SOLE PBL Workshop 19 Aug 04

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Defense Acquisition University
A premier corporate university serving DoD
Acquisition, Technology, and Logistics
Dean Newman, DAU Mid-Atlantic
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Logistics Transformation Objectives

• Project and sustain the force with minimal
  footprint
• Implement performance-based logistics to compress
  the supply chains and improve readiness for major
  weapon systems and commodities
• Reduce cycle times to industry standards

3
PBL Buys Capability
Increased Operational Availability
4
PBL Reduces Cost
Cost Avoidance / Savings from PBL
5
DoD Has Created a New STRUCTURE andSTRATEGY for
SUPPORT
STRATEGY
STRUCTURE
Buy Weapon System Support As an Integrated
Package, vice Segmented Functions
Designate a Single Point of Accountability for
the Weapon System from Cradle to Grave
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DOD 5000 Policy TLCSM
The PM shall be the single point of
accountability for accomplishment of program
objectives for total life cycle systems
management, including sustainment.
5000 Series
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PM Responsibility for TLCSM
BEFORE
PM ROLE DIMINISHES
A
C
B
System Development Demonstration
Tech Dev
Concept Refine
EMD, Demonstration LRIP Production
Throw it over the fence
LOG INFRASTRUCTURE
SUSTAINMENT
TODAY and into the FUTURE
PM ROLE CONTINUES
EVOLUTIONARY
A
B
C
System Development Demonstration
Tech Dev
Concept Refine
EMD, Demonstration LRIP Production
SUSTAINMENT
UPGRADES
TLCSM
LOGISTICS INPUT/SERVICES
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DOD 5000 Policy PBL
PMs shall develop and implement
performance-based logistics strategies
that optimize total system availability while
minimizing cost and logistics footprint.
5000 Series
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Deputy Secretary of Defense 4 Mar 2004 PBL Memo
I direct the USD(ATL)to issue clear guidance
on purchasing using performance criteria. I
direct each Service to provide a plan to
aggressively implement PBL Paul
Wolfowitz Deputy Secretary of Defense
Each Service to provide a plan to aggressively
implement PBL, including transfer of
appropriate funding, on current/planned systems
for FY06-09
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PBL Buys Outcomes
Outcomes
Transactions
REPAIRS
SPARES
ENGINEERING
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PBL Incentivizes THE RIGHT THINGS

• Readiness
• Reliability
• Accountability
• Win-Win
• Relationships
• Optimizes for the
• Warfighter

• PBL pays for PERFORMANCE, not transactional good
  (parts) and services (repairs)
• Minimizing repairs and spares increases profit
  for the support provider
• There is a SINGLE focal point responsible for
  integrating all sources of support to provide
  performance outcomes
• DoD gets guaranteed results at a fixed price the
  Support Provider gets the authority and
  flexibility to maximize their profit
• PBL can be vertically (weapon system) oriented or
  horizontally (commodity) oriented

PBL RESULTS
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The HIDDEN Cost ofUnreliable Systems
PBLs Guaranteed Outcomes Reduce Footprint
Requirements!
The Original Requirement 12 Mission Ready
Aircraft
To Maintain an Operational Availability of
75 Requires 16 Aircraft And the
Equipment/ Material for 4 More Aircraft
A Reduction in Predicted Reliability Requires
Additional Maintenance Personnel To Maintain
Same Level of Readiness
Increased Stocks Require Additional Force
Protection Personnel and Fuel, Water and
Subsistence to Support the Entire Force
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Scope of PBL Strategy
PBL Maturity Level

• Scope can range from process to platform level
• Most existing PBLs are at sub-system level
• The PBL scope can grow over time
• Look for opportunities to transition to PBL
• The broader the scope, the greater the
  transition of
• risk and support responsibility from DoD to the
  
• support provider

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OK, But How Do I Get
TO THERE?
FROM HERE
Performance Based Support Strategy
Traditional Support Strategy
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The PBL Blueprint
Implementing PBL
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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Integrate Requirements and Support
Durable
Reliable
Supportable

