving to the RAF by outsourcing = £2,537,000 over 10 years.
Ratio of Officers to ORs = 1:1
If, over and above all of this, you can justify co-locating Sqns at one Stn thus allowing you to close a stn because you no longer need the real estate and can sell it off the savings can be immense.
I’m not saying that the RAF is better off with outsourcing to industry, especially when it comes to the quality of the end product but when it comes to cost savings, the proof is there. You don’t need hundreds of ORs per officer when you outsource – all you need is somebody to manage the contract, hence the ratio of officers to ORs is higher.