Performance-Based Logistics proves winner for Pentagon

ARLINGTON, Va., June 10 (UPI) -- Public-private partnerships are vital to reducing the life-cycle costs of weapons systems. Some 60 percent of the total life-cycle costs of any weapons system are in post delivery sustainment and support. Linking the organic maintenance base with equipment manufacturers offers opportunities to improve the performance of both and provide savings to the United States government at the same time.

There are a number of clear benefits to using public-private partnerships to perform a Performance-Based Agreement.

PPPs make sense because no single entity can be the best at all aspects of the sustainment process. A public-private partnership capitalizes on the strengths of each partner. The mix of capabilities provided by private contractors and the organic base gives better support to the war fighter.

The organic depots have unique capabilities. Often they have underutilized capacity that can be applied to the Performance-Based Agreement, thereby improving the depot's overall efficiency. At the same time, the contractor remains responsible for managing the supply of repair parts and even consumables.

The private partner can provide improved reliability of parts and create a means for rapid infusion of new technology. In addition, a properly structured Performance-Based Agreement can allow the organic depots to improve their technical competencies with respect to the system being supported.

Finally, a public-private partnership can help the public sector maintain the mandated 50-50 balance of work in areas considered critical.

Concerns have been raised by some that Performance-Based Logistics will take work away from the organic base. Nothing could be farther from the truth. One early study of Performance-Based Logistics identified dozens of cases of public-private partnerships that not only improved sustainment of critical military systems, but brought additional work into the organic base.

These programs not only took advantage of beneficial labor rates available in the organic base, but the unique technical skills of specific depots and logistics centers. These developments were documented in the study "Contracting and Performance Agreement Management for PBL," published by the Center for the Management of Science and Technology, University of Alabama at Huntsville in 2004. It is available at cmost.uah.edu/pdf/candpmgt.pdf.

Our conclusion is that Performance-Based Logistics works. Performance-Based Logistics has led to improvements in availability in the neighborhood of 20 percent to 40 percent while typically reducing costs by 15 percent to 20 percent.

A study by the Aerospace Industries Association of 23 Performance-Based Agreements showed an average annual program cost savings of more than $21 million while achieving an average increase in availability of 16 percent. The study was conducted by Joe Grossman, and it was called "Performance Based Logistics." Grossman delivered his findings in a briefing at the 2007 Aerospace Industries Association Product Support Conference, May 9, 2007

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Part 10: Documenting the success of the PBL innovations

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(Daniel Goure is vice president of the Lexington Institute, an independent think tank in Arlington, Va.)

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(United Press International's "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.)