Performance-based logistics (PBL), also known as performance-based life-cycle product support, [1] is a defense acquisition strategy for cost-effective weapon system support which has been adopted in particular by the United States Department of Defense. Rather than contracting for the acquisition of parts or services, DoD contracts to secure outcomes or results. [1] Under PBL, the product support manager identifies product support integrator(s) (PSI) to deliver performance outcomes as defined by performance metric(s) for a system or product. The integrator often commits to this performance level at a lower cost, or increased performance at costs similar to those previously achieved under a non-PBL or transactional portfolio of product support arrangements for goods and services.
As the preferred approach to supporting weapon system logistics, it seeks to deliver product support as an integrated, affordable performance package designed to optimize system readiness. PBL meets performance goals for a weapon system through a support structure based on long-term performance agreements with clear lines of authority and responsibility. [2]
DoD program managers are required to develop and implement performance-based life-cycle support strategies for weapon systems. These strategies should[ why? ] optimize total system availability while minimizing cost and logistics 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 oriented analysis, taking into account technology maturity, fiscal constraints, and schedule. In implementing performance-based life-cycle product support strategies, the metrics should be[ why? ] appropriate to the scope of product support integrators and providers responsibilities and should be[ why? ] revisited as necessary to ensure they are motivating the desired behaviors across the enterprise. [3] [4]
PBL strategies do not mandate that work be contracted to commercial contractors; integrating the best features of the public and private sectors is a key component of the support strategy. Instead of a pre-ordained course of action, Product Managers are directed to implement "sustainment strategies that include the best use of public and private sector capabilities through government/industry partnering initiatives, in accordance with statutory requirements". [5]
Many times,[ citation needed ] employing a PBL strategy has resulted in either increased system performance issues or increased costs.[ why? ]. Examples include the C-17 PBL, FIRST, and PBtH. Ideally, the provider profits by controlling constituent elements (PSIs) that are used to generate the performance results.
In PBL, typically a part or the whole payment is tied to the performance of the provider and the purchaser does not get involved in the details of the process, it becomes crucial to define a clear set of requirements to the provider. [6] Occasionally governments, more particularly Defence, fail to define the requirements clearly. This leaves room for providers to, either intentionally or unintentionally, misinterpret the requirements, which creates a game like situation and excuses to deliver imperfect services. [7]
Beginning in the early 1990s, emerging trends towards increases in the costs to support fielded systems and decreases in the general reliability and operational readiness of weapon systems were recognized as issues that could continue if unabated. As a result, a performance-based approach, PBL, was advanced by the U.S. DoD in its annual Quadrennial Defense Review in 2001. Since then, not only has the U.S. DoD adopted the PBL approach, but other countries have adopted this strategy as well. Many programs that have employed it have yielded increased system availability, shorter maintenance cycles, and/or reduced costs.[ which? ]
Since the inception of the PBL concept, there have been numerous examples of DoD systems that have yielded the anticipated results, and many that have exceeded – some extremely so – the performance expectations. Annual PBL awards highlight achievement in three areas:
In 2009, partially in response to some[ who? ] who believed that PBL concepts were inadequate, and to assess the current state of DoD systems sustainment, DoD's Office of the Assistant Deputy Secretary of Defense for Materiel Readiness (OADUSD(MR)) initiated a Weapon System Acquisition Reform Product Support Assessment. Its final report, signed by Ashton B. Carter, Under Secretary of Defense for Acquisition, Technology and Logistics, affirms the essence of the PBL concept by stating, "there remains a strong consensus that an outcome-based, performance-oriented product support strategy is a worthy objective". It further identified eight areas that would make product support even more effective, if developed and improved:
In 2003 the United States Air Force found that logistics support contracts were more expensive than undertaking support operations in-house through their organic depot system. [9]
Logistics is a part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers. Logistics management is a component that holds the supply chain together. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.
