A Chicago aerospace company is hoping to capitalise on Doge-inspired cost-cutting fervour and persuade the US military to embrace a seemingly surprising practice: buying used spare parts for its commercial-style planes.
For years, AAR, which services aircraft for government and commercial clients, has maintained the military could save billions by buying overhauled parts, also known as “used serviceable material”, rather than defaulting to new for hundreds of its aircraft.
The company’s lobbyist has pitched the so-called Department of Government Efficiency in the hope that newfound thrift in Washington may finally work in its favour. But in doing so, the company faces a higher hurdle than overcoming armrest-clutching sceptics. Instead, the biggest obstacle appears to be changing how the Pentagon’s massive bureaucracy does business.
US defence secretary Pete Hegseth has said he wants to cut the Pentagon’s $850bn budget by 8 per cent, or about $50bn. AAR chief executive John Holmes said the new business could be “material” to the company over time.
“When you’re in a moment like we’re in now, things are moving very quickly, and radical change can happen,” he said. “That’s why we think it’s a great time to present this concept more fully so it can be broadly adopted.”
US Federal Aviation Administration-certified used parts cost about half the price of spare parts purchased new from Boeing and other aerospace manufacturers. Oliver Wyman consultants wrote in 2022 that the Pentagon could save at least $1.8bn over seven years if it began using overhauled parts in its commercial-style fleet.
Melius Research analyst Scott Mikus said, “$1.8bn is still a lot of money, particularly for a company the size of AAR”. Even for the US Air Force, it could fund the acquisition of 21 additional F-35s, the next-generation fighter plane.
AAR — so called after the middle name of company founder, Ira Allen Eichner, and the aviation radios he sold in the 1950s out of the back of his Studebaker — employs about 6,000 and has a market cap of $2.3bn.
Commercial carriers have deployed used parts — and entire used aircraft — for decades, and the military repairs its own parts to use in fighter jets as well.
In addition to its fighter jets, bombers and refuelling tankers, the fleet of the US armed services includes aircraft derived from commercial models, such as the P-8, a copy of the Boeing 737 used in maritime patrol. The Air Force and the Navy together have about 800 commercially derived jets, which is about the size of Southwest Airlines’ fleet.
Congress instructed the Department of Defense to begin using such parts in the 2023 National Defense Authorization Act, but implementation remains piecemeal.
“The DoD could save a lot of money across the armed services by retiring older equipment and harvesting them for parts that can be refurbished and reused, or by purchasing PMA parts for commercial derivatives,” Mikus said, referring to ‘parts manufacturer approval’, which are certified by the FAA and made by companies other than original manufacturers.
“It’s also important to keep in mind just because one actionable item is not large in the grand scheme of things, doesn’t mean it isn’t worth doing.”
It also reduces lead times to obtain parts, Holmes said. Shorter lead times are important for military readiness, and they have increased for new parts in recent years because of struggles in the aerospace supply chain.
John Cooper, a retired Air Force lieutenant general and now AAR’s senior vice-president for government and defence, said of the dozens of congressional staff and Pentagon officials he briefed in 2023, not one thought that moving to overhauled parts was a bad idea. But buying used parts adds steps to the purchasing process, including inspections and tracking the paperwork that documents a part’s history. That can turn off the decision makers within the bureaucracy.
“When you go down in the levels of the DoD, to the majors and lieutenant colonels and [federal workers] who have to make those decisions on the actual acquisition — they’re going to do the tried and true,” he said. “I call it ‘the easy button’.”
But a lobbyist AAR hired happened to have a connection to a senior figure at Doge, which was how the Chicago company was able to get a hearing when “there’s a lot of much, much larger companies than ours presenting ideas to the government right now”, Holmes said.
AAR made its formal submission to Doge in February, asking the advisory body to recommend President Donald Trump sign executive orders to buy overhauled parts and used planes. From there the politically appointed acquisition secretaries would direct their branches of the armed services to follow the order. A Doge representative did not respond to a request for comment.
Now the company is waiting to hear back. While this has not been the normal acquisition process, Holmes said, “we’re in a world where normal processes don’t necessarily apply. So we’re hoping this gets someone’s attention, and they say, ‘This is a good idea. Just get this done. Period.’”