Performance-based logistics (PBL) contracts are agreements between a customer and a supplier that are based on the supplier’s ability to provide a certain level of performance, such as delivery times, cost savings, and product quality. The customer pays the supplier based on the performance of the supplier, rather than paying for a specific product or service.

Performance-based logistics

performance-based logistics (PBL), also known as performance-based lifecycle product supportit is a defense takeover cost-effective strategy weapons system support that was adopted in particular by the United States Department of Defense. Rather than contracting to acquire parts or services, the DoD contracts to secure results or results. In PBL, the product support manager identifies product support integrator(s) (PSI) to deliver performance results as defined by performance metric(s) for a system or product. The integrator will typically commit to this level of performance at lower cost, or higher performance at costs similar to those previously achieved in a non-PBL or transactional portfolio of product support agreements for goods and services.

As the preferred approach to supporting weapons system logisticsseeks to provide product support as an affordable, integrated performance package designed to optimize system readiness. PBL meets a weapons system’s performance goals through a support structure based on long-term performance agreements with clear lines of authority and responsibility.

DoD program managers are needed to develop and implement performance-based lifecycle support strategies for weapons systems. These strategies should[why?] optimize total system availability, minimizing costs and logistic footprint. Trade-off decisions involve cost, useful service, and effectiveness.[clarification needed] The selection of the specific performance metrics should be[why?] carefully considered and supported by an operationally driven analysis, taking into account technology maturity, fiscal constraints and timeline. In implementing performance-based lifecycle product support strategies, metrics should be[why?] appropriate to the scope of responsibilities of integrators and product support providers and must be[why?] revisited as needed to ensure they are driving the desired behaviors across the enterprise.

PBL strategies do not require work to be contracted out to commercial contractors; integrating the best characteristics of the public and private sectors is a key component of the support strategy. Rather than a predetermined course of action, product managers are directed to implement “maintenance strategies that include the best use of public and private sector resources through government/industry partnership initiatives, in line with the statutory requirements”.

Often,[citation needed] employing a PBL strategy resulted in increased system performance issues or increased costs.[why?]. Examples include the C-17 PBL, FIRSTand PBtH. Ideally, the provider profits by controlling the constituent elements (PSIs) that are used to generate the performance results.

In PBL, typically part or all of the payment is tied to the provider’s performance and the buyer is not involved in the details of the process, it becomes crucial to define a clear set of requirements for the provider. Occasionally, governments, most particularly Defense, fail to clearly define the requirements. This leaves room for providers to intentionally or unintentionally misinterpret the requirements, which creates a game-like situation and excuses for providing imperfect services.

History

DoN PBL Guidance Jan 03.pdf

Beginning in the early 1990s, emerging trends of rising field system support costs and reductions in the overall reliability and operational readiness of weapon systems were recognized as problems that could continue if unabated. As a result, a performance-based approach, PBL, was advanced by the US Department of Defense in its annual report. Quadrennial Defense Review in 2001. Since then, not only has the US DoD adopted the PBL approach, but other countries have adopted this strategy as well. Many programs that have employed it have resulted in increased system availability, shorter maintenance cycles, and/or reduced costs.[which?]

awards

Since the inception of the PBL concept, there have been numerous examples of DoD systems that have produced expected results and many that have exceeded – some extremely – performance expectations. The annual PBL Awards highlight achievements in three areas:

Criticism

In 2009, partially in response to some[who?] who believed that PBL concepts were inadequate, and to assess the current state of support for DoD systems, the Office of the Assistant Under Secretary of Defense for DoD Materiel Readiness (OADUSD(MR)) initiated a Reform Product Support Assessment of Weapons System Acquisition. Its final report, signed by Ashton B. Carter, Under Secretary of Defense for Acquisition, Technology and Logistics, states the essence of the PBL concept by stating that “there remains a strong consensus that a results-based, performance-oriented product support strategy It’s a worthy goal.” Additionally, it identified eight areas that would make product support even more effective if developed and improved:

  1. Product support business model
  2. Industrial Integration Strategy
  3. Supply Chain Operational Strategy
  4. Governance
  5. Metrics
  6. Operating and Support Costs (O&S)
  7. Analytical tools
  8. Human capital.

In 2003 the United States Air Force found that logistical support contracts were more expensive than carrying out support operations internal through its organic deposit system.

See too

References

External Links


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