Performance-Based Logistics Perspective - James Beggs
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by
James Beggs
beggs_james@bah.com
Benjamin Ertel
ertel_ben@bah.com
Mike Jones
jones_mike@bah.com
Performance-Based Logistics
Perspective1
Performance-Based Logistics Perspective
Since 2000, the Department of Defense (DoD) solutions throughout the branch services has not trend-
has consistently directed that Performance-Based ed as quickly as was envisioned 5 years ago. In part,
Logistics (PBL) be the preferred acquisition and this is due to common barriers that prevent incorporat-
ing a PBL solution for weapon system sustainment:
sustainment vehicle. It is widely believed that PBL
solutions offer the best overall construct for long-term ■ Regulation and practicality usually require a mix of
sustainment support of systems and subsystems. commercial and government support in the PBL con-
Put simply, ever-tightening constraints on budgets and struct. Aligning government and commercial organiza-
tions under a PBL construct is difficult because work-
resources have forced reconsideration of traditional
ing relationships that limit the PBL provider’s empow-
support models. The growing need has been to iden- erment to integrate the functional areas of support
tify support constructs that squeeze as much system (inventory management, maintenance management,
readiness as possible out of limited budgets. and technical management) will limit the potential
success of the PBL arrangement.
As Exhibit 1 illustrates, the goal is to move the readi- ■ (“Colors of Money”) Total system or subsystem sup-
ness/cost ratio as close to the curve as possible. The port will often fall under more than one funding source.
PBL construct is the preferred method for achieving
that goal. ■ Systems are often supported by a number of original
equipment manufacturers (OEM). Developing a PBL
Although DoD directives have stipulated PBL as the construct with clear competency, accountability, and
preferred acquisition construct, incorporating true PBL cost advantages versus transactional support con-
structs may be difficult.
Exhibit 1 ■ PBL support may be radically different in approach
Theoretical Curve for Any System
and construct from traditional government support.
i m al
Traditional practices, processes, and support cultures
Opt r t Cur ve
p p o may require significant change to successfully incor-
Su
Readiness (%)
Moving toward the porate PBL solutions.
optimal curve requires
DoD The structural and cultural impediments to more wide-
improving integration
Today
spread PBL incorporation can be overcome only with a
Cost ($)
clear understanding of how PBL arrangements improve
performance and promote better efficiency. Once clear
Source: Booz Allen Hamilton2
understanding exists, it will then be possible to focus on PBL Definition
the critical issues that prevent success. The PBL value PBL can be defined as follows (see Exhibit 2):
proposition is the same for any PBL support construct. ■ Accountability versus control
■ Incentives instead of specification
Incentive Alignment ■ Performance management instead of transaction
■ A PBL support strategy must align the incentives of the
management.
support provider(s) with the performance requirements
of the system. These incentives encourage integra- PBL is shifting the active management of sustainment
tion that rewards the support provider(s) for improving from the organic acquisition/program manager to
support efficiency while meeting system performance the support provider. It is buying results or outcomes
requirements—creating a “win-win” relationship. instead of initiating and managing transactions. When
buying inventory management, maintenance services,
■ Support providers must be empowered to integrate.
or technical services transaction by transaction, the
Organic partnerships, “in theater government sup-
decisions of what, when, and how to buy are left to the
port,” and other areas outside the support provider’s
customer. Under a PBL, the support provider decides
control must be carefully set up and managed to
the what, when, and how for weapon system support.
ensure that empowerment to integrate is not hin-
In exchange for this management control, the provider
dered. The government and support provider(s) have
is held accountable to the warfighter’s requirements
an interest in ensuring strong partnerships.
and motivated to optimize costs and the overall logis-
tics footprint needed for achieving those requirements.
Competency Advantage
If costs and logistics footprint improve while the
■Support providers must be qualified and have a clear
warfighter’s requirements are met, the customer and
competitive advantage for providing the support ele-
provider are successful together—“win-win.”
ments and integration of the functional areas of sup-
port: inventory management, maintenance manage-
ment, and technical management.
