When Boeing (NYSE:BA) delivered the fifth of 15 new Chinook CH-147F helicopters to the Canadian military earlier this month, it delivered more than just a new military helicopter.
As is the case with most defence contracts these days, the craft itself comes with a service agreement under which Boeing assumes the responsibility and financial risk for keeping it maintained.
"It's really a power by hour agreement," said Bob Cantwell, CEO for Aeroinfo Systems Inc., the Richmond-based company that developed the software used to manage the highly complex maintenance agreement. "They pay a certain amount for every hour they fly."
Modern aircraft can have hundreds of pieces of software and thousands of sensors and "rotable" parts (parts that can be rebuilt). Each has a serial number, and every time one of those parts comes off an airplane – either to be rebuilt and reused or replaced – it has to be tracked.
That's where Aeroinfo comes in. The Richmond-based software company – a division of Boeing – specializes in developing software for the military and aviation industry.
The company received an $8 million contract to develop software for the $5 billion Chinook CH-147F helicopter program, which includes a 20-year in-service agreement.
Aeroinfo's role was developing a performance measurement system (PfMS) that allows Boeing to demonstrate to the DND how it will meet its obligations to keep the helicopters maintained, and allows DND to measure how successful the company is in living up to those obligations.
"We have to anticipate what's going to go wrong, when they are going to need maintenance – being able to look forward so that we don't end up with these things in maintenance on the ground when they need to fly them," Cantwell said.
"It takes a lot of the onus off the operator because that deep knowledge to maintain those things and make the decisions to get optimal performance out of them is done by the manufacturers."
Although designed for the Chinook contract with DND, the software could be used for other DND programs, Cantwell said.
"It was developed so that it could be used for other platforms within the Canadian military, if they so chose to do that, or around the world so that Boeing could reuse the same work that's being done in other countries."
The Chinook CH-147F is one of the helicopters that will replace Canada's aging Sea King fleet as part of an $11 billion replacement contract.
The other supplier – Sikorsky Aircraft Corp. – has had less success than Boeing in delivering its CH-148 Cyclone to DND. The program has been plagued with delays. While Boeing has now delivered five of the 15 Chinooks it is building for DND, Sikorsky has yet to deliver a helicopter that meets the government's specifications.
Aeroinfo was founded in Richmond in 1996 providing software for Canadian Airlines. Then a 15-person company, it now employs 240 people.
Although Boeing has manufacturing facilities in Seattle, Microsoft Corp. (Nasdaq:MSFT) is also based there, so the competition for software developers there is fierce. It's one of the reasons Boeing has kept Aeroinfo in Richmond.
"We have grown it where it is today based on really great access to talent," Cantwell said. "If you're trying to attract talent [in Seattle], you're competing with Microsoft and a lot of other companies down there."
Cantwell added that the Sauder School of Business's Centre for Operations Excellence has been an important resource for the company. One of the things the research centre has helped Aeroinfo with is performance logistics – a key part of the PfMS system.
"That's just a gold mine, that area, and it's growing really fast. We've been hiring [graduates] out of UBC as fast as we can get them."
The centre offers a Master of Management in Operations Research program, which is unique in the amount of hands-on work the graduates get with industry partners like Aeroinfo.
"Aeroinfo has been one of our partners for several years," said Harish Krishnan, the centre's director of operations. "Aeroinfo has hired a lot of our students who have actually worked on a lot of the projects with Aeroinfo." •