• EXIT Requirements Based Documents (MNS, ORD)
• ENTER Capabilities Documents (JCIDS) (ICD, CDD,
  CPD)
• Focuses on Requirements in terms of overall
  CAPABILITIES versus discrete Performance
  REQUIREMENTS
• A requirements capability is performance in an
  operational environment that is reliable,
  transportable, supportable, and affordable
• Supportability linked with Performance in JCIDS

Warfighters need capabilities that can perform
reliably
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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Establish the PBL Team
Program Office (Chair)
Customers/Users
Cultural Change!
Owners/Operators
Organic Support Organizations
OEMs/Contractors
PBL changes the public/private relationship
from arms length to Arm in Arm
A True Joint Effort
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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Define and Document System Baseline

• What is the SCOPE of your support requirement?
• The whole system, a subsystem, or ??
• Resources, Equipment, Location
• Who are the key STAKEHOLDERS?
• Program Office
• Users/Customers
• Support Providers
• Service Corporate Structure
• What are your Cost and Performance OBJECTIVES?

• What is your STARTING point?
• What is your objective END point?

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Example
Weapon System
Replaces Dragon 2.5x range capability Defeats all
known armor Fire and Forget Since MS III FRP
Decision 93 flight reliability 92 First-Time
Gunner Hits (given a reliable round) In
production since June 1994 Fielded Airborne
Rangers Special Forces Light Infantry Mech
Infantry Marines
ü
ü
ü
ü
ü
ü
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System Elements
Example
Round
Training Devices

• Field Tactical Trainer (FTT)
• Enhanced Producibility Basic Skills Trainer
  (EPBST)
• Missile Simulation Round (MSR)

• Disposable launch tube assembly containing missile

Command Launch Unit(CLU)
EPBST

• Integrated day/thermalsight (LWIR)

MSR
FTT
CURRENT SUPPORT CONCEPT

• WOODEN ROUND

• 27E ORGANIC
• CLS/GOVERNMENT DEPOT

• CONTRACTOR LOGISTIC SUPPORT (CLS)

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Javelin LCCS Program Objectives

• Maintain Operational Readiness
• Lifecycle Support for JAVELIN Weapon System
  During Peacetime and War
• CLU
• Training Devices
• CLU Maintenance Trainer
• Memory Loader Verifier (MLV)
• Containers (Except Round Container)
• Round (External Only)
• Support Army, USMC, UK and FMS Hardware
• Flexible to Cover Differing Support Concepts,
  Contingencies, Hardware Modifications
• Modernize System Through Routine Support

Example
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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Identify Performance Outcomes and Metrics

• Operational Availability Are we
  ready?
• Operational Reliability Will we be
  effective?
• Cost per Unit Usage What is the
  cost?
• Footprint How much real estate do we need?
• Mobility Can we get to the fight?
• Logistics Response Time Are we sustainable?

OSD PBL Top Level Metric Categories USD/ATL
Memo Performance Based Logistics Purchasing
Using Performance Criteria 16 Aug 2004
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AVAILABILITY
Time Horizon
Available
Maximize This
System Status
Time
Active repair time
Admin time
Minimize This
Turnaround time
Turnaround time
Turnaround time
Admin and logistics delay time
Unavailable
Down time
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READINESS/AVAILABILITYMETRICS

• Inherent Availability (Ai)
• Operational Availability (Ao)
• Operational Readiness (O.R.)

PBL IS BUYING PERFORMANCE OUTCOMES
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INHERENT AVAILABILITY (Ai)

• Inherent Availability addresses only those
  features that can be designed into a system.
• Ai ________Operating time__________ Oper
  ating time Active repair time
• Ai _________MTBF_________ MTBF
  MTTR
•  

OBJECTIVE 1 DESIGN A RELIABLE SYSTEM
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OPERATIONAL AVAILABILITY (AO)
However, Ai does not account for operational
realism. There are delays

•  
• Ao _________MTBF_________ MTBF MTTR
  MLDT TAT
•  

OBJECTIVE 2 DESIGN A SUPPORTABLE SYSTEM
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OPERATIONAL READINESS (O.R.)

