The Pentagon and Contractor are at odds over how much data the military can have access to for its own jet, the F-35, and that’s creating renewed friction in the fight to fix longstanding issues with the automated logistics system vital to keeping it flying.
ALIS is an off-board system that runs the maintenance and logistics system for the F-35. The Pentagon and Contractor say a relaunched version of the Autonomic Logistics Information System, or ALIS, should be ready to start sending to squadrons in 2020. Both the military’s top acquisition official and the F-35 program manager expressed frustration to lawmakers with how much control contractor asserts over crucial data for the system.
“One of the key elements of coming up with a new ALIS architecture, data standards, and all the other parts that would make a very good system is understanding the data set as it exists today — what all the algorithms are — and we are still in the process of going through that with contractor. But understanding where all the intellectual property is and making sure the government has access to what it has paid for is a key part of rearchitecting ALIS.”
The fight over intellectual property stems from the original concept for the program, which gave contractor sweeping control over virtually every major aspect of the F-35, from design and fabrication to maintenance, parts and logistics. But in recent years, dissatisfied by rising costs and delays, the Pentagon has sought to wrest more control back from contractor. Intellectual property rights and disputes over proprietary data, however, have often tripped up such efforts.
“We still have concerns, there still are roadblocks as we go to execute. Everything from something as simple as DoD documents that get uploaded into a system and come back with contractor proprietary markings on it. That is a frustrating occurrence, but not one that prevents us from doing work.
“What we’re working to do is to figure out where are the places at which intellectual property assertions actually prevent us from doing the kind of work that we intend to do. … We’re getting to a place where we don’t need all the data, but the data that we need — it’s important that we pursue it.”
DoD says the key to getting a successful system was breaking contractors grip on the logistics data infrastructure and housing more of it in a DoD network bank.
“One of the challenges we have is that fact that a lot of the ALIS data and functionality works back through contractor computers. So, what we need to have in a newly rearchitected ALIS to is have that accessible within DoD. So, this deconflicting of contractor data and DoD data will become much more clear.”
The Pentagon would like to leverage more of its internal network development capabilities to get after a newly reconstructed ALIS system, resolving the intellectual property disputes is the key.
Contractor for its part, says it is investing significant company resources in developing solutions to both improve the current ALIS system, known as ALIS classic, but also in the redesigned “ALIS Next.”
Contractor spending about $50 million of internal funds to improve classic ALIS, and also implementing additional company funds in the order of $120 million to support new architecture investments.”
Though the ALIS release in 2018 met the required-capabilities threshold for its design and development phase, the system needs “significant additional improvements” and noted that combat coded squadrons require more than one dozen system administrators to maintain deployed operations and that training squadrons would probably require similar numbers.
Lawmakers said “As we look ahead to the next few decades of F-35 service, failing to create an effective and cost-efficient sustainment system would diminish readiness, squander resources, and discourage the services and our partners from continuing to purchase the F-35. This would create unacceptable risk for the program and would be an abdication of the trust and investment of partners.
Manufacturers can prevent DoD from repairing certain equipment, which puts members of the military at risk. Marines have told us they had roadblocks in the logistics process that left them unable to fix a broken generator because of the warranty.
The idea behind right-to-repair is that you or a third-party you choose, should be able to repair something you own, instead of being forced to rely on the company that originally sold it.
This could involve not repairing something like a generator because doing so would void a warranty; repairs which require specialized tools, diagnostic equipment, data or schematics not reasonably available to consumers; or products that are deliberately designed to prevent an end user from fixing them.
Conversations about right-to-repair issues are increasing, because of the big issues that arise when a manufacturer restricts or makes it impossible for a consumer or an independent repair shop to make product repairs.”
We first heard about the term from a Marine interested in problems with industry power and technology. A few past experiences then snapped into focus. Besides the broken generator the Marine was working at a maintenance unit overseas watching as engines were packed up and shipped back to contractors in the United States for repairs because “that’s what the contract says.” The process took months.
