Performance Based Logistics For Achieving Affordable Readiness
Abstract
In February 2014, the Secretary of Defense announced a plan to shrink the Pentagon s budget by more than $75 billion over the next two years. Secretary Chuck Hagel said these cuts would come by reducing manpower without degrading training or readiness. In order to help achieve these aggressive goals, there has been an increased focus on greater efficiency and productivity. This is reflected in the April 24, 2013, memorandum from Under Secretary of Defense for Acquisition, Technology, and Logistics (USD[AT&L]) Frank Kendall, Implementing Directive for Better Buying Power 2.0 Achieving Greater Efficiency and Productivity in Defense Spending. As part of a broad range of initiatives, Kendall s BBP 2.0 memorandum promotes Performance Based Logistics (PBL) as one tool for achieving the Department of Defense (DoD) goal of affordable readiness. Using an outcome-based sustainment strategy, PBL offers a well-tested contribution to meeting the DoD s budgetary challenges. PBL works by incentivizing desired outcomes across the product life cycle, from design through sustainment to retirement. In a PBL product support arrangement which rewards the achievement of performance results a support provider is incentivized to reduce the number of unscheduled maintenance and repairs as well as the cost of the parts and labor used in the repair process. This improves availability at lower cost. Under a traditional transactional product support model, by which the government purchases parts or maintenance services for repairs, the provider does not receive incentives to improve availability or reduce the need for repairs and repair parts. The opposite is true: In the transactional model, the provider s revenue increases as equipment failures increase. This model creates a fundamental product support misalignment for DoD, and PBL arrangements address this misalignment.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 01, 2015
- Accession Number
- ADA621267
Entities
People
- Betsy Lederer
- Knob Moses
Organizations
- Defense Acquisition University