PBL CONTRACTING

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PBL CONTRACTING
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Statutory Requirements see www.http//uscod.house.
gov

• 10 USC, Chapter 131 Planning and Coordination
• Section 2208 -- Working-capital funds
• Section 2208(j) -- Direct sales of items
• 10 USC Sec. 2320 Rights in technical data
• 10 USC, Chapter 145 Cataloging and
  Standardization
• Section 2451  -- Defense supply management
• Section 2452  -- Duties of Secretary of Defense
• Section 2453  -- Supply catalog distribution and
  use
• Section 2454  -- Supply catalog new or obsolete
  items
• Section 2456 -- Coordination with General
  Services Administration
• Section 2457  -- Standardization of equipment
  with North Atlantic Treaty Organization members

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Statutory Requirements, cont. see
www.http//uscod.house.gov

• 10 USC, Chapter 146 Contracting for Performance
  of Civilian Commercial or Industrial Type
  Functions
• Section 2460 -- Definition of depot-level
  maintenance and repair
• Section 2461 -- Commercial or industrial type
  functions required studies and reports before
  conversion to contractor performance
• Section 2461a-- Development of system for
  monitoring cost savings resulting from workforce
  reductions
• Section 2462 -- Contracting for certain supplies
  and services required when cost is lower
• Section 2463 -- Collection and retention of cost
  information data on converted services and
  functions
• Section 2464 -- Core logistics capabilities
• Section 2465 -- Prohibition on contracts for
  performance of firefighting or security-guard
  functions

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Statutory Requirements, cont. see
www.http//uscod.house.gov

• 10 USC, Chapter 146 Contracting for Performance
  of Civilian Commercial or Industrial Type
  Functions
• Section 2466 -- Limitations on the performance of
  depot-level maintenance of materiel.
• Section 2467 -- Cost comparisons inclusion of
  retirement costs, consultation with employees,
  waiver of comparison.
• Section 2469 -- Contracts to perform workloads
  previously performed by depot-level activities of
  the Department of Defense requirement of
  competition.
• Section 2470 -- Depot-level activities of the
  Department of Defense authority to compete for
  maintenance and repair workloads of other federal
  agencies.
• Section 2472 -- Management of depot employees.
• Section 2473 -- Procurements from the small arms
  production industrial base.

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Statutory Requirements, cont. see
www.http//uscod.house.gov

• 10 USC, Chapter 146 Contracting for Performance
  of Civilian Commercial or Industrial Type
  Functions
• Section 2474 -- Centers of Industrial and
  Technical Excellence designation public-private
  partnerships.
• Section 2475 -- Consolidation, restructuring, or
  re-engineering of organizations, functions, or
  activities notification requirements.
• 10 USC, Chapter 152 Issue of Supplies,
  Services, and Facilities
• Section 2563 -- Articles and services of
  industrial facilities sale to persons outside
  the Department of Defense

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Regulatory Requirements

• Federal Acquisition Regulation (FAR)
• DoDD 5000.1, The Defense Acquisition System
• DoDI 5000.2, Operation of the Defense Acquisition
  System
• Defense Acquisition Guidebook
• DOD 5105.38-M, Security Assistance Management
  Manual
• DoD 4140.1-R, DoD Materiel Management Manual
• DoD Directive 5230.24, "Distribution Statements
  on Technical Documents,"
• AR 25-1, Army Information Management
• AR 70-1, Army Acquisition Policy
• AR 350-1, Army Training
• AR 350-35, Army Modernization Training
• AR 700-4, Logistics Assisrance

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Regulatory Requirements, cont.

• AR 700-127, Supportability Strategy (SS)
• AR 700-144, Demilitarization and Trade Security
  Controls
• AR 708-1, Cataloging of Supplies and Equipment
  Cataloging and Supply Management Data
• AR 710-1, Centralized Inventory Management of the
  Army Supply System
• AR 710-2, Inventory Management Supply Policy
  Below the Wholesale Level
• AR 710-3, Asset and Transaction Reporting System
• AR 715-9, Contractors Accompanying the Force
• AR 725-50, Requisition, Receipt, and Issue System
• AR 750-1, Army Materiel Maintenance Policy and
  Retail Maintenance Operations
• AR 750-2, Army Materiel Maintenance Wholesale
  Operations
• AR 750-10, Army Modification Program

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National Defense Authorization Act

• Requires a report to Congress prior to award of a
  prime vendor contract for depot level
  maintenance, or repair of a weapon system.
• Requires military services to describe
  competitive procedures used to award contract and
  provide an analysis that demonstrates government
  savings over life of contract.
• Requires analysis of the extent contracts conform
  to 10 U.S.C. 2466 (50/50) and 10 U.S.C. 2464
  (core logistics requirements).

