Navy pioneering a new way of dealing with performance-based logistics

Behind nearly every major weapons system, performance-based logistics strategies support any number of facets of the program, equipment and management. As budget pressures bear down on the Defense Department and leadership looks to squeeze savings from anywhere possible, it’s critical to boost performance-based logistics with an open approach and a revamped commitment to partnership, according to a panel of industry experts and DOD officials.

To help pioneer a new way of dealing with performance-based logistics and support strategies, officials are looking to institutionalize the more collaborative methodology, starting with the people entering the world of defense contracting intricacies.

“We’ve got a good solid team of contract specialists, and we’re training the next crop,” Rear Adm. Mark Heinrich, commander of the Naval Supply Systems Command and chief of the Naval Supply Corps, said as part of a panel at the Navy League Sea-Air-Space Exposition April 16. “PBLs are hard, and you’ve got to get a group of individuals who can really sit down and work this stuff."

The renewed focus on performance-based logistics is at least partly being driven by the need to cut spending, including policies like the Better Buying Power initiatives rolled out in 2010 by now Deputy Defense Secretary Ashton Carter.

“As we move forward in this era of affordability, I think the next wave of PBLs will feature enhanced transparency and enhanced sharing across the government and industry partnerships,” said Louis Krantz, vice president of logistics and sustainment at Lockheed Martin.

Strong performance-based logistics have been shown to save money and increase effectiveness, according to Joe Clements, a specialist leader with Deloitte Consulting, which conducted a study on the issue.

“We found that a properly structured and executed PBL would reduce the costs of performance while driving up absolute levels of performance,” Clements said. For example, 20 out of 21 weapons systems Deloitte studied experienced improved performance when compared with traditional, transactional sustainment programs. In another case, one program saw 27 percent savings as well as a jump in performance from 50 percent system availability to 100 percent availability, Clements said.

But to be well-structured and well-executed, the strategy must be rooted in an open collaboration between government and industry, members of the panel said.

“It doesn’t do industry any good to read that [contractors] are making too much money, and it doesn’t do government any good to read that they aren’t getting the operational capability they contracted. So it’s about trust in the relationships, it’s about sharing the data and it’s about being open,” said Tim Carey, vice president of Raytheon Space and Airborne Systems.