• The system is in an available state but
  just not being used.  
• O.R. MTBF Mean Idle Time_______
• MTBF MTTR MLDT TAT Mean Idle Time
•  
•  

OBJECTIVE 3 HAVE THE SYSTEM READY WHEN THE
WARFIGHTER NEEDS IT
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PBL Metrics

• Joint Strike Fighter
• Mission Air Combat and Weapon Delivery
• Performance Requirement Sortie Generation
• Rate (SGR) Peacetime 2/Day Wartime 3/Day

• C-17 Cargo Aircraft
• Mission Air Mobility
• Performance Requirement On Time Takeoffs
• (Scenario and OPTEMPO dependent)

Outcome Metrics must be TAILORED to the
Operational Mission of the Weapon System
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Common Sustainment Metrics
Operational Availability(Ao)
Cost / Time Unit of Operation

• Mission Capability Rate
• Mission Completion Rate (sorties, launches, etc.)
• time-free of mission degradation

• Flying hour cost
• Steaming hour cost
• Engine hour cost
• Surveillance hour cost

Logistics Effectiveness
Footprint

• Inventory forward
• Personnel in theater (military , civilian,
  contractor)
• Personnel (military , civilian, contractor)
  non-deployed
• C-17, C-141 loads

• Total inventory
• Cycle time (CWT/LRT, RTAT)
• Perfect order fulfillment
• Maintenance man-hours / time unit of operation

Which ones best fit YOUR program?
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F-117 Performance Targets
Example
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Direct Vendor Delivery MetricsAN/ALR-67(V)3
Radar Warning System
Example
Extract

• Performance Metrics
• The contractual requirements on these metrics
  are
• 1) Availability On-time fill of requisition lt5
  working days 90 Raytheon
• 2) Reliability System Mean Flight Hours Between
  Failures (MFHBF)
• a) DVD Year 1 gt 300 hours (Raytheon)
• b) DVD Year 2 gt 323 hours
• c) DVD Year 3 gt 383 hours
• d) DVD Year 4 gt 443 hours
• e) DVD Year 5 gt 475 hours
• f) DVD Year 10 gt 600 hours
• 3) Retrograde Transit time from requisition (lt
  30 calendar days) gt 90
• NAVICP to arrival _at_ Raytheon

Continuous Improvement!
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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The Need for a Product Support Integrator
The PSI is a single focal point of responsibility
for integrating all support
TLCSM Mandates the PM as Life Cycle Manager,
including Sustainment
Depot Repair
Supply/DLA
Contract Support
Transportation
Organizational Maintenance
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Vertical PSI Model
Product Support Integrator
Maintenance
Transportation
Supply
Engineering
Training

• Single, overarching PRIME PSI with platform
  level
• support responsibility
• Suitable when there is a high degree of Prime
  Vendor/
• OEM consolidation of support function
  management
• Generally most feasible with new Acquisition
  systems

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Horizontal PSI Model
PM Office Product Support Integrator
APU
Engines
Avionics
Airframe
M-1 Tank
Landing Gear
Radar
Recuperator

• PBLs implemented at sub-assembly/commodity level
• PBLs generally cover common items (e.g. APUs,
  Tires)
• Entire range of support functions may be mix of
  PBL,
• non-PBL, organic, contract
• PMO PSI integrates the horizontal support to
  optimize
• for the vertical platform (e.g. F/A-18 E/F
  approach)
• Easier to implement suitable for Legacy system
  transition to PBL

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Who is the PSI?

• Candidates
• Prime Vendor/OEM
• Has knowledge of system technical data,
  proprietary rights licenses unique parts
  maintenance expertise
• 3PL (Third Party Logistics Provider)
• Good candidate for System of Systems platforms
  without one Prime
• Neutral Party
• Organic Depot or ICP
• Good for legacy systems with large organic
  support infrastructure in place, and for small
  systems or sub-systems with no real OEM or Prime
  Vendor
• Program Management Office
• Inadequate staffing best for small, highly
  unique systems

REMEMBER! PBL is not All Contract or All
Organic it is a mix of the best of both
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PSI Authority PSI Responsibility
Maintenance
Supply
Sub-Process
Full System
Subsystem
Commodity
Process
SCOPE OF PSI SUPPORT
PSI
DoD
RISK
RISK
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PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
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DOD 5000 Policy
Sustainment strategies shall include the best
use of public and private sector capabilities
through government/industry partnering initiatives
, in accordance with statutory requirements.
5000 Series
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Definition

• A public-private partnership for depot
  maintenance is an agreement between an organic
  depot maintenance activity and one or more
  private industry or other entities to perform
  work or utilize facilities and equipment.