With every engine sent back, Marines lost the opportunity to practice the skills they might need one day on the battlefield, where contractor support is inordinately expensive, unreliable or nonexistent.
Marines have the ability to manufacture parts using water-jets, lathes and milling machines, as well as newer 3D printers, but these tools often sit idle in maintenance bays alongside broken-down military equipment. Although parts from the manufacturer aren’t available to repair the equipment, we aren’t allowed to make the parts ourselves “due to specifications.”
How pervasive is this issue for the most powerful military in the world? And what does it mean for a military that is expected to operate in the most austere and hostile environments to not possess the experience, training or tools to fix its own very technical equipment?
DoD spent 30 years last century significantly invested in research and development and unquestionably owned the right to repair the equipment it developed. In the years since, much of the research and development has shifted to the commercial sector; increasingly, the commercial sector develops cutting-edge technology that also has military uses, such as communication technologies, satellite launches and drones.
To compound the impact of increasingly technical military systems, a new set of political views favorable to industry consolidation emerged resulted in merger waves across the industry landscape.
Strategists in the national security world responded by arguing that DoD needed to become a better customer in order to have access to this commercially developed technology. Consequently, DoD decided that it needed to be more cooperative, and less aggressive, when negotiating terms with commercial companies that produce military equipment or perform services in support of the military.
At the end of the century policymakers simplified the Federal Acquisition Regulation, exempting “commercial items” from a large portion of the rules as well as expanding the definition of what is a commercial item to include goods that could be seen as specialized military goods.
Congress also encouraged DoD to purchase commercial items “to the maximum extent practicable.” These changes fueled high rates of commercial purchases, which, coupled with consolidation in the defense industry, contributed to increased use of commercial technology by DoD and the negotiation of single-source contracts.
Ultimately, the power dynamics shifted between DoD and commercial industry, forcing the department to accept warranties, contracts or prices that it could previously avoid — all thanks to changes in research and development funding, regulations and a lack of competition.
The effects of the right-to-repair paradigm will become only more significant and restrictive as older military vehicles and systems are replaced with equipment that is more complex and involving more electronics. Already complicated equipment designs lead to situations where the manufacturer is the only source for repairs.
Fundamentally, service members just want to ensure that their gear is ready to meet mission requirements. While a broken generator or tactical vehicle may seem like small issues, the implications are much larger when a combat ship or a fighter jet needs to be fixed. What happens when those systems break somewhere with limited communications or transportation? Will DoD get stuck in the mud because of a warranty?
1. Acquire clearly defined Warfighter relevant outcomes - not just sustainment services or replacement equipment
The performance-based logistics strategy should be focused on Warfighter product support requirements and structure the associated performance-based logistics arrangements to deliver outcomes that are tied to the Warfighter requirements. Workloads should be distributed to the most effective providers consistent with guidelines, and with an effort to focus on best competencies, best value, and effective use of public-private partnership solutions. The activities of the product Support integrator and provider are aligned with the Warfighter requirements and monitored with metrics that are consistent with the responsibility and risk delegated to them. This is counter to traditional transactional approaches where DoD procures products and services without linking the consumption of the resources with the desired Warfighter outcomes.
2. Use measurable and practical metrics that accurately assess the product support provider’s performance against delivery of targeted Warfighter outcomes
Performance metrics are vital to the success of a performance-based logistics arrangement. DoD needs insight into program performance to determine compliance with performance requirements and level of mission success. For example, one important area to gather measurement data is related supply chain performance, as these are associated with key performance indicators such as materiel availability and operations and support costs. The product support manager is responsible for the performance of the product support solution and will use Warfighter relevant metrics to monitor its performance.
Metrics assigned to the product support integrator or provider reflect the responsibilities assigned to them. They should not reflect outcomes that are beyond the product support integrator/provider ability to influence and are not part of the arrangement. The selected metrics should be measurable and manageable and map back to the higher-level program metrics. For example, a product support provider may be responsible for the availability of their product and the associated metric may be supply material availability or logistics response time. Too many metrics make it difficult to manage and may also work at cross purposes to each other. Also, data must be available for the metric. There have been occasions where metrics were required as part of an arrangement without the ability to collect the data to determine performance against the metric.