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Contracts

• Functional area within the acquisition process
  that provides direct support to the requiring
  activity
• A legal document containing all necessary
  elements for a contractor
• To provide acceptable products or services to the
  Government
• Within a specified time period
• A contract contains the Governments
• Statement of need
• An agreed price or cost
• Specific instructions for an expected outcome
• Financial data
• Other special guidance or requirements

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Contracting Officer

• Authorized to legally negotiate and sign
  Government contracts
• Duties
• Solicit and evaluate contractor proposals
• Negotiate, award, and administer contracts

Early involvement of the Contracting Officer is
key to obtaining a contract that reflects the
needs of the requiring activity.
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Memorandum of Agreement (MOA) Memorandum of
Understanding (MOU)

• Usually negotiated between Government Agencies,
  examples include
• PM and Combat Developer
• PM and PM
• PM and DLA
• Defines terms of agreement, performance outcomes,
  and stakeholder responsibilities
• Is not legally binding
• Does not require contracting officer signature
• Resolution of disputes is normally handled by the
  interested parties.

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Preferred PBL Contracting Method

• Competitive
• Firm Fixed Price
• Long term
• Incentives

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Elements of a PBL Contract

• Performance Objectives
• Responsibilities
• Reliability Growth targets
• Maintainability improvements
• Term of contract
• Flexibility (range of support)
• Diminishing manufacturing sources
  (DMS)/obsolescence
• Product Data Management ( Configuration
  Management)
• Continuous modernization/improvement
• Foreign Military Sales (FMS) Support Options (to
  include non-PBL support)
• Cost reduction/stability

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Contract Incentive Case Study
Operational Readiness Profit
Profit Plus Maximum Performance Adjustment

Profit Plus Minimum Performance Adjustment
Minimum Profit

• Additional Metrics to Prevent Gaming
• Separate Metrics for Contingency Options

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Contract Incentive Case Study, cont.

• To Prevent Gaming
• One Battalion Below 90 for Two Consecutive
  Monthly Reporting Periods No Incentive Fee
• Any One System Down More Than 30 Days 50 of
  Incentive Fee MAXIMUM
• Three Battalions Less Than 90 (During Award Fee
  Period) No Incentive Fee
• Division Less Than 90 for a Month No Incentive
  Fee for That Period and Contractor Increases
  Spares by N Where N Is the Number of Unfilled
  Requisitions That Month
• Division Less Than 90 Two Consecutive Months
  No Incentive Fee for That Period and Contractor
  Spares Increase by N2 1 Where N2 Is the Number
  of Unfilled Requisitions During Month 2

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Funding the PBL Contract

• Army Procurement Funds (APA)
• Funded through the Program Management Office
• Non-recurring activities
• Initial spares
• Reliability improvements
• Incentive Fees
• Army Working Capital Funds (AWCF)
• Funded through the IMMC
• Depot repair
• Field Service Support

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Funding the PBL Contract, cont.

• O M Appropriation Funds (OMA)
• OMA (has greatest flexibility and is hardest to
  get)
• Direct to PM
• Recurring sustainment and training activities
• Depot repair
• FSRs
• Replenishment spares
• Incentive Fees
• OPTEMPO
• Direct to PM, or
• Funds received from Major Commands
• Recurring sustainment and training activities
• Replenishment spares
• Training

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PBL Guidelines

• Invisible to Field
• Use of Standard Army Information Systems (STAMIS)
• Maximize use of Public Private Partnerships or
  Organic Depots
• Use Organic Supply
• Per AR 700-4, FSRs can only be contracted for a
  period of five years. Must get waiver from AMC
  for additional time.