JDMAG Report for SECDEF Public-Private
Partnerships for Depot Level Maintenance Jul
2003
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Spectrum of PBL Strategies
PBL IS NOT OUTSOURCING
More Organic
More Commercial
CONTRACTOR
ORGANIC
Contractor Support
Organic Support
MIX
Contractor Responsible For Majority of Support
Public/Private Partnering Opportunities
Traditional Organic Support Environment
PBL strategies will vary along this spectrum
depending on

• Age of System (Phase in Life Cycle)
• Existing Support Infrastructure
• Organic Commercial Capabilities
• Legislative and Regulatory Constraints

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PBL Changes HOW Support is Provided Not WHERE
it is Sourced

• Usually Organic
• Program Management
• Depot Maintenance
• Core 50/50
• Existing Infrastructure
• Marginal Workloads
• Partnering
• O-Level Maintenance
• Service preference
• DoD Transportation System
• Especially in-theater
• Configuration Control

• Usually Contractor
• Product Support Integrator
• Depot Maintenance
• Partnering
• non-core
• Contractor Field Teams
• Maintenance support
• Technical Support
• Sustaining Engineering
• Premium Transportation
• Configuration Management
• Technical Data Management

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Develop A Workload Allocation/Sourcing Plan

• An effective support strategy considers best
  competencies and partnering opportunities
• To identify what is BEST for EACH support
  function in terms of
• Capability
• Skills
• Infrastructure
• Opportunities for partnering
• Compliance with Title 10
• Public/Private flexibility
• Affordability

Where will the work be done, and who will do it?
The BCA is a valuable tool
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Make Best Use of Public/Private Competencies

• DoD Core Competencies include
• Existing Capital Investment in Logistics
  Infrastructure
• Skilled and Trained Workforce
• Ability to accomplish unique, marginal profit
  workloads not attractive to industry
• Significant opportunities for intra,
  inter-Service sharing of resources

• Industry Partner Core Competencies include
• Production and Manufacturing
• Technical Data
• Procurement
• Supply Chain Management
• Subcontractor Management
• Maintenance
• Information Networking
• Systems Engineering

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PBL Offers Multiple Opportunities for Partnering
Contractor/Depot personnel sharing workloads
Organic Depot as Subcontractor to Industry PSI
Industry Prime Vendor (Product Support Integrator)
Contractor utilizing Depot facilities
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What are the Key Title 10 Sections?

• 10 U.S.C. 2464 Core Logistics
• Performance of workloads necessary to maintain a
  core logistics capability that is
  Government-owned and Government-operated
  (including Government personnel and
  Government-owned and Government operated
  equipment and facilities)

• Ensures that the Government will always have a
  minimum essential core infrastructure of Defense
  capabilities
• MILDEPS (Services) have flexibility to define
  Core workloads
• It varies by Service, and even within Service
• Some by Weapon System
• Some by Major Commodity (e.g. Aircraft Engines)
• Services have flexibility in determining when
  they meet Core requirements
• Example Engines are Core Service has several
  engines as Core Depot Maintenance workload New
  engine workload surfaces Service determines
  that existing workload satisfies Core New engine
  workload can be contracted out (Above Core)

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What are the Key Title 10 Sections?