3. Provide significant incentives to the support provider that are tied to the achievement of outcomes for aspects of performance that are within their control
An incentive is anything that encourages or motivates somebody to do something. With respect to performance-based logistics arrangements, it is any term or condition that encourages the desired product support integrator and/or provider behavior to deliver the relevant Warfighter outcome for aspects of performance that are within their control. The incentive may be related to contract type, contract length, or incentive/penalties. A Long term Firm Fixed Price contract provides the strongest incentive for the provider to control costs. However, Long term Firm Fixed Price contracts do not share these savings with DoD, and without additional mechanisms e.g., Contract Data Requirements Lists, they do not provide the information needed by the DoD to understand actual costs for negotiations on future performance-based logistics contracts.
4. Long term Firm Fixed Price contract is generally the preferred contract type but Fixed Price Incentive Firm Target and Cost-plus-incentive-fee Contracts may be effective
When coupled with a requirement to deliver a Warfighter relevant outcome versus delivery of a part or service, a Long term Firm Fixed Price contract converts a traditional revenue center in a transactional business model to a cost center under performance-based logistics. The provider is required to deliver a specific Warfighter relevant outcome for a set price. It transfers the financial risk from DoD to the provider. In this fashion, it acts as a powerful incentive for product support integrator/provider to improve the reliability of their product and the efficiency of their processes in order to reduce their cost to deliver the desired outcome. The lower their cost to perform, the greater the provider profit associated with the fixed price. In order to transfer risk in this fashion to the provider, the failure modes and rates need to be stable enough to reasonably forecast demand. Otherwise, the provider will price in the difficulty with assessing the risk ultimately becoming an unaffordable option.
As the uncertainty and associated risk increases, a more appropriate contract type would be a Fixed Price Incentive Firm Target or a Cost-plus-incentive-fee Contracts arrangement. Fixed Price Incentive Firm Target contracts provide a mechanism for the provider to reduce costs while sharing those cost savings with DoD. Without sharing, there can be instances when DoD does not fully understand the actual costs or the cost-saving opportunities available to the provider. The further the contract type moves from Long term Firm Fixed Price and Fixed Price Incentive Firm Target toward cost plus, the less incentive there is for the provider to improve the product and lean out their processes without reasonable assurance of a follow-on arrangement. Conversely, a cost-plus fixed-fee contract is generally not appropriate for performance-based logistics arrangements.
5. Provide sufficient contract length for the product support provider to recoup investments on improved product e.g. time between failure, sustainment processes and manufacturing capabilities
Performance-based logistics contribute to minimizing operational risk by incentivizing the product support integrator and provider to invest in improving their product and processes in support of Warfighter relevant outcomes. However, this requires an appropriate contract length aligned with the desired investment to provide the product support integrator or provider an opportunity to realize a return on their investment. A provider would want the improved component to go through at least one repair cycle so they have an opportunity to recoup their investment. The length of the contract will depend on the complexity of the product and the size of the investment. The product support manager and Contracting Officer will need to work with their product support integrator and provider counterparts to determine the contract length that is appropriate for their specific arrangement.
6. Performance-based logistics knowledge and resources are maintained for DoD team and product support providers
The most successful performance-based logistics programs are those where both DoD organization and the product support integrator and provider have a comprehensive knowledge of and experience in performance-based concepts, tenets, business models, and implementation strategies at the beginning of their program efforts. The very best programs assemble a performance-based logistics team comprising DoD and the support provider representatives, and tend to include teams with prior performance-based logistics management experience.
7. Leadership champions the effort throughout their organization
A successful performance-based logistics strategy and subsequent arrangements require the support of leadership and all stakeholders throughout DoD and product support integrator/provider organizations. It is particularly important for DoD leadership to create an environment that facilitates broadly implementing performance-based logistics solutions across DoD. This focus must flow down through the organization such that the product support manager is enabled to develop and execute performance-based solutions without undue oversight or review when compared with other approaches.
