ARLINGTON, Va., May 28 (UPI) -- For several decades the U.S. Department of Defense has pressed for a different way of maintaining military equipment and acquiring services, one that would both be less costly and provide greater benefit to the warfighter. Since 2001 the Department of Defense has settled on Performance-Based Logistics as the most desirable way of streamlining the system for maintaining weapons systems and major components.
According to the Department of Defense, PBL is the purchase of support as an integrated, affordable performance package designed to optimize system readiness and meet performance goals for a weapons system through long-term support arrangements with clear lines of authority and responsibility. Simply put, performance-based strategies buy outcomes, not products or services.
Performance-Based Logistics is similar to purchasing a warranty when acquiring a car. However, rather than simply guaranteeing to repair any defects that occur over a specified period of time, the car dealer either promises the purchaser that the car will be in working order for a specified number of miles or guarantees that a car will be available for his use 95 percent of the time.
The car dealer undertakes to provide preventive maintenance and even to replace parts with ones that are more reliable in order to achieve the mileage goals. If the car fails to make the specified number of miles, the car dealer has to refund part of the warranty price or provide the purchaser with another vehicle.
Alternatively, every morning the car owner goes to his garage to find a car in working order; how it gets there is the dealer's problem. If the car dealer can reduce the cost associated with maintaining the car, he makes more money based on the premium charged for the warranty. Unlike the current system, the car dealer has every incentive to keep the car in working order and out of the repair shop.
The essence of Performance-Based Logistics is the purchase of weapons system sustainment as an affordable, integrated package based on output measures such as weapons system availability, rather than input measures, such as parts and technical services. At the heart of the value of Performance-Based Logistics is creating a situation in which the private sector is incentivized to find ways of reducing costs and increasing weapons systems availability.
Performance-Based Logistics has been used extensively in commercial businesses for more than 25 years. The airline industry pioneered the concept of "power by the hour," in which engine manufacturers contracted with the airlines to guarantee a certain minimum number of flying hours for every engine. The engine companies also guaranteed to replace a faulty engine within a specified period of time anywhere the airline flew.
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Part 4: Adapting Performance-Based Logistics for the U.S. military
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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.)
