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2. Integrated Life Cycle Management Cradle to grave enterprise perspectiveLife cycle planningSystems engineeringE.g., reliability, availability, maintainability, supportability (RAMS); sensors (CBM ); operational safety, suitability,
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1. Performance-Based Logistics (PBL)
2. 2 Integrated Life Cycle Management
Cradle to grave enterprise perspective
Life cycle planning
Systems engineering
E.g., reliability, availability, maintainability, supportability (RAMS); sensors (CBM+); operational safety, suitability, & effectiveness; interoperability & commonality; configuration
Product support
E.g., strategy (PBL), sourcing (Core, 50/50, DSOR), partnering, prod spt integration, spt elements (Mx, supply, SE/ATS, technical data, facilities, PHS&T, manpower & personnel, training)
Total ownership cost
3. 3 Product support requirements addressed in materiel solution analysis of alternatives
Integrated acquisition and sustainment life cycle strategy by program initiation
Depot source of repair determination by program initiation
Technical data needs prior to issuance of an acquisition contract solicitation
Public-private partnerships consideration in contract solicitation
Identify and manage industrial base constraints
4. 4 Materiel product support solutions that:
Optimizes
Operational capability
Affordable supportability
Minimizes
Logistics footprint
Total ownership cost
5. 5 Product Support: Package of logistics support functions necessary to maintain the readiness and operational capability of a system or subsystem.
Performance Based Logistics (PBL): Strategy for weapon system life cycle sustainment that links product support to an integrated weapon system performance package designed to optimize readiness.
Business Case Analysis (BCA): A decision support document that identifies alternatives and presents convincing business, economic, and technical arguments for selection and implementation to achieve stated organizational objectives/imperatives.
6. 6 Expectation Management Agreement (EMA): An agreement between the SPM and lead/using major commands (MAJCOMs) that provides real-time support to proactively resolve or de-conflict potential issues over the program life-cycle between the acquirer and operator of capabilities needed, when required and at the most affordable cost.
Performance Based Agreement (PBA): An agreement that provides clear delineation of performance outcomes, corresponding support requirements and the resources required to achieve both.
PBL Contract: A contract between the Government and commercial entity that provides clear delineation of performance outcomes and corresponding support requirements.
7. 7 “PBL” A Strategy for product support
Applicability: Air Force requires for all ACAT I & II Programs and prefers for all other
All PBL strategies must be validated by a BCA
Characteristics:
Based on warfighter operational requirements
Defines the performance goals
Establishes clear lines of authority and responsibility
Provides clear delineation of performance outcomes, corresponding support requirements and resources required to achieve both
Implementation:
Between Gov’t entities: PBAs
Between Gov’t and industry: PBL contracts (not synonymous with “contract logistics support”) PBL transitions DoD support strategies from DoD transaction-based purchases of specified levels of spares, repairs, tools, and data, to the purchase of “capabilities,” such as system availability. This is a fundamental and significant change, in that it transitions the responsibility, and corresponding risk, for making support decisions to the Product Support Integrator. The PM will tell the provider “what” they want, not “how” to do it.
PBL is about managing our logistics business to achieve performance based outcomes and provides incentives for attaining the outcomes.
PBL delineates outcome performance goals of systems, ensures that responsibly are assigned, provides incentives for attaining these goals, and facilitates the overall life-cycle management of system reliability, supportability, and total ownership costs.
PBL states requirements in terms of performance
Defines output performance goals
PBL optimizes total system availability while minimizing cost and logistics footprint
It applies to both industry and government activities
Misconceptions about PBL are the root cause of the inconsistent application of successful PBL strategiesPBL transitions DoD support strategies from DoD transaction-based purchases of specified levels of spares, repairs, tools, and data, to the purchase of “capabilities,” such as system availability. This is a fundamental and significant change, in that it transitions the responsibility, and corresponding risk, for making support decisions to the Product Support Integrator. The PM will tell the provider “what” they want, not “how” to do it.
PBL is about managing our logistics business to achieve performance based outcomes and provides incentives for attaining the outcomes.
PBL delineates outcome performance goals of systems, ensures that responsibly are assigned, provides incentives for attaining these goals, and facilitates the overall life-cycle management of system reliability, supportability, and total ownership costs.
PBL states requirements in terms of performance
Defines output performance goals
PBL optimizes total system availability while minimizing cost and logistics footprint
It applies to both industry and government activities
Misconceptions about PBL are the root cause of the inconsistent application of successful PBL strategies
8. 8 “BCA” Based on performance requirements
Reflect operational requirements for contractors on the battlefield; DOD core logistics capabilities; depot level maintenance contracting limit; synchronization with Defense Transportation System; and contingency and surge flexibility
Address performance, supply chain responsiveness and surge risk assessment
Use information provided by product support stakeholders, government and industry (maintaining competitive environment)
Assess changes from existing product support strategies for legacy systems to support the product support strategy for new weapon systems
Evaluate all services or activities needed to meet lead/using MAJCOMs’ performance requirements using best value assessments
Address cost per output, performance measures, capitalization/asset ownership, logistics footprint, reliability growth, system life cycle costs, diminished manufacturing sources management, obsolescence, mitigation plan, technology insertion and risk management.