8. Everyone with a vested interest in the outcome is involved
Organizational alignment is a strategically focused approach that integrates efforts throughout all levels of the organization, starting with leadership down to the shop floor of both customer and supplier organizations. Leadership may champion performance-based logistics, while the lower levels of the workforce may be less than enthusiastic or vice versa. Situations like this can become charged, and a concerted effort to align all parties involved in the execution of the strategy pays big dividends upon execution with a win-win proposition for the entire team. This includes internal and external stakeholders that they should be involved as early in the process as possible. The goal is to drive strong consensus and participation toward common support strategy objectives. An agreement across all stakeholders that establishes performance-based logistics metrics that align with the required operational outcomes is essential.
9. Supply chain activities are aligned to the desired performance-based logistics outcome, vice disparate internal goals
Performance-based logistics focuses on optimizing the effectiveness of the end-to-end process, while traditional sustainment contracts manage the supply chain by commodities or services. The product support manager must develop a management strategy as part of the Life-Cycle Sustainment Plan, which integrates and aligns functions of the various product support integrators and providers to optimize the complete supply chain process. Internally stove-piped processes must be reduced or eliminated. Portions of the supply chain’s effectiveness should not be measured with metrics that are not aligned with the desired performance outcome for the Warfighter. For some programs, co-location of the support provider and DoD team in a public-private partnership arrangement has proven to facilitate cohesive, comprehensive and coordinated customer and supplier supply chain efficiency.
10. Assumption of Risk is shared between DoD customer and support provider
Robust performance-based logistics solutions include a focus on total program risk reduction along with appropriate off-ramp exit criteria that are captured at the onset of the contract execution. These programs balance risk with mitigation strategies that account for all parties involved, while paying specific attention to integrate supplier accountability and authority. By moving some risk to the support provider, and aligning incentives to stimulate program effectiveness, the product support business model can remove risk from the total system. Performance-based logistics is about realigning the incentives to reduce total program risk. Cost: Hourly, annual, life
ALIS is an off-board system that runs the maintenance and logistics system for the F-35. The Pentagon and Contractor say a relaunched version of the Autonomic Logistics Information System, or ALIS, should be ready to start sending to squadrons in 2020. Both the military’s top acquisition official and the F-35 program manager expressed frustration to lawmakers with how much control contractor asserts over crucial data for the system.
“One of the key elements of coming up with a new ALIS architecture, data standards, and all the other parts that would make a very good system is understanding the data set as it exists today — what all the algorithms are — and we are still in the process of going through that with contractor. But understanding where all the intellectual property is and making sure the government has access to what it has paid for is a key part of rearchitecting ALIS.”
The fight over intellectual property stems from the original concept for the program, which gave contractor sweeping control over virtually every major aspect of the F-35, from design and fabrication to maintenance, parts and logistics. But in recent years, dissatisfied by rising costs and delays, the Pentagon has sought to wrest more control back from contractor. Intellectual property rights and disputes over proprietary data, however, have often tripped up such efforts.
“We still have concerns, there still are roadblocks as we go to execute. Everything from something as simple as DoD documents that get uploaded into a system and come back with contractor proprietary markings on it. That is a frustrating occurrence, but not one that prevents us from doing work.
“What we’re working to do is to figure out where are the places at which intellectual property assertions actually prevent us from doing the kind of work that we intend to do. … We’re getting to a place where we don’t need all the data, but the data that we need — it’s important that we pursue it.”
DoD says the key to getting a successful system was breaking contractors grip on the logistics data infrastructure and housing more of it in a DoD network bank.
“One of the challenges we have is that fact that a lot of the ALIS data and functionality works back through contractor computers. So, what we need to have in a newly rearchitected ALIS to is have that accessible within DoD. So, this deconflicting of contractor data and DoD data will become much more clear.”
The Pentagon would like to leverage more of its internal network development capabilities to get after a newly reconstructed ALIS system, resolving the intellectual property disputes is the key.