Logistics engineering is a field of engineering dedicated to the scientific organization of the purchase, transport, storage, distribution, and warehousing of materials and finished goods. Logistics engineering is a complex science that considers trade-offs in component/system design, repair capability, training, spares inventory, demand history, storage and distribution points, transportation methods, etc., to ensure the "thing" is where it's needed, when it's needed, and operating the way it's needed all at an acceptable cost.
Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual obligation to "procure", i.e. to "ensure" that something is done. When a government agency buys goods or services through this practice, it is referred to as government procurement or public procurement.
The Defense Acquisition University (DAU) is a corporate university of the United States Department of Defense offering "acquisition, technology, and logistics" (AT&L) training to military and Federal civilian staff and Federal contractors. DAU is headquartered in Fort Belvoir, Virginia, and is accredited by the American Council on Education (ACE), International Association for Continuing Education and Training (IACET) and the Council on Occupational Education (COE).
Los Angeles Air Force Base (LAAFB) is a United States Space Force Base located in El Segundo, California. Los Angeles Air Force Base houses and supports the headquarters of the United States Space Force's Space Systems Command (SSC), which was established on Aug. 13, 2021. The center manages research, development and acquisition of military space systems.
Integrated logistics support (ILS) is a technology in the system engineering to lower a product life cycle cost and decrease demand for logistics by the maintenance system optimization to ease the product support. Although originally developed for military purposes, it is also widely used in commercial customer service organisations.
A cost-plus contract, also termed a cost plus contract, is a contract such that a contractor is paid for all of its allowed expenses, plus additional payment to allow for a profit. Cost-reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses.
Leverage-point modeling (LPM) is a demonstrated approach for improved planning and spending for operations and support (O&S) activities. LPM is a continuous-event simulation technique that uses the system dynamics approach of model building. Dr. Nathaniel Mass championed the potential of LPM, and adapted it for the Department of Defense (DoD) as a tool for jumping to a higher performance curve as a means of offsetting higher costs and declining budgets. The purpose of LPM is to test policies and investments that improve mission capability for a given level of investment or funding. It is particularly used to evaluate investments in component reliability and parts availability.
The Marine Corps Systems Command (MCSC) is the acquisition command of the United States Marine Corps, made up of Marines, sailors, civilians and contractors. As the only systems command in the Marine Corps, MCSC serves as Head of Contracting Authority and exercises technical authority for all Marine Corps ground weapon and information technology programs. MCSC is headquartered at Marine Corps Base Quantico.
The Under Secretary of Defense for Acquisition and Sustainment, or USD(A&S), is the Principal Staff Assistant (PSA) and advisor to the Secretary of Defense for all matters relating to acquisition and sustainment in the Department of Defense. This includes the DoD Acquisition System; system design and development; production; logistics and distribution; installation maintenance, management, and resilience; military construction; procurement of goods and services; material readiness; maintenance; environment and energy resilience ; utilities; business management modernization; International Armaments Cooperation, Cooperative Acquisition and International Agreements, Promoting exportability of military components to allies and partners; nuclear, chemical and biological defense programs; and nuclear command, control, and communications.
Military acquisition or defense acquisition is the "bureaucratic management and procurement process", dealing with a nation's investments in the technologies, programs, and product support necessary to achieve its national security strategy and support its armed forces. Its objective is to acquire products that satisfy specified needs and provide measurable improvement to mission capability at a fair and reasonable price.
In the United States military integrated acquisition lifecycle the Technical section has multiple acquisition "Technical Reviews". Technical reviews and audits assist the acquisition and the number and types are tailored to the acquisition. Overall guidance flows from the Defense Acquisition Guidebook chapter 4, with local details further defined by the review organizations. Typical topics examined include adequacy of program/contract metrics, proper staffing, risks, budget, and schedule.
