Kate Vitasek Managing Partner Supply Chain Visions www'scvisions'com

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Pay for Performance Contracting Developing a
Win-Win Strategy for Improving Service Parts and
Support Logistics
Scott Turco F117 Program Material Manager Pratt
Whitney scott.turco_at_pw.utc.com
Kate VitasekManaging PartnerSupply Chain
Visionswww.scvisions.com
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Agenda

• Fundamentals of Pay for Performance Contracting
• Best Practices in Pay for Performance Contracting
• Case Study

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What is Pay for Performance Contracting?
The purchase of support as an integrated,
affordable, performance package designed to
optimize support readiness and meet performance
goals through long-term support arrangements.
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Performance Based Contracting Buys Outcomes
Buy Transactions vs.
Buy Outcomes

• Operational Availability (Ao)
• Operational Reliability
• Logistics Response Time
• Cost per Unit Usage
• Support Footprint (Assets)

Parts
Repair
Services
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Example Dept of Defense Traditional Support
Strategy
DoD
The more we sell, the more profit we make!
Parts Supplier

• Compute Requirements
• Buy Right Parts
• Schedule Right Repairs
• Send to Right Locations

Repair Provider
High Risk
Technical Support Provider
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PBL Contract ApproachTransfer Risk and Reward
to The Contractor
OEM or Prime Vendor
The less I use, the more profit I make!
DoD
Provides Supplies

• Compute Requirements
• Buy Right Parts
• Schedule Right Repairs
• Send to Right Locations

• Specify
• Performance
• Outcomes

Provides Repair
Provides Tech Support

• The OEM or Prime Vendor is Motivated to
• Improve reliability
• Improve repair processes

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In short..
Transformational Warfighting Initiatives Through
Focused Logistics Strategies (PBL)
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Does it Really Work?
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Sample US DoD Successes Availability
Navy Program
Pre-PBL
Post-PBL
90
73
F-14 LANTIRN
Material Availability increased an average of
30-40 through PBL
62
85
F/A-18
H-60 Avionics
71
85
98
65
F/A-18 Stores Mgmt System (SMS)
85
70
Tires
APU
90
65
AEGIS
65
95
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Sample of PBL Successes Logistics Response Time
Navy Program
Pre-PBL
Post-PBL
5 Days
56.9 Days
F-14 LANTIRN
Aircraft and Equipment Logistics Response Times
decreased average of 70-80
22.8 Days
5 Days
ARC-210
H-60 Avionics
52.7 Days
8 Days
42.6 Days
2 Days CONUS7 Days OCONUS
F/A-18 Stores Mgmt System (SMS)
2 Days CONUS4 Days OCONUS
28.9 Days
Tires
APU
6.5 Days
35 Days
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Agenda

• Fundamentals of Pay for Performance Contracting
• Best Practices in Pay for Performance Contracting
• Case Study

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Workscope Flexibility
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Contract Length
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Pricing
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Performance Mgmt Attributes
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Relationships
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Agenda

• Fundamentals of Pay for Performance Contracting
• Best Practices in Pay for Performance Contracting
• Case Study

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F117 Globemaster III Sustainment Partnership
Supply Chain Council Case Study
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F117 Globemaster lll Sustainment Partnership

• PW engaged in support since development
• Successful Competitive bids for Propulsion
  Support in 1997 and 2000
• PW offerings Leverage Commercial Commonality and
  Goal Aligned Contracting Structure

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F117 Globemaster lll Sustainment Partnership
Demonstrated Performance

• Air System Design and Manufacturer
• Field Support Infrastructure
• Integration with USAF Systems
• QEC Manufacturer

• Original Equipment Manufacturer
• Manufactures Spare Parts
• Familiar with USAF Systems
• F117 OR Experience
• East Coast Facility

• Largest PW2000 Fleet
• Lowest PW2000 IFSD Rate
• QEC Maintenance Expertise
• Fleet Management Experience
• West Coast Facility

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Workscope Flexibility Contract Length
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Pricing, Perf. Mgmt. Attributes, Relationships
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F117 Globemaster lll Sustainment Partnership
Intelligently integrating a wide variety of
support services
Maintenance Management
Maintenance Event Logistics and Tracking
Repair Execution Labor/Material
RCM Analysis / Maintenance Optimization
On-Wing Monitoring Tech Support
Availability for /Cycle, Hour, Sortie
Support system is more closely coupled than
traditional business
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2005 Performance Results
In-Flight Shutdown Rate Decreased 29
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2005 Performance Results
Shop Visit Rate Decreased 28 (12 mo. Rolling
Avg.)
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2005 Performance Results
Time On Wing Increased 14 (Inherent, 12 mo.
Rolling Avg.)
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F117 Globemaster lll Sustainment Partnership
Questions? Comments? Feedback?