• 10 U.S.C. 2466 50 Percent Limitation on
  Contracting

• Not more than 50 percent of the funds made
  available to a military department in a fiscal
  year for depot maintenance may be used to
  contract for performance by non-federal
  government personnel

• Based on FUNDS, not MANHOURS or PERSONNEL
• A safety net measure by Congress to ensure
  that the MILDEPS dont abuse their flexibility
  in defining Core workloads and meeting Core
  requirements
• Used to be 60/40 trend has favored increased
  contractor support
• No clear penalties for breach
• Contractors working at Depot are not counted in
  the 50/50 computation

52
Title 10 and Partnering
10 USC Sec. 2474

• Service Secretaries can designate Depots as
  Centers
• of Industrial and Technical Excellence (CITE) in
  their
• core competencies
• After designation, Depots may enter into
• Public/Private Partnerships with Industry in
  workloads
• related to their core competency
• Workloads may be performed by Depot employees,
• Industry employees, or other entities outside
  DoD
• Under contract, subcontract, or otherwise
• Promotes efficient and optimum utilization of the
• Depot
• Promotes industry investment in Depot facilities

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Typical Process Steps

• Service designates core workloads and capability
  requirements (Identify of workload that must be
  done organically)
• PBL Contractor (PSI) DoD identify potential
  organic maintenance subcontract candidates
• Services designate potential depot sources for
  identified subcontracted candidate workloads
• Contractor negotiates PBL with depot as partner
• Contractor negotiates partnership agreement with
  depot(s)
• Contractor provides workload oversight in
  partnership with Depot

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A Partnering Success Story

• Provides Support for APUs used on the C-2,
  F/A-18, S-3, C-130 and P-3
• Navys First Public / Private Partnership
• NADEP Cherry Point... Touch Labor
• Honeywell... Program Management
• Reliability Increase Guarantees
• 45 for F/A-18
• 25 for S-3
• 15 for C-2
• 390 for P-3
• Delivery Guarantees... 2 Days (IPG 1)
• Priced by the Flight Hour
• All Inclusive, No Excuses Contract
• Obsolescence Management
• Surge Capability... 120 of Annual Flight Hours

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C-17 Global Sustainment Program Relationships
C-17 PROGRAM
GSP Contract
TSSR
BOEING
Boeing will invest 62M in Depots

• Program Management
• Asset Repair
• Depot Maintenance
• Technical Orders
• Support Equipment
• Supply Management
• Sustaining Engineering
• Engine Management

Direct Sales Partnering Agreement
Subcontracts
Boeing / Vendors
ALCs
DSPA signed/coordinated with AFMC/CC Nov 02
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C-17 ALC Partnering
Supplier assists in ALC Organic Capability
Assessment and in establishing Organic repair
capability

• SUPPLIER
• Shared Repair/Overhaul of LRUs/SRUs
• Surge Requirements
• Product Reliability Improvements
• TCTO/Service Bulletin Incorporation
• Technical/Engineering
• Technical Data/Information
• Material Management of Unique Spares
• Consumables
• Reparables
• Rotables
• Configuration Management (Class II)

• DoD
• Shared Repair/Overhaul of
• LRUs/SRUs
• Ownership of all spares
• Material Management of Common
• spares
• Operation of Retail Supply
• Organizational Level Maintenance
• Configuration Control
• Configuration Management
• Class I modifications
• Oversight of Support Contract

Engineering Data


MIP/DR Investigations
OEM Retained Efforts

Logistics Data
Spares

Service Bulletins

Obsolescence

57
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
58
A Supply Chain Management Strategy is CRITICAL!

• Materiel Support is a critical link in
  supportability of weapon systems
• All the skilled labor, advanced technology, and
  performance means little without the right part
  at the right place at the right time
• A primary target area for utilizing Industry
  flexibility, capability, and proprietary spares
  support

59
Notional Supply Chain Management Strategy
60
DLA Role in F/A-18 E/F Integrated Readiness
Support Team (FIRST) PBL

• DLA transferred F/A-18 E/F unique consumable item
  management to Navys Boeing ICP after inventory
  was bought out
• DLA is managing/supplying common consumable
  items coded to the F/A-18 E/F for I and O Level
  Navy/USMC Customers
• 7,327 NSNs
• 62.9M in inventory 52.7M due in under
  contracts
• 167.2M in sales last 24 months across all
  systems
• Boeing plans to use DLA as source of supply for
  common consumable items when best value
• To support depot level maintenance performed by
  Boeing, its subcontractors, and the 3 Naval
  Aviation Depots in the partnership