■ Traditional support and PBL options must be thor- Exhibit 2
Performance Management
oughly explored and constructed before data analysis
� Establish mission requirements
can begin (done to ensure that the solution with the Set
– Establish key performance metric
Warfighter
greatest competency advantage is chosen). drivers requirements
– Establish required performance
Shift to Performance Management � Develop cost/performance analysis
■The success of PBL implementation must be moni- � Establish PBA with warfighter
tored and refined. The Government’s oversight role Develop alternative support Facilitate
�
becomes one of performance management rather constructs
Program requirements
Address barriers to integration and manage
than transaction management.
�
Manager
� Conduct life cycle support planning performance
� Develop BCA of support alternatives
Critical Concepts for Successful PBL Incorporation � Negotiate support agreements and
■PBL definition contracts
■PBL value proposition: improved integration
� Improve internal processes to
■Importance of integration maximize integration competency
Product
■PBL constructs have an inherent integrative advantage Support
� Manage and improve partnerships Provide
Common PBL misconceptions support
■
Integrator � Maintain strong communication to
PM and warfighter regarding
■Keys to successful PBL implementation performance impacting issues
■PBL implementation steps
Source: Booz Allen Hamilton3
A key point to consider and understand when explor- Exhibit 3
PBL Value Proposition
ing a PBL alternative is that it is a fundamental shift
of management control away from the Government to
Improved
the supplier. In exchange for this shift in control, the integration
Government is able to impose a much higher level of through:
� Aligning Performance
performance accountability on the supplier than under incentives management
traditional support constructs. The Government impos- � Ensuring � Manage outcomes instead
competency of transactions
es output requirements instead of support criteria on advantage � Empower and hold
the supplier. In short, the Government expects output � Managing suppliers accountable to
performance integrate
requirements, but it does not tell the supplier how
those outputs will be achieved. This is the fundamental
change from traditional logistic support constructs. “Win-Win” Result
PBL
� Tie supplier �Improved
Some commonly heard supporting arguments for PBL profits with Optimizing readiness
arrangements are that they incorporate commercial
improving Logistics Support �Reduced
warfighter logistic
readiness at through improved
best practices, that PBLs provide better focus on what footprint
reduced cost integration Reduced cost
matters for the weapon system, or that they remove
�
“fluff” or non-value added effort and expense. These
arguments, however, are vague and do not provide Competency advantage
insight as to how and why a PBL arrangement can be � Ensure an inherently
efficient support construct
more successful than traditional support. Why can’t � Ensure support provider(s)
traditional support incorporate commercial best practic- have technical and
management competency
es? Why can’t traditional support develop metrics that advantages
focus on what matters and that eliminate “fluff”? What
Source: Booz Allen Hamilton
is the key value proposition of PBL?
example could be an advanced gas turbine airplane
PBL Value Proposition: Improved Integration
engine. Gas turbine engines are technical marvels.
The key advantage of a PBL construct is that it creates
These systems are composed of thousands of parts,
an inherent incentive to integrate the functions that
many of which operate under extreme temperatures and
support the weapon system. These incentives start with
pressures. The effective technical management of gas
a support provider having a competency advantage to
turbines is complex and must be highly proactive. New
integrate. The suppliers’ incentives are aligned with the
part manufacturing times can extend into years and
needs of the weapon system. Finally, the Government’s
maintenance requirements can routinely take several
role becomes a manager of performance, responsible
months. Clearly, efficient integration of the technical
for monitoring outcomes and ensuring alignment
management, inventory management, and maintenance
between the warfighter and the supplier. Exhibit 3 illus-
management of such a system is highly desirable.
trates integration of the PBL value proposition.
As illustrated in Exhibit 4 (see page 4), the long-term
successful management of any of these elements is
Importance of Integration
dependent on strong integration with the others.
Systems or subsystems that lend themselves best to
PBL support constructs are those whose support relies Systems that are not technically advanced would not
heavily on all three functional elements of support—i.e., benefit from the advantages of a PBL construct for
highly complex systems. Because all three elements sustainment support. A Jeep might be an example of
are essential to system readiness, integration plays a this. Once the design phase of a Jeep is completed,
key role in developing and improving efficiencies. An the parts supporting the Jeep will not undergo sig-
nificant technical change over time. This eases parts4
Exhibit 4
Optimal Logistics Support
The functional areas of
logistic support are depen-
Maintenance
dent on each other.