Contractor for its part, says it is investing significant company resources in developing solutions to both improve the current ALIS system, known as ALIS classic, but also in the redesigned “ALIS Next.”
Contractor spending about $50 million of internal funds to improve classic ALIS, and also implementing additional company funds in the order of $120 million to support new architecture investments.”
Though the ALIS release in 2018 met the required-capabilities threshold for its design and development phase, the system needs “significant additional improvements” and noted that combat coded squadrons require more than one dozen system administrators to maintain deployed operations and that training squadrons would probably require similar numbers.
Lawmakers said “As we look ahead to the next few decades of F-35 service, failing to create an effective and cost-efficient sustainment system would diminish readiness, squander resources, and discourage the services and our partners from continuing to purchase the F-35. This would create unacceptable risk for the program and would be an abdication of the trust and investment of partners.
Manufacturers can prevent DoD from repairing certain equipment, which puts members of the military at risk. Marines have told us they had roadblocks in the logistics process that left them unable to fix a broken generator because of the warranty.
The idea behind right-to-repair is that you or a third-party you choose, should be able to repair something you own, instead of being forced to rely on the company that originally sold it.
This could involve not repairing something like a generator because doing so would void a warranty; repairs which require specialized tools, diagnostic equipment, data or schematics not reasonably available to consumers; or products that are deliberately designed to prevent an end user from fixing them.
Conversations about right-to-repair issues are increasing, because of the big issues that arise when a manufacturer restricts or makes it impossible for a consumer or an independent repair shop to make product repairs.”
We first heard about the term from a Marine interested in problems with industry power and technology. A few past experiences then snapped into focus. Besides the broken generator the Marine was working at a maintenance unit overseas watching as engines were packed up and shipped back to contractors in the United States for repairs because “that’s what the contract says.” The process took months.
With every engine sent back, Marines lost the opportunity to practice the skills they might need one day on the battlefield, where contractor support is inordinately expensive, unreliable or nonexistent.
Marines have the ability to manufacture parts using water-jets, lathes and milling machines, as well as newer 3D printers, but these tools often sit idle in maintenance bays alongside broken-down military equipment. Although parts from the manufacturer aren’t available to repair the equipment, we aren’t allowed to make the parts ourselves “due to specifications.”
How pervasive is this issue for the most powerful military in the world? And what does it mean for a military that is expected to operate in the most austere and hostile environments to not possess the experience, training or tools to fix its own very technical equipment?
DoD spent 30 years last century significantly invested in research and development and unquestionably owned the right to repair the equipment it developed. In the years since, much of the research and development has shifted to the commercial sector; increasingly, the commercial sector develops cutting-edge technology that also has military uses, such as communication technologies, satellite launches and drones.
To compound the impact of increasingly technical military systems, a new set of political views favorable to industry consolidation emerged resulted in merger waves across the industry landscape.
Strategists in the national security world responded by arguing that DoD needed to become a better customer in order to have access to this commercially developed technology. Consequently, DoD decided that it needed to be more cooperative, and less aggressive, when negotiating terms with commercial companies that produce military equipment or perform services in support of the military.
At the end of the century policymakers simplified the Federal Acquisition Regulation, exempting “commercial items” from a large portion of the rules as well as expanding the definition of what is a commercial item to include goods that could be seen as specialized military goods.
Congress also encouraged DoD to purchase commercial items “to the maximum extent practicable.” These changes fueled high rates of commercial purchases, which, coupled with consolidation in the defense industry, contributed to increased use of commercial technology by DoD and the negotiation of single-source contracts.
Ultimately, the power dynamics shifted between DoD and commercial industry, forcing the department to accept warranties, contracts or prices that it could previously avoid — all thanks to changes in research and development funding, regulations and a lack of competition.
The effects of the right-to-repair paradigm will become only more significant and restrictive as older military vehicles and systems are replaced with equipment that is more complex and involving more electronics. Already complicated equipment designs lead to situations where the manufacturer is the only source for repairs.