61
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
62
DOD 5000 Policy
The PM shall work with the users to document
performance and support requirements in
performance agreements specifying objectives
outcomes, measures, resource commitments and
stakeholder responsibilities.
5000 Series
63
Performance-Based LogisticsIs Built on
AGREEMENTS!
INDUSTRY/ORGANIC
Weapon System Manager
Warfighter/Force Provider
Product Support Integrator
Agreement
PM
Agreement
Provide continuous, Reliable, affordable Support
per PBA
Acquisition
Disposal
Sustainment
Visibility into cost/risk decisions across
life cycle
64
Performance Based Agreements

• Performance Based Agreements are a Critical
  Element in Implementing PBL
• Define Expectations of Force Provider
• Define Roles and Responsibilities
• Define Range of Support Requirements
• Basis for Negotiating Support Contracts
• Ensure Accountability in Meeting Warfighter
  Requirements
• Getting Them Right is Critical!

Clarify Support Expectations!
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PBA Metric Flexibility
Things Change avoid PBA rewrites
Level of Performance Metric (e.g. Ao )
PBA needs to specify a range of support
to accommodate changing priorities
and resources available
Wartime Over and Above or pre-negotiated Cost,
Services, and Metrics
Amount of Resources Available ()
66
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
67
Business Case Analysis

• BCAs required by Statute
• Section 346, 1999 NDAA, as amended by Section
  336, 2000 NDAA
• BCAs required by USD/ATL
• 13 Feb 2002 USD/ATL Memo re PBL evaluation
  schedules
• PBL Implementation Schedule for all ACAT I and II
  programs
• BCAs to be used to determine viability of
  transition to PBL strategy
• 23 Jan 2004 USD/ATL Memo re BCA guiding
  principles
• BCAs to be used to assess and select best value
  support strategy
• Based on Warfighter-stated performance
  requirements documented in PBAs must be
  completed by Milestone C
• Must address LCC, footprint, reliability, risk,
  obsolescence, performance metrics, supportability
• BCAs required by FY06-11 Strategic Planning
  Guidance
• In order to extend the benefits of PBL to
  additional systems, Components will perform BCAs
  on each fielded ACAT I and II weapon systems not
  currently planned to implement PBL. Results will
  be used to determine if a PBL arrangement is the
  preferred means of providing log support. BCAs
  will be provided to USD(ATL) by 30 Sep 06.

68
Business Case Analysis

• BCAs will be conducted to assess changes from
  existing product support strategies for legacy
  systems and to support the product support
  strategy for new weapon systems
• USE 1 Legacy Systems
• - Difficult for Legacy Systems to do wholesale
  transition to PBL
• - More likely Subsystem, process (upgrade, mod)
• USE 2 New Weapon Systems
• - PBL is default support strategy (unless
  waivered)
• - Best allocation of workloads
• - Most affordable solution
• - Compliance with Statutes and Policy
• - Best use of Partnering opportunities

The BCA serves to determine the best mix of
organic, contract, and statutory factors in
optimizing the chosen approach.
69
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
70
Contracting for PBL
5 April 2000 USD/ATL Memorandum It is the policy
of the Department of Defense that (in order to
maximize performance, innovation, and competition
often at a savings) performance-based
strategies for the acquisition of services are to
be used wherever possible. While not all
acquisitions for services can be conducted in a
performance-based manner, the vast majority can.
Those cases in which performance-based strategies
are not employed should become the exception. In
order to ensure that the Department continually
realizes these savings and performance gains, the
DoD establishes, at a minimum, that 50 percent of
service acquisitions, measured in both dollars
and actions, are to be performance-based by year
2005.
71
Contracting for PBL

• Specify outcomes, not How To
• Preference for SOO vs. Detailed PWS
• Clearly delineate roles and responsibilities on
  BOTH sides (Government and Contractor)
• Quantify metrics and performance outcomes
• Include incentives and penalties
• Specify how measurement and performance will be
  assessed

72
Statement of Objectives (SOO) vs. Performance
Work Statement (PWS)
PWS
SOO

• Describes requirement in full.