Inventory
(Repair/build capacity Management Example: Priorities of Note: A functional
planning, process (New and repairable technical management impact support provider
planning) spare part the what, when, and how to
Optimal
management) buy for inventory require-
cannot be held
Logistics
Support ments. These technical accountable to
priorities also affect capacity, metrics that are not
cost, and “repair versus buy” under its control.
Technical Management decision making at the
(How to repair and build. Priorities for maintenance facility.
technical improvement/refresh)
Source: Booz Allen Hamilton
forecasting and obsolescence concerns, which are ply, and technical development. Integration supporting
further eased by relatively short repair and new part each weapon system gives way to decisions that best
manufacturing time. This is not to say that sound man- support the interests of the functional organization.
agement and good sourcing strategies are not needed The requirements of the weapon system cannot always
for the sustainment of Jeeps. It suggests only that a come first.
PBL construct does not have an inherent competency
Under a traditional transactional approach, even the
advantage over a traditional support construct.
contractor logistic support (CLS) elements of the over-
all logistic solution are simply tasked with meeting
PBL Constructs Have an Inherent Integrative
the criteria of the transactional requirement. These
Advantage
elements do not have a business interest in system
It is not impossible to create alignment, establish
performance. Under PBL, carefully thought out metrics
competency advantage, and shift to performance
that establish acceptable performance of the system
management through organic constructs; however,
are combined with payment terms that reward the sup-
the profit/loss of a commercial contractor provides
port provider for meeting the metric requirements of a
a means for the incentive to be powerful and to be
successfully supported system.
sustained through the life cycle of a weapon system.
Furthermore, organic supply chain management and An example in which organic support does not natu-
product support organizations are responsible for mul- rally lend itself to integration is that each organiza-
tiple systems and report through separate and distinc- tion establishes an annual budget. The incentive is
tive command structures. Each reacts to the budget to provide support within the established budget (see
and initiative pressures of its own command. Over Exhibit 5 on page 5). If costs are low, managers are
time, these pressures create significant barriers that encouraged to seek investment opportunities regard-
prevent consistent incentives to integrate. In addition, less of whether they are needed. Coming below bud-
short-term funding constraints or focused initiatives get results in money being shifted to other programs
imposed on an organic provider supporting multiple that are short of funding. If costs are running high,
systems force that provider to prioritize support—favor- managers are motivated to postpone needed invest-
ing the needs of some systems over others. Over time, ment to the next funding year. Long-term thinking
prioritization—even if efficiently managed—will result about improving support efficiency gives way to short-
in a suboptimal investment in capability, capacity, sup- term constraints.5
Exhibit 5 exchange for service provider accountability and bet-
Incentives to Integrate Under Traditional or PBL Approach ter cost predictability. Different contract types will vary
the amount of cost risk shifted to the provider; under
Incentives to Integrate Incentives to Integrate a true PBL construct, the support provider will assume
Under Traditional Under PBL Approach
Approach more cost risk than under a traditional construct.
■ Government manages ■ Support provider man-
design change and ages design change
overall engineering sup- and overall engineering Performance Contracts Mean PBL
■ Technical
port support There is no accurate record of how many PBLs have
manage- ■ Government provides ■ Support provider been implemented to date because the label PBL
ment priori- logistics support pro- invests in changes that
ties viders funding to make improve system readi- has often been applied to traditional contracts with
changes ness or reduce cost
■ Implement
incentive clauses. Further, some PBL contacts are not
Support provider is Support provider profit-
labeled as PBL (e.g., total systems support). A per-
■ ■
technical
only required to meet ability is tied to meet-
changes
Statement of work ing requirements speci- formance contract alone (e.g., a nonintegrative cost
Manage (SOW) fied in the Statement
■
of Objectives (SOO) reimbursable contract with incentives) is not a PBL. An
processes
across all ■ Support provider is not ■ Support provider is example would be an inventory management contract.
functional accountable to down- accountable to down-
support
The supplier is tasked with inventorying parts and
stream system perfor- stream system perfor-
areas mance mance providing the parts as required. The supplier is reim-
■ Support provider is not ■ Support provider is bursed for costs and is provided an incentive bonus
incentivized to inte- incentivized to inte-
grate the supply chain grate supply chain if a customer wait time metric is met or exceeded.
