View/Open - Naval Postgraduate School

Evaluation of Performance Based Logistics
Abstract
Presenter: Kenneth Gabriel, University of Maryland
Jacques Gansler, University of Maryland
William Lucyshyn, University of Maryland
Performance-Based Logistics (PBL) is an alternative logistics support solution that
transfers inventory management, technical support, and the supply chain function to a provider
who guarantees a level of performance at the same or reduced cost. Instead of buying spares,
repairs, tools, and data in individual transactions, the method in a performance-based logistics
arrangement is to buy a predetermined level of availability that meets the warfighter’s
objectives.
In most cases, PBL agreements are multi-year (5-15 years, base plus options) and often
result in part or all a systems supply chain being managed by a contractor. In the traditional
support concept the supplier is incentivized to sell parts. This approach reverses vendor
incentives. A “pay for performance” contract now motivates the vendor to reduce failures and
consumption. A long term investment also enables the vendor to balance the risk vs. the
required investment. As a result, these long term partnerships with industry can leverage
commercial best practices, and result in increased system availability, less infrastructure, and
reduced costs.
For example, the Navy uses a PBL contract for the F/A-18E and the two-seat F/A-18F.
This aircraft perform a variety of missions, including air superiority, day and night strike with
precision-guided weapons, fighter escort, and close air support. Through the F/A-18E/F
Integrated Readiness Support Team (FIRST) PBL contract, valued at $750M over five years,
Boeing provides aircraft support that includes supply chain support, reliability improvements,
obsolescence management, E/F squadron activation, technical publication, and support
equipment management. The availability rate of the F/A-18 E/F has been 85%, as compared to
a 73% for the F/A-18 C/D which is supported by a traditional logistics system. This report will
examine and evaluate the performance of existing PBL initiatives, focusing on issues that
include: contracting challenges, government data rights, maintaining a competitive environment,
and developing incentives for standardization.
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