Fundamentally, service members just want to ensure that their gear is ready to meet mission requirements. While a broken generator or tactical vehicle may seem like small issues, the implications are much larger when a combat ship or a fighter jet needs to be fixed. What happens when those systems break somewhere with limited communications or transportation? Will DoD get stuck in the mud because of a warranty?
1. Acquire clearly defined Warfighter relevant outcomes - not just sustainment services or replacement equipment
The performance-based logistics strategy should be focused on Warfighter product support requirements and structure the associated performance-based logistics arrangements to deliver outcomes that are tied to the Warfighter requirements. Workloads should be distributed to the most effective providers consistent with guidelines, and with an effort to focus on best competencies, best value, and effective use of public-private partnership solutions. The activities of the product Support integrator and provider are aligned with the Warfighter requirements and monitored with metrics that are consistent with the responsibility and risk delegated to them. This is counter to traditional transactional approaches where DoD procures products and services without linking the consumption of the resources with the desired Warfighter outcomes.
2. Use measurable and practical metrics that accurately assess the product support provider’s performance against delivery of targeted Warfighter outcomes
Performance metrics are vital to the success of a performance-based logistics arrangement. DoD needs insight into program performance to determine compliance with performance requirements and level of mission success. For example, one important area to gather measurement data is related supply chain performance, as these are associated with key performance indicators such as materiel availability and operations and support costs. The product support manager is responsible for the performance of the product support solution and will use Warfighter relevant metrics to monitor its performance.
Metrics assigned to the product support integrator or provider reflect the responsibilities assigned to them. They should not reflect outcomes that are beyond the product support integrator/provider ability to influence and are not part of the arrangement. The selected metrics should be measurable and manageable and map back to the higher-level program metrics. For example, a product support provider may be responsible for the availability of their product and the associated metric may be supply material availability or logistics response time. Too many metrics make it difficult to manage and may also work at cross purposes to each other. Also, data must be available for the metric. There have been occasions where metrics were required as part of an arrangement without the ability to collect the data to determine performance against the metric.
3. Provide significant incentives to the support provider that are tied to the achievement of outcomes for aspects of performance that are within their control
An incentive is anything that encourages or motivates somebody to do something. With respect to performance-based logistics arrangements, it is any term or condition that encourages the desired product support integrator and/or provider behavior to deliver the relevant Warfighter outcome for aspects of performance that are within their control. The incentive may be related to contract type, contract length, or incentive/penalties. A Long term Firm Fixed Price contract provides the strongest incentive for the provider to control costs. However, Long term Firm Fixed Price contracts do not share these savings with DoD, and without additional mechanisms e.g., Contract Data Requirements Lists, they do not provide the information needed by the DoD to understand actual costs for negotiations on future performance-based logistics contracts.
4. Long term Firm Fixed Price contract is generally the preferred contract type but Fixed Price Incentive Firm Target and Cost-plus-incentive-fee Contracts may be effective
When coupled with a requirement to deliver a Warfighter relevant outcome versus delivery of a part or service, a Long term Firm Fixed Price contract converts a traditional revenue center in a transactional business model to a cost center under performance-based logistics. The provider is required to deliver a specific Warfighter relevant outcome for a set price. It transfers the financial risk from DoD to the provider. In this fashion, it acts as a powerful incentive for product support integrator/provider to improve the reliability of their product and the efficiency of their processes in order to reduce their cost to deliver the desired outcome. The lower their cost to perform, the greater the provider profit associated with the fixed price. In order to transfer risk in this fashion to the provider, the failure modes and rates need to be stable enough to reasonably forecast demand. Otherwise, the provider will price in the difficulty with assessing the risk ultimately becoming an unaffordable option.