Source: Booz Allen Hamilton
The supplier is not empowered (nor is the supplier
tasked) to address technical management or main-
tenance repair issues that naturally affect inventory
Organic PBL planning. The supplier is not required to manage all
Organic management of weapon systems can be and the elements affecting customer wait time. The metric
has been successful. It is possible to restructure is attained only if other logistics elements meet their
working relationships under support agreements requirements, in which case the supplier will receive
between organic support providers and achieve the bonus simply for being lucky. This is not PBL.
improved system performance. However, the con-
structs must adequately address the core require- PBL Support Cannot Apply to Subsystems
ments of a successful PBL: Most major weapon systems are supported by several
■ Incentive exists for the support provider to integrate OEMs. It might not be possible for a commercial sup-
the functional areas of support. port provider to develop a competency advantage over
■ The support construct must have a competency the Government when managing several sub-vendors.
advantage over alternative options. Fortunately, total system support, albeit attractive, is
■ Overall management of system support must shift to not required. The Government can assume the role
performance management. as product support integrator (PSI) as long as support
providers managing subsystems have enough control
Common PBL Misconceptions to integrate the support of the subsystem. The inte-
Government Accepts Higher Cost Risk Under a gration of workload allocation can be to the system,
PBL Structure subsystem, or component level. Workload allocation to
It is commonly believed that the Government assumes the lower level could even be encouraged because it
increased cost risk under PBL implementation; how- becomes easier to foster competition and ensure the
ever, in a true PBL arrangement, the opposite is the competency advantage at these lower levels.
case. There is confusion because under a PBL vehicle,
the Government extends management control in6
A PBL solution is not only possible but also the pre- PBL provider. The Government must understand that
ferred alternative as long as— the more control it retains, the less ability the PBL pro-
vider will have to effect changes that improve system
■ The logistic support for a system or subsystem or
performance and reduce cost. Without empowerment,
component can be integrated.
the support provider will be unwilling to accept the
■ The support construct has a competency advantage
level of accountability that translates to its acceptance
over alternative options.
of greater risk.
■ Performance management can be imposed.
Title 10—Core Requirements, 50/50 rule, etc. Title
Keys to Successful PBL Implementation 10 is specifically where most “barriers” to PBL
come in to play. Regulatory requirements specifying
Alignment of Supplier Incentives With Warfighter
“50/50,” “Core,” and “Battlefield” considerations
Requirements
are called PBL barriers and constraints because they
As stated earlier, the most basic advantage of a well
are requirements of retaining government control
planned PBL implementation is alignment of the perfor-
over portions of the product support functions and
mance requirements of the system or warfighter with
processes. How the support provider and government
the incentives of the support provider. It starts with
relationships are structured is critical because these
a support construct that has an inherent competency
requirements limit the empowerment of the support
advantage for integration. The support provider is then
provider to manage integration.
motivated to leverage its competency advantage and
improve overall integration. Better integration is the key Congress has enacted numerous statutes that
to improved system performance at reduced costs. place controls on what actions the DoD can take in
using commercial sector maintenance capabilities.
Competency Advantage Requirements are as follows:
The PBL support provider must have a clear and ■ DoD must maintain core logistics capability to per-
demonstrated capability advantage that can deliver
form maintenance and support of mission-essential
technical management, inventory management, and
equipment (Title 10, Section 2464).
maintenance management more efficiently than the
alternative support constructs. Incentive without a ■ Not more than 50 percent of the funds available to
competency advantage is useless. Typically, the com- a military DoD agency in a fiscal year for depot-level
petency advantage in a PBL construct is the result of maintenance and repair workload may be used to
superior engineering and technical knowledge of the contract for performance of this workload by nonfed-
OEM or system integrator (thorough background and eral government personnel (Title 10, Section 2466).
knowledge of design intent is a powerful advantage). ■ Existing depot-level maintenance or repair workload
Integration is the key to a successful PBL arrange-
valued at $3 million or more must be neither con-
ment, and the technical knowledge of the OEM is the
tracted out nor moved to another depot-level activity
most difficult competency to duplicate. Consequently,
without using public and private competition proce-
most successful PBL constructs include the OEM as
dures or merit-based selection procedures (Title 10,
a major partner.
Section 2469).