Assess support cost and performance baselines: for legacy systems, based on historic experience and costs; for new systems, considering reliability and maintainability projections Sept 01 QDR directed the application of PBL to new and legacy weapon systems
FY06-11 SPG directs completion of PBL Business Case Analysis on all (ACAT I & II) weapon system platforms by 30 Sep 2006
DOD policy directs implementation of PBL
DoDD 5000.1 mandates PBL implementation in order to optimize total system availability, minimize cost and reduce the logistics footprint and DoDI 5000.2 defines the sustainment elements necessary to maintain readiness of deployed systems
The DOD 5000 Guide has an entire section on PBL Sept 01 QDR directed the application of PBL to new and legacy weapon systems
FY06-11 SPG directs completion of PBL Business Case Analysis on all (ACAT I & II) weapon system platforms by 30 Sep 2006
DOD policy directs implementation of PBL
DoDD 5000.1 mandates PBL implementation in order to optimize total system availability, minimize cost and reduce the logistics footprint and DoDI 5000.2 defines the sustainment elements necessary to maintain readiness of deployed systems
The DOD 5000 Guide has an entire section on PBL
9. 9 “EMA” Collaborative written agreement between the operator and the acquisition community
General Officer or Senior Executive Service level signatures
Big picture look
Programs have a process to manage requirements, cost, schedule, risk and performance expectations
Program office and operator meet at least annually to review and adjust the expectations
EMA is attached to the Program Management Directive (PMD)
Every acquisition I-III program requires an EMA
Operator, acquirer and sustainer inputs
Required at Milestone B with PMD
Joint Programs use Memorandum of Agreement (MOA), not EMA
10. 10 Every implementation of a PBL strategy requires a PBA and/or performance based Contract
Provide clear delineation of performance outcomes, corresponding support requirements, and the resources required to achieve both
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
11. 11 Levels of PBL Support
12. 12 EMA and PBL Linkage
13. 13 PBL; An Approach Strategy:
Prior to MS-B (during Concept Refinement and Technology Development)
Initial BCA – finalized by MS-C
Life cycle and enterprise considerations:
Traditional sustainment strategy of similar systems/end-items
Extent of logistics requirements and access to data
Lead/using MAJCOMs’ stated capability requirements
Achievable and maintainable under PBL approach with a high potential for achieving an increase in system performance
Linkage to requirements:
Contracts: requirements to metrics & metrics to incentives
PBAs: requirements to metrics & metrics to PBAs between the SPM and organic product support providers
Cost per operational unit of performance capable of being reduced through PBL
BCA shall:
Be based on performance requirements
Reflect operational requirements for contractors on the battlefield; DOD core logistics capabilities; depot level maintenance contracting limit; synchronization with Defense Transportation System; and contingency and surge flexibility
Address performance, supply chain responsiveness and surge risk assessment
Use information provided by product support stakeholders, government and industry (maintaining competitive environment)
Assess changes from existing product support strategies for legacy systems to support the product support strategy for new weapon systems
Evaluate all services or activities needed to meet lead/using MAJCOMs’ performance requirements using best value assessments
Address cost per output, performance measures, capitalization/asset ownership, logistics footprint, reliability growth, system life cycle costs, diminished manufacturing sources management, obsolescence, mitigation plan, technology insertion and risk management.
Assess support cost and performance baselines: for legacy systems, based on historic experience and costs; for new systems, considering reliability and maintainability projections
BCA shall:
Be based on performance requirements
Reflect operational requirements for contractors on the battlefield; DOD core logistics capabilities; depot level maintenance contracting limit; synchronization with Defense Transportation System; and contingency and surge flexibility
Address performance, supply chain responsiveness and surge risk assessment
Use information provided by product support stakeholders, government and industry (maintaining competitive environment)
Assess changes from existing product support strategies for legacy systems to support the product support strategy for new weapon systems
Evaluate all services or activities needed to meet lead/using MAJCOMs’ performance requirements using best value assessments
Address cost per output, performance measures, capitalization/asset ownership, logistics footprint, reliability growth, system life cycle costs, diminished manufacturing sources management, obsolescence, mitigation plan, technology insertion and risk management.
