View/Open - Naval Postgraduate School

On Budget Allocation to Increase Operational Availability and
Reduce Readiness Risk through Improvements in Weapon
Systems Logistics
Overview
Presenter: Keebom Kang, Naval Postgraduate School
Kenneth Doerr, Naval Postgraduate School
Uday Apte, Naval Postgraduate School
Ira Lewis, Naval Postgraduate School
The goal of this research is to develop a decision support framework to inform the
acquisition of logistic services for a weapon system. The primary element of this decision
support framework is an explicit choice model of the tradeoff between life-cycle cost on the one
hand and improvements in Operational Availability (Ao) on the other hand. This tradeoff is
encountered when there are a number of opportunities to improve Operational Availability
through the acquisition of logistics services for a weapon system with a limited budget, so that
all opportunities cannot be pursued. In such a case, several criteria are important, including
both average operational availability, as well as the risk that operational availability may fall
below some planning threshold (which we call readiness risk).
The Department of Defense (DoD) is increasingly interested in contractual agreements
and public-private partnerships to improve weapon systems logistics. Such agreements and
partnerships are often established under the umbrella of Performance Based Logistics (PBL).
Under PBL agreements, performance outcomes are specified, and vendors are given a large
degree of autonomy to determine the means of accomplishing those performance outcomes.
Often, PBL agreements are established at the component level (e.g., depot-level maintenance
of an aircraft engine), and a recent review by the Government Accountability Office 2 was
supportive of component-level agreements for PBL, but critical of system level agreements.
However, the DoD values performance at the systems level because only systems, and
not components, help to determine war-fighting outcomes. Recent guidance has been directed
toward five key performance criteria: 1) weapon system operational availability, 2) weapon
system operational reliability, 3) weapon system cost per usage, 4) logistics footprint for a
weapon system, and 5) response time required for weapon system logistics support. 3 .
2 Government Accountability Office (2004). “Opportunities to Enhance the Implementation of Performance
Based Logistics,” Report the Subcommittee on Readiness and Management Support, Committee on
Armed Services, U.S. Senate. August 2004.
3 Office of the Secretary of Defense, Undersecretary for Acquisition, Technology & Logistics (2004). PBL
Purchasing Using Performance Based Criteria. Proceedings of the 2004 DoD Procurement Conference,
Orlando, FL.
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