Empowerment of Support Provider Because maintenance is a critical aspect of support
Empowering the support provider means that the sup- integration, the support provider’s ability to effective-
port provider makes decisions that the Government ly work with organic depots is a key area of concern.
once made. Before selecting a PBL strategy, the If the support provider cannot effectively partner
Government must make an honest assessment of how with the depot, then the PBL construct cannot effec-
much control it is willing to and can relinquish to the tively integrate.7
Regulation Under Title 10, Section 2474. This regulation port. This leaves the possibility that the PBL supplier
encourages public and private partnerships to meet might be asked to assume management costs that are
core and 50/50 requirements. The success of a PBL not part of the comparative business case analysis
largely depends on how well the partnerships facilitate (BCA) because these costs fall under funding sources
the support provider’s ability to integrate all the sup- outside the government entity that is negotiating the
port functions. PBL contract. Alternatively, it leaves the possibility that
key processes important to overall integration are left
A true PBL construct empowers the provider to man-
under traditional management and not partnered with
age three functional elements of support: inventory
the service provider. This issue must be addressed in
management, maintenance management, and techni-
the PBL construct and in warfighter metric development
cal management (e.g., what gets repaired, what gets
because support provider accountability to higher level
replaced, how to repair, how to replace, and what
system metrics could become impossible to establish.
needs to be upgraded).
Data Requirements for PBL Must Be Understood and
Performance Management
Managed
In managing a PBL construct, a key role of the pro-
One of the most significant hurdles to overcome when
gram manager is to act as the facilitator between the
implementing PBL arrangements is establishing a gov-
warfighter and supplier. The Government agrees to
ernment support provider agreement on the projected
an appropriate level of warfighter readiness, passes
long-term support profile of the system (what the tech-
on this requirement to the supplier(s), and becomes
nical management, inventory management [e.g., spare
a manager of performance rather than a manager of
parts consumption], and maintenance needs of the
transactions.
system will be over the long term).
Performance Management Requires Addressing Budget Note that the data requirements and ongoing data
Flexibility management required under a PBL arrangement are
The operations and maintenance (O&M) budget is sub- also needed under any support construct—traditional
ject to increases and reductions annually. Performance or otherwise. As a result of the contractual arrange-
management is undermined because varying annual ment between the Government and the support pro-
budgets limit long-term investment decisions that opti- vider, this data management task requires significant
mize costs over time. Existing DoD budget realities, rigor. The contractual agreement and incentives of the
however, require optimizing costs in the current year. PBL drive better and more thorough data management
Under traditional organic support, program managers requirements and data collection practices. The data
with multiple system oversight and/or the commanders itself (e.g., system performance data, maintenance
of the major systems commands have the flexibility to data, and cost data) is the basis for managing integra-
reallocate money depending on the new O&M budget tion, and the initial rigor of evaluating and then manag-
and the unique demands of each system. PBL con- ing data helps further the competency advantage of
tracts limit that flexibility because PBL costs are driven the PBL construct.
by the performance demands of the weapon system—
Without thorough data analysis and modeling as well
not by the latest approved O&M appropriation.
as good data collection and reporting practices over
time, it is difficult to not only construct a successful
Equal Comparison Between Traditional Support
PBL arrangement but also effectively support the sys-
and PBL (“Colors of Money”)
tem under any support construct. Strong data analysis
The funding sources that pay for all of a system’s
is critical because it—
support elements might not be considered in their
entirety when transferring from organic to PBL sup-8
■ Supports comparative BCA to identify constructs and trol that is shifted to the PBL support provider and
processes that have a competitive advantage over with developing and using a very different skill set.
other support construct alternatives. The BCA can ■ The shift in management focus brings about a shift
also be the foundation for an agreement between
in the business rules that dictate government proce-
the support providers (including the PSI) and the
dures concerning supplier management. The policies,
Government (and between the program manager and
procedures, and guidelines that dictate roles and
the warfighter).
responsibilities must change to reflect performance
■ Enables establishment of performance metrics that management rather than transaction management.
support system mission requirements at an afford- ■ A commercial PBL support provider will have different
able and predictable cost.
expectations and will desire a much closer relation-
■ Is the basis for effective integration (e.g., prioritizing ship with its organic partner than what is customary
technical initiatives, make versus buy decisions, effi- under the traditional construct. Organic management
cient shelf inventory levels). could resist the perceived threat to its autonomy. The
key is to promote insight versus oversight on the part
A key part of the data analysis is to develop a shared
of the organic base.
understanding of what is required to support the
system to ensure that the BCA compares apples to ■ The support provider has final authority on investment
apples. This shared understanding is also necessary to decisions that affect durability. Again, this shift in
enable the effective negotiation of a performance-based control might represent a significant culture shock to
agreement (PBA). If the necessary data is unavailable, government support personnel who are accustomed
the PBL strategy should include a transition period in to traditional transactional management.
which the data is developed and maintained.
