Defining and implementing Performance-Based Logistics in government

Defense AR Journal, Dec, 2004 by David Berkowitz, Jatinder N.D. Gupta, James T. Simpson, Joan B. McWilliams

Following a review of the PBL literature, we identified individuals and organizations engaged in PBL-type activities. We then grouped potential respondents into four categories: Army, Navy, Air Force, and Industry. We conducted in-depth interviews, often lasting many hours, with contractors and DoD project managers. For example, interviews were conducted at Warner Robins Air Force Base, Wright Patterson Air Force Base, Naval Inventory Control Point (NAVICP) in Philadelphia, and at PBL Conferences. We used each interview to document and investigate how PBL is both defined and operationalized. In some instances, we also conducted telephone interviews including those with people from Headquarters (HQ) Navy, General Accounting Office (GAO), Defense Logistics Agency (DLA), RAND, and selected contractors. In general, there was a very high level of cooperation at all levels among both government and Industry participants.

RESPONDENTS

A review of literature on PBL-related activities revealed that, in 1998, DoD established 30 sustainment pilot programs, of which 24 adopted some type of innovative product support strategies (Product Support for the 21st Century, 2001). We contacted project managers from the pilots to schedule visits and interviews. Table 1 lists the 30 initial programs and highlights the programs interviewed by our research team.

In addition to the pilot programs listed in Table 1, we also interviewed managers from the Soldier Focused Logistics (SFL) program, a collaborative effort between AMCOM and the Cargo Helicopters Project Manager's (PM) Office to support the CH-47 fleet sustainment using PBL strategies.

While a DoD-wide study of PBL efforts is useful, information is also available from the Industry's logistics strategies and approaches to solving problems. Therefore, we interviewed Industry managers from AutoZone, UPS, Target, Caterpillar, Intergraph, Dell Computers, Royal Caribbean Cruises, and the University of Toronto. Since the term Performance-based Logistics is not used in the private sector, we widened the scope of logistics to include inventory management, spare parts acquisitions and repair, and maintenance activities.

DEFINITION OF PBL

The first objective of our research was to review existing definitions of PBL used in the Army, Navy, Air Force, and Industry to provide insight into the tenets of PBL. We found no single definition for PBL. Yet, various PBL definitions revealed several common themes. The three main themes are: 1) integration between acquisition and logistics for total system life-cycle, 2) incentives, and 3) performance goals.

Generally, the contracting agency seeks to improve performance throughout the life of a weapon system in some measurable way without dictating the specific methods of performance. Moreover, the agency is willing to provide incentives to the contractor to meet these performance objectives. PBL integration replaces the practice of attempting to define specific methods of operation by describing desired results and uses incentives to ensure success.