As the uncertainty and associated risk increases, a more appropriate contract type would be a Fixed Price Incentive Firm Target or a Cost-plus-incentive-fee Contracts arrangement. Fixed Price Incentive Firm Target contracts provide a mechanism for the provider to reduce costs while sharing those cost savings with DoD. Without sharing, there can be instances when DoD does not fully understand the actual costs or the cost-saving opportunities available to the provider. The further the contract type moves from Long term Firm Fixed Price and Fixed Price Incentive Firm Target toward cost plus, the less incentive there is for the provider to improve the product and lean out their processes without reasonable assurance of a follow-on arrangement. Conversely, a cost-plus fixed-fee contract is generally not appropriate for performance-based logistics arrangements.
5. Provide sufficient contract length for the product support provider to recoup investments on improved product e.g. time between failure, sustainment processes and manufacturing capabilities
Performance-based logistics contribute to minimizing operational risk by incentivizing the product support integrator and provider to invest in improving their product and processes in support of Warfighter relevant outcomes. However, this requires an appropriate contract length aligned with the desired investment to provide the product support integrator or provider an opportunity to realize a return on their investment. A provider would want the improved component to go through at least one repair cycle so they have an opportunity to recoup their investment. The length of the contract will depend on the complexity of the product and the size of the investment. The product support manager and Contracting Officer will need to work with their product support integrator and provider counterparts to determine the contract length that is appropriate for their specific arrangement.
6. Performance-based logistics knowledge and resources are maintained for DoD team and product support providers
The most successful performance-based logistics programs are those where both DoD organization and the product support integrator and provider have a comprehensive knowledge of and experience in performance-based concepts, tenets, business models, and implementation strategies at the beginning of their program efforts. The very best programs assemble a performance-based logistics team comprising DoD and the support provider representatives, and tend to include teams with prior performance-based logistics management experience.
7. Leadership champions the effort throughout their organization
A successful performance-based logistics strategy and subsequent arrangements require the support of leadership and all stakeholders throughout DoD and product support integrator/provider organizations. It is particularly important for DoD leadership to create an environment that facilitates broadly implementing performance-based logistics solutions across DoD. This focus must flow down through the organization such that the product support manager is enabled to develop and execute performance-based solutions without undue oversight or review when compared with other approaches.
8. Everyone with a vested interest in the outcome is involved
Organizational alignment is a strategically focused approach that integrates efforts throughout all levels of the organization, starting with leadership down to the shop floor of both customer and supplier organizations. Leadership may champion performance-based logistics, while the lower levels of the workforce may be less than enthusiastic or vice versa. Situations like this can become charged, and a concerted effort to align all parties involved in the execution of the strategy pays big dividends upon execution with a win-win proposition for the entire team. This includes internal and external stakeholders that they should be involved as early in the process as possible. The goal is to drive strong consensus and participation toward common support strategy objectives. An agreement across all stakeholders that establishes performance-based logistics metrics that align with the required operational outcomes is essential.
9. Supply chain activities are aligned to the desired performance-based logistics outcome, vice disparate internal goals
Performance-based logistics focuses on optimizing the effectiveness of the end-to-end process, while traditional sustainment contracts manage the supply chain by commodities or services. The product support manager must develop a management strategy as part of the Life-Cycle Sustainment Plan, which integrates and aligns functions of the various product support integrators and providers to optimize the complete supply chain process. Internally stove-piped processes must be reduced or eliminated. Portions of the supply chain’s effectiveness should not be measured with metrics that are not aligned with the desired performance outcome for the Warfighter. For some programs, co-location of the support provider and DoD team in a public-private partnership arrangement has proven to facilitate cohesive, comprehensive and coordinated customer and supplier supply chain efficiency.
10. Assumption of Risk is shared between DoD customer and support provider
Robust performance-based logistics solutions include a focus on total program risk reduction along with appropriate off-ramp exit criteria that are captured at the onset of the contract execution. These programs balance risk with mitigation strategies that account for all parties involved, while paying specific attention to integrate supplier accountability and authority. By moving some risk to the support provider, and aligning incentives to stimulate program effectiveness, the product support business model can remove risk from the total system. Performance-based logistics is about realigning the incentives to reduce total program risk. Cost: Hourly, annual, life
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