PBL Implementation Steps
The complexity and value of this step cannot be over-
All steps are carried out with an eye to developing a
stated. Projecting the durability of any complex techni-
support solution that—
cal system over several years requires sophisticated
modeling and simulation analysis. Effective data analy- ■ Aligns the system requirements with the incentives of
sis and data collection practices are the foundation for the support provider
optimizing system logistics support. ■ Has a competency advantage over alternative support
constructs
Change Management (i.e., Overcoming Cultural
Resistance to PBL) ■ Incorporates performance management.
PBL approaches may bring about significant change.
(The Defense Acquisition University [DAU] articulates a
How well that change is managed is critical to the suc-
“PBL Implementation Model.” The DAU approach is not
cess of the PBL contract.
inconsistent with the steps below.)
■ Shifting from transactional management to perfor-
mance management could be a significant change in Strategic Planning
the job requirements of organic support personnel. A thorough review of the traditional support construct
Program managers often must shift their focus from (what will change regardless of whether PBL will be
managing the needs of systems and subsystems to implemented) will provide the baseline.
managing suppliers (and supplier relationships) and ■ Conduct a thorough review of warfighter requirements
performance outcomes. Furthermore, the program
(identify the key metrics and level of performance
office might be uncomfortable with the level of con-
actually needed to meet mission requirements).9
■ Construct and describe PBL options with a focus on of each alternative. The BCA will include subjective
competitive advantage and incentive alignment. assessments, along with the quantitative analysis.
The BCA includes identification of entities, feasibil-
■ Establish warfighter-needed performance metrics
ity of approach, tangible/intangible benefits, and
and desired support provider payment terms.
affordability. Decisions must incorporate a full appre-
Negotiate program manager (PM) to warfighter PBA;
ciation and understanding of the assumptions and
then, PM to PSI PBA(s); and finally, PSI to product
the subjective assessments.
support providers’ PBAs.
Thoroughly preparing for the correct approach to Change Management Planning
data analysis and BCA development is critical. It Develop plans for addressing cultural and organizational
should begin with establishing the comparative issues arising from the shift to PBL performance man-
model (usually the traditional transaction approach, agement. This requirement is often viewed as “soft”
a.k.a. baseline). The baseline should incorporate all and not critical. It is, however, the most frequently
intended organic changes. It makes little sense to sighted concern of government employees undergo-
compare a potential PBL construct with an outdated ing a reorganization driven by PBL incorporation. The
organic construct. The comparative model should functions of the program office undergo dramatic
include all cost elements that could be shifted to change when PBL arrangement is fully implemented.
PBL regardless of funding source. The warfighters’ Government support personnel must fully understand
requirements should be explored for applicability to their new roles and responsibilities.
mission requirements. Metrics that support warfight-
er’s requirements are then formulated. Concurrent Negotiate PBL Contract
to this effort, possible PBL constructs are explored Negotiate the PBL contract with emphasis on promot-
with emphasis on ensuring that the potential support ing support provider and organic partnering. In addi-
provider(s) has an expected competitive advantage. tion, the contract must clearly define performance
Integration constraint issues should be addressed metrics and the terms and conditions of how perfor-
with potential support provider(s) involvement. The mance will be managed.
BCA process should be performed iteratively through-
out the acquisition life cycle and used as a tool to Ongoing Management
ensure sound business decisions. Proactively measure the expected performance of
the PBL construct against actual performance. This
Life-Cycle Support Projection step verifies the competency advantage of the PBL
A system support profile should be developed arrangement and provides the foundation for a fair
with potential support provider(s) participation. and reasonable renegotiation when the contract
Projections include forecasts of part consumption, expires. If the actual performance does not meet
maintenance capacity and capability needs, and expectations, this step will provide the support for
technical management resource requirements. developing alternative support constructs. Note that
it is not intended that exit criteria or an off-ramp
Business Case Analysis strategy be necessary, but without a plan, the pro-
Compare alternatives down to the management of vider will have significant negotiating leverage and
all required transactions and processes. The transac- the Government will not have the option to pursue a
tions are driven by the life-cycle support projection. better support construct.