The Analysis of Alternatives (AoA) in the United States is a requirement of military acquisition policy, as controlled by the Office of Management and Budget (OMB) and the United States Department of Defense (DoD). It ensures that at least three feasible alternatives are analyzed prior to making costly investment decisions. The AoA establishes and benchmarks metrics for Cost, Schedule, Performance (CSP) and Risk (CSPR) depending on military "needs" derived from the Joint Capabilities Integration Development System process. It moves away from employing a single acquisition source to the exploration of multiple alternatives so agencies have a basis for funding the best possible projects in a rational, defensible manner considering risk and uncertainty.
A spare part, spare, service part, repair part, or replacement part, is an interchangeable part that is kept in an inventory and used for the repair or refurbishment of defective equipment/units. Spare parts are an important feature of logistics engineering and supply chain management, often comprising dedicated spare parts management systems.
Third-party logistics is an organization's long term commitment of outsourcing its distribution services to third-party logistics businesses.
Performance based contracting (PBC), also known as performance-based logistics (PBL) or performance-based acquisition, is a product and services purchasing strategy used to achieve measurable supplier performance. A PBC approach focuses on developing strategic performance metrics and directly relating contracting payment to performance against these metrics. Common metrics include availability, reliability, maintainability, supportability and total cost of ownership. The primary means of accomplishing this are through incentivized, long-term contracts with specific and measurable levels of operational performance defined by the customer and agreed on by contracting parties. The incentivized performance measures aim to motivate the supplier to implement enhanced practices that offer improved performance and cost effective. This stands in contrast to the conventional transaction-based, or waterfall approach, where payment is related to completion of milestones and project deliverables. In PBC, since a part or the whole payment is tied to the performance of the provider and the purchaser does not get involved in the details of the process, it becomes crucial to define a clear set of requirements to the provider. Occasionally governments fail to define the requirements clearly. This leaves room for providers, either intentionally or unintentionally, to misinterpret the requirements, which creates a game like situation.
GSA FEDSIM provides assisted acquisition support for information technology systems and services, and professional services, to other U.S. Government agencies on a fee for service basis. FEDSIM’s business lines include system and network operations and maintenance, development of new applications, purchases of hardware and software, and many other IT goods and services, as well as professional services such as logistics. FEDSIM contracts with large and small private sector companies for these systems and services.
The United States Army Acquisition Corps (AAC) is the officer / NCO corps of the United States Army Acquisition Workforce (AAW), a branch which includes civilians, officers, and NCOs. The Acquisition Corps is composed of army officers who serve in acquisition, a specialized form of product development, fielding, and support and Noncommissioned Officers who specialize in Contracting, Level I Program Management and Purchasing. These officers begin their careers in the other branches of the army for eight years, after which they may elect the Acquisition branch as their career as assistant program managers (APMs), program managers (PMs), and program executive officers (PEOs). The Noncommissioned Officers (NCOs) are reclassified in the Army Acquisition NCO Corps after serving 7-10 years in their respective enlisted career management fields, and serve primarily in the Army Acquisition Career Management Field - 51 and (MOS) 51C. 4% percentage of the Army Acquisition Officers serve among the 40,000 members of the army acquisition workforce, 6% in MOS 51C - Acquisition, Logistics and Technology Contracting Noncommissioned Officer, and the remainder 90% percentage consist largely of Department of the Army civilians.
Human Systems Integration (HSI) is an interdisciplinary managerial and technical approach to developing and sustaining systems which focuses on the interfaces between humans and modern technical systems. The objective of HSI is to provide equal weight to human, hardware, and software elements of system design throughout systems engineering and lifecycle logistics management activities across the lifecycle of a system. The end goal of HSI is to optimize total system performance and minimize total ownership costs. The field of HSI integrates work from multiple human centered domains of study include training, manpower, personnel, human factors engineering, safety, occupational health, survivability and habitability.
Non-developmental item (NDI) is a term used for products procured by the United States federal government which do not require further development or require only minimal modification. Commercial-off-the-shelf (COTS) and government-off-the-shelf (GOTS) are two subtypes of NDI.