• Defines objectives for the requirement.
• Provides all program information.

Agency

• Develops requirement approach.

• Develops PWS in proposal

Contractor

• Technical information in solicitation is close.
• Description focus is strategic.
• Can use down select method to narrow the
  competitive field.
• Can have site visits/surveys.
• Best Value selection criteria is applicable.
• Market research is used to develop the
  requirement.
• Emphasize innovative approaches and solutions

Similarities

• PWS defines WHAT, asks Contractor for HOW
  SOO asks Contractor to define WHAT and HOW.
• PWS defines QA method SOO has Contractor define
  both QA and QC methods.
• PWS is legally binding SOO is replaced by the
  PWS of the selected Contractor.
• PWS is the basis for Task Orders SOO defers to
  Contractor PWS for Task Orders.

Differences
73
CONTRACTOR LOGISTICS SUPPORTPERFORMANCE WORK
STATEMENT
1. SCOPE 1.1 SUPPORT CONCEPT 1.2 SUPPORT
LOCATION SITES 1.3 O- LEVEL ENGINE SUPPORT
CONCEPT 1.4 FULL SCALE DEVELOPMENT (FSD) TESTING
SUPPORT 2. ENGINE MAINTENANCE 2.1
MAINTENANCE PROGRAM REQUIREMENTS 2.2 SUPPORT
EQUIPMENT (SE) MAINTENANCE 2.3 ENGINE
MAINTENANCE 2.4 I LEVEL FACILITIES 2.5 OTHER
MAINTENANCE REQUIREMENTS 3 CONTRACTOR MATERIAL
SUPPORT 3.1 GOLD SYSTEM INVENTORY
REQUIREMENTS 3.2 DIRECT MATERIAL 3.3 INDIRECT
MATERIAL 3.4 OTHER MATERIAL SUPPORT
REQUIREMENTS 3.5 GOVERNMENT PROPERTY
(NON-ENGINE) 3.6 APN-6 SPARES FUNDING
4 ENGINEERING SUPPORT 4.1 ENGINEERING
INVESTIGATIONS (EIs) 4.2 PUBLICATION CHANGES 4.3
RELIABILITY CENTERED MAINTENANCE (RCM) 4.4
COMPONENT IMPROVEMENT PROGRAM (CIP) 4.5 TEST CELL
CORRELATIONS/VERIFICATIONS 4.6 NATOPS INPUTS 4.7
ENGINE SAFETY CALLS 5 CONTRACTOR PERFORMANCE
REQUIREMENTS 5.1 OPERATING ENVIRONMENT 5.2
PERFORMANCE REQUIREMENTS 5.3 ENGINE CONTRACTOR
IPARS/CPARS CRITERIA 5.4 DEFINITIONS
Not This!
74
Types of PBL Contracts

• Cost Plus
• CPIF (Cost Plus Incentive Fee)
• Objectively assessed performance metrics
• CPAF (Cost Plus Award Fee)
• Subjectively assessed performance metrics
• Fixed Price
• FFP-AF (Firm Fixed Price Award Fee)
• Award fee earned based on predetermined
  assessment of contractor performance against an
  award fee plan
• Others FPI (incentive), FPEPA (Economic Price
  Adjustment, FPLOA (Level of Effort)

75
Notional PBL Contract Strategy
Transition to FFP When Pricing Risk is minimum

• Collect Supply Data
• Collect Repair Data
• Compile Cost Baseline
• Apply Initial Metrics
• Apply Initial Incentives
• Assess Results

• Finalize Metrics
• Final Incentives
• Assess Results

• Forecast Supply Data
• Forecast Repair Data
• Forecast Cost Baseline
• Develop Initial Metrics
• Develop Initial Incentives