Assumptions in the BCA must be clearly stated
along with an assessment of the integrity of the sup-
port data. The BCA must highlight the inherent risks10
Conclusion port elements and integrating inventory manage-
PBL implementation is a highly difficult task but con- ment, maintenance management, and technical
sidering the complexity of logistic support planning that management.
must take place anyway, incorporating even a small
– Traditional support and PBL options must be
degree of PBL support in the overall logistics solution
explored thoroughly and constructed before data
of a weapons system will have benefit.
analysis can begin.
Key items to consider are as follows: ■ Performance Management
■ Incentive Alignment
– The Government’s role becomes that of manag-
– A PBL construct must align the incentives of the ers of performance rather than managers of
support provider with the requirements of the transactions. Although the Government is still ulti-
warfighter or subsystem. mately accountable for the warfighter, it meets this
accountability by managing supplier performance.
– Support providers must be empowered to integrate.
Organic partnerships must be carefully developed If appropriate and implemented well, a PBL construct
to ensure that integration is not hindered. will contribute to the continual optimization of the logis-
tic support elements while meeting the warfighter’s
■ Competency Advantage
required level of readiness.
– Support providers must have a clear, competitive
advantage for managing and providing the sup-
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Contact Information:
MCLEAN
Mike Jones James Beggs Benjamin Ertel
Officer Associate Associate
703-902-3833 703-902-5175 202-548-3727
jones_mike@bah.com beggs_james@bah.com ertel_ben@bah.com
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Marco Kesteloo Ivan De Souza Timo Leino Tim Jackson Fernando Napolitano Joe Garner
31-20-504-1900 54-1-14-131-0400 358-9-61-54-600 61-3-9221-1900 39-06-69-20-73-1 813-281-4900
Atlanta Caracas Hong Kong Mexico City San Diego Tokyo
Lee Falkenstrom José Gregorio Baquero Edward Tse Jaime Maldonado Dave Karp Steve Wheeler
404-659-3600 58-212-285-3522 852-2251-8892 52-55-9178-4200 619-725-6500 81-3-3436-8631
Bangkok Chicago Houston Milan San Francisco Vienna
Tim Jackson Chris Disher Matt McKenna Enrico Strada Bruce Pasternack Helmut Meier
66-2-653-2255 312-346-1900 713-650-4100 390-2-72-50-91 415-391-1900 43-1-518-22-900
Beijing Cleveland Jakarta Munich Santiago Warsaw
Edward Tse Mark Moran Tim Jackson Jörg Krings Leticia Costa Reg Boudinot
8610-8520-0036 216-696-1900 6221-577-0077 49-89-54525-0 562-445-5100 48-22-630-6301
Beirut Colorado Springs Lexington Park New York São Paulo Washington, DC
Charles El-Hage Glen Bruels Cynthia Broyles David Knott Letícia Costa Eric Spiegel
961-1-336433 719-597-8005 301-862-3110 212-697-1900 55-11-5501-6200 703-902-5000
Berlin Copenhagen London Oslo Seoul Wellington
Rene Perillieux Torsten Moe Shumeet Banerji Karl Høie Jong Chang Tim Jackson
49-30-88705-0 45-33-18-70-00 44-20-7393-3333 47-23-11-39-00 82-2-2170-7500 64-4-915-7777
Bogotá Dallas Los Angeles Paris Shanghai Zurich
Jaime Maldonado Tim Blansett Tom Hansson Bertrand Kleinmann Edward Tse Jens Schädler
57-1-628-5050 214-746-6500 310-297-2100 33-1-44-34-3131 86-21-6340-6633 41-1-20-64-05-0
Boston Düsseldorf Madrid Philadelphia Stockholm
John Harris Thomas Kuenstner Mercedes Mostajo Molly Finn Jan-Olof Dahlén
617-428-4400 49-211-38900 34-91-411-8450 267-330-7900 46-8-506-190-00
E04.185.05/6/05 PRINTED IN USA
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