Defense budgetNew contracting model would allow the Pentagon to do more with less
Old-school, transactional product support paid defense contractors to ship spare parts and do repairs; it paid contractors to “fix-on-failure”; management experts say that DoD should adopt a different contracting model: Performance-Based Life Cycle Product Support Management, or PBL; under PBL, the military buys system performance, or outcomes, rather than products or services, and a contractor is responsible for providing a defined level of equipment readiness or availability, whatever the cost
The Department of Defense is facing a daunting challenge: finding a way to meet greater-than-ever demands for weapons system maintenance, repair, and overhaul at a time when the defense budget is declining and worn equipment is returning from service in southwest Asia.
The Pentagon’s solution to the challenge of doing more with less is Performance-Based Life Cycle Product Support Management, or PBL. The premise of PBL is that the military buys system performance — or outcomes — rather than products or services. In a PBL program, a contractor is responsible for providing a defined level of equipment readiness or availability, whatever the cost.
A University of Tennessee Knoxville release reports that to help contractors understand how to work with the military in this business model, PBL experts and faculty members in the University of Tennessee’s Center for Executive Education, Steve Geary and Kate Vitasek, have written Performance-Based Logistics: a Contractor’s Guide to Life Cycle Product Support Management. The book was published in October 2008 by Supply Chain Visions, a consulting firm founded by Vitasek.
The release notes that UT’s Center for Executive Education currently offers the only university-driven, educational program in performance-based logistics. The book, used in UT’s course, provides practical guidance to the contractor community in helping them work within this complicated environment.
“Stepping up to ensure that a weapons system is ready to perform when required, anywhere in the world, is a totally different business model for defense contractors,” Geary said. “Old-school, transactional product support paid contractors to ship spare parts and do repairs. It paid contractors to ‘fix-on-failure.’ Now, PBL defense contractors earn their money when the system works, not when it breaks.”
Vitasek confirmed, “PBL isn’t just business as usual.”
Alex Miller, dean of the Center for Executive Education, said that, conceptually, performance-based life cycle support is easy to understand, but not necessarily easy to implement. “The Department of Defense has published information to help educate the government community, but there is little published for the people in the private sector who are stepping up to make performance-based logistics happen.”