76
PBL Contract Incentives

• The Government contracted for its first Aircraft
  with the Wright Brothers in 1909
• Target price 25,000
• Target speed 40 MPH
• Incentive
• For every MPH over the target, contractor
  receives an additional 2,500
• For every MPH under the target, contractor loses
  2,500
• Minimum speed requirement 36 MPH
• Final delivered MPH speed 42 MPH
• Incentive actually earned 5,000

77
PBL Contract Incentives

• The Government contracted for its first Aircraft
  with the Wright Brothers in 1909
• Target price 25,000
• Target speed 40 MPH
• Incentive
• For every MPH over the target, contractor
  receives an additional 2,500
• For every MPH under the target, contractor loses
  2,500
• Minimum speed requirement 36 MPH
• Final delivered MPH speed 42 MPH
• Incentive actually earned 5,000

78
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
79
Financial Process Strategy
Enabler vs. Disabler
Appropriated Funds
Execute Performance Agreement and Provide Funds
Performance Agreements
Force Provider
Program Manager

• Provides performance as a package IAW Force
  Providers requirements
• Develops Performance Agreements with Logistics
  support providers
• Estimates annual cost based on operational
  requirements
• Receives funds from Force Provider to execute PA
  within fiscal constraints

• Operational commands define requirements
• Defines acceptable range of performance
• Advocates for required funds
• through Service PPBS process
• by platform
• Buys performance as a package
• Retain direct management of
• Fuel
• I and O maintenance
• Base operations

80
DRAFT Management Initiative Decision (MID) 917
PILOT PROGRAMS Sentinel TOW-ITAS EA-6B ALQ-99
Radar Jamming System Pod Expeditionary Fighting
Vehicle F-22 JSF
The MILDEPS shallensure Operation and
Maintenance (OM) resources are included in a
single budget sub-activity group (SAG) in the
applicable OM appropriations and, further,
limit the lines of accounting involved to the
lease number practical by consolidating or
realigning resources within the commands.
A Step Forward in Needed Financial Reform
81
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
82
Implement and Oversight

• PM Oversight Role
• Develop Performance Assessment Plan
• Monitor PSI performance vis-à-vis Performance
  Based Agreements/contracts
• Revise/Adjust as necessary
• Product Support Strategy
• PBAs
• Act as agent for Warfighter
• Certify PSI performance
• Approve payment of incentives
• Take a hands on approach DONT assume
  Contracts/Agreements will be self-regulated

83
PBL IMPLEMENTATION MODEL
Form the PBL Team
Integrate Requirements Support
Baseline The System
Identify Performance Outcomes
Select PSI
Implement And Oversight
COMPLETE
Workload Allocation Strategy
Financial Enablers
SCM Strategy
Establish PBAs
Accomplish Contracts
Business Case Analysis
84
Additional Resources
85
log.dau.mil
86
PBL
87
Examples!!

• PBL Policy and Guidance
• Performance Based Agreements
• Contracting for PBL
• Contractual Incentives
• Public Private Partnerships
• Statutory Requirements

88
Comprehensive Guidanceon Designing in
Supportability

• USD/ATL Memo of 24 Oct 03
• PM to guidance to effectively
• implement TLCSM and PBL
• Incorporates System Design for
• Operational Effectiveness (SDOE)
• criteria into the systems engineering
• process to
• - Increase Reliability
• - Reduce Logistics Footprint
• Evaluation Criteria for all Milestones
• Establishes IOC and Post IOC Reviews
• Provides template for defining and
• assessing program life cycle
• supportability requirements

Supportability Planning is no longer deferred!
http//www.acq.osd.mil/log/logistics_materiel_read
iness /organizations/lpp/html/new_lro.html
89
LOG 235 - NEW Performance Based Logistics
LOG235A
LOG235B

• 50 Student Hours DL
• 60 days to Complete
• Web-Interactive

• 4.5 Day Resident
• Case-Based Practical
• Exercise

• PBL Tools and Processes
• Supply Chain Management
• Business Case Analysis
• Reliability, Maintainability, Supportability

Subjects

• Enterprise Integration
• Support options
• Continuous Modernization
• Commercial Integration
• Configuration Management

WWW.DAU.MIL
90
"The line between disorder and order lies in
logistics..." - Sun Tzu