Assess support cost and performance baselines: for legacy systems, based on historic experience and costs; for new systems, considering reliability and maintainability projections
14. 14 PBL Metrics System-level metrics
Operational availability (materiel availability)
Total not mission capable supply
Mission capable (MICAP) hours
Operational reliability (materiel reliability)
Maintainability (mx man-hours per flying hour or per failure)
Logistics response time
Total Ownership Cost
Unit-level metrics
Mission capable (MC) rate
Total not mission capable maintenance
Production Scheduling Effectiveness
Flying SE, Depot flow days, commodity production target Performance is defined in terms of military objectives such as
Operational Availability
Operational Reliability
Logistics Response Times
Cost
Performance is defined in terms of military objectives such as
Operational Availability
Operational Reliability
Logistics Response Times
Cost
15. 15 Accountability & Responsibility Accountability:
System: System Program Manger (SPM)
Program: Program Manager (PM)
Product Group: Product Group Manager (PGM)
Other: Air Logistics Center Commander (ALC/CC)
Responsibilities:
Development and implementation of PS strategies
Implements tenets of integrated PS planning
Develop an EMA with lead/using MAJCOMs (as applicable)
Document performance & support requirements in PBAs (as applicable)
Ensure planning consideration for USC Title 10 compliance
Preserve competitive options
Accomplish BCA (as applicable)
Ensure PS concept is integrated to provide agile & robust capability
May utilize a PSI (responsibility includes intra- and inter- system integration) Sept 01 QDR directed the application of PBL to new and legacy weapon systems
FY06-11 SPG directs completion of PBL Business Case Analysis on all (ACAT I & II) weapon system platforms by 30 Sep 2006
DOD policy directs implementation of PBL
DoDD 5000.1 mandates PBL implementation in order to optimize total system availability, minimize cost and reduce the logistics footprint and DoDI 5000.2 defines the sustainment elements necessary to maintain readiness of deployed systems
The DOD 5000 Guide has an entire section on PBL Sept 01 QDR directed the application of PBL to new and legacy weapon systems
FY06-11 SPG directs completion of PBL Business Case Analysis on all (ACAT I & II) weapon system platforms by 30 Sep 2006
DOD policy directs implementation of PBL
DoDD 5000.1 mandates PBL implementation in order to optimize total system availability, minimize cost and reduce the logistics footprint and DoDI 5000.2 defines the sustainment elements necessary to maintain readiness of deployed systems
The DOD 5000 Guide has an entire section on PBL
16. 16 Spectrum of Support Opportunities
17. 17 Public-Private Partnerships Partnerships leverage public and private sector capabilities and investment
Facilitate implementation of new technologies and innovative processes
Government re-capitalization in depots – 6% by law
Private Sector business investments at Government facilities
Partnerships are effective in:
Implementing PBL strategies
Satisfying 50/50 and Core Title 10 requirements
18. 18 Centers of Industrial Technical Excellence (CITE) & Public Private Partnerships Facilitate reengineering of industrial processes & adoption of best-business practices at CITEs (Air Force Air Logistics Centers designated CITEs)
Access to technical data and maximization of capacity
Integration of organic sustainment in a PBL environment
More effective maintenance operations
Economical sustainment of organic capabilities
Depot maintenance dollars excluded from 50-50 calculations if workload performed by non-federal personnel at a CITE As of: 3/14/2007
As I mentioned before partnerships are the preferred way to bring new maintenance workload capability into the depots. Partnerships are our focus to establish new emerging workloads and technologies capabilities in our depots.
As of: 3/14/2007
As I mentioned before partnerships are the preferred way to bring new maintenance workload capability into the depots. Partnerships are our focus to establish new emerging workloads and technologies capabilities in our depots.
19. 19 PBL Challenges Organic PBL Issues
PBAs lack ways to incentivize for exceptional performance or provide consequences for not meeting performance requirements
Contracting issues
Incentives relative to performance
Appropriate measurable metrics for needed performance
Lack of historical data on new systems for fixed price contacts
Insufficient or obsolete BCA
Multiple contracts at differing levels on same system
Confusion concerning support of unique type commodity items vs. system level support
Financial management issues
Multiple expense codes
Must pay obligations/commitments
Quantitative verification for reducing total ownership cost
20. 20 Key Take Away PBL strategy utilized to optimize operational capability, minimize the logistics footprint, and reduce total ownership cost
Key PBL characteristics:
Single point accountability
Strategic sourcing (partnering)
Performance-based arrangements
Long-term vendor relationships
Integrated logistics chains
Incentivized performance based on metrics
Considerations:
Life cycle and enterprise perspective
Historical data and commonality
Statute requirements (50/50, Core, partnerships to leverage capabilities)
Challenges:
Strategy developed early in the life cycle
A good BCA that is maintained
The “right” performance metrics to incentives
Proper oversight and enforcement - CLS/COMBS COST (provider Raytheon) – FY 05 $81M, FY 06 $60M, FY 07 $59M, FY 08 $60M, FY 09 $69M – New contract beginning FY 09- CLS/COMBS COST (provider Raytheon) – FY 05 $81M, FY 06 $60M, FY 07 $59M, FY 08 $60M, FY 09 $69M – New contract beginning FY 09
21. 21 QUESTIONS?
22. 22
Backup
23. 23 Building a Business Case
24. 24 Contract Incentives