One of the most difficult challenges facing program managers seeking to implement Performance-Based Logistics is to conduct a thorough, accurate and fair Business Case Analysis.
Establishing metrics by which to define the focus of the Performance-Based Agreement and judge its outcome is a critical part of the process. Metrics must reflect the needs of the warfighter and be expressed in terms of performance criteria that relate to desired outcomes.
Cost may be a metric, but it is only one of several. In some instances it is not possible to translate the warfighters desired outcomes directly into performance metrics because the Product Support Integrator lacks control over all the support functions necessary to achieve that outcome.
For example, in the case of naval aviation, it is impossible to make aircraft carrier sorties generated per day a performance metric because this metric is subject to variables such as weather, damage to the ship, etc., that are beyond the contractors control.
Performance-Based Agreements need to be of a sufficient duration to allow the Product Support Integrator to fully appreciate the costs involved in supporting a platform or system, identify opportunities for cost reduction and implement the necessary changes.
The service provider needs time to make the necessary investments in infrastructure, engineering support and maintenance processes to improve availability and reliability, and see the return on investment. Experience has suggested that five years is a minimum time for a Performance-Based Agreement, and 10 years is better still. The time constraints dont appear to be as much of a hindrance on foreign PSAs; some contracts are for more than 30 years duration.
One of the reasons that Performance-Based Logistics works is the identification of a Product Support Integrator, or in the case of a commodity item, a Product Support Manager, to perform the tasks set out in the Performance-Based Agreement.
The PSI is responsible for integrating all sources of support required to perform the contracted services. The Product Support Integrator can look across the entire logistics system for a given platform or item in order to develop the lowest-cost approaches to achieve the specified performance objectives.
The Product Support Integrator may be a private company or a government entity such as a depot. The Product Support Integrator is responsible to the government Program Manager, who has the full authority of the government to oversee and direct the activities of the Product Support Integrator. However, it is the Product Support Integrator who is responsible for day-to-day management of contractually required activities.
Part 7: The Boeing C-17 Globemaster III Sustainment Partnership as a successful example of a Performance-Based Agreement
(Daniel Goure is vice president of the Lexington Institute, an independent think tank in Arlington, Va.)
(United Press Internationals Outside View commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
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