On any given day, on any given Naval or Marine Corps airfield, there is an Aircraft Maintenance Officer (AMO) on the flight line, urgently prioritizing a squadron’s workload, juggling available manpower and material resources to optimize aircraft availability and meet the ever-emerging flight schedule.
The Marines and Sailors performing the maintenance actions (also known as Wrench Turners) are so focused on mission accomplishment that they often have to be reminded not to exceed their safe crew-day, to go home and get some rest. Their motivation and sense of urgency is clear.
Down the road at the Intermediate Maintenance Activity (IMA), Production Control Departments are urgently driving the completion of expeditious repairs, and Supply Departments are meticulously tracking high priority requisitions. Although the IMA is one-step removed from the flight line, they can see and hear aircraft overhead, and are in constant contact with the squadrons. These Marines and Sailors take pride in the performance of their departments. Using established performance metrics with various levels of detail, analysts from the flight line to the Pentagon are tracking the success of these Marines and Sailors.
Their motivation and sense of urgency is also clear.
At the strategic level however, the motivation and sense of urgency has not always been clear. The Performance Based Logistics (PBL) initiative attempts to inject the same pressures and motivators felt daily on the flight line into government supply and logistics contracts.
Traditionally, after the initial outfitting, in the sustainment phase of a weapons system, Naval Supply purchased parts to address failures. Private industry made money making repairs or selling additional components to the government. Contractors had little incentive to invest “their” money into reliability improvements as reliability improvements would actually decrease the demand for their components/systems, and decrease their revenue. The PBL concept attempts to influence private industry’s behavior to meet the outcome you, the “warfighter,” require ... contracts structured to influence industries behavior to provide reliable materials, when you need them, to maintain and repair your weapons platform. PBL contractors have the motivation to pursue efficiencies and the latitude to be innovative.
Simply put, NAVSUP Weapon Systems Support (WSS), utilizing all existing data, analyzes and projects what the government would spend during a given period of time to maintain an item. In most cases, PBL contractors receive payments based upon a negotiated Firm-Fixed Price Contract funded with Navy Working Capital, equal to or less than what the government will spend, to provide very specific, measured outcomes. For example, the desired outcome may be to fill priority 01 - 03 requisitions within four days, from the time the contractor receives the requisition to the time the item is received at a government supply point, 85 percent of the time or better. In this scenario, if the contractor invests to improve reliability over time, it will result in less demand, and will increase their profit margin.
To varying degrees, the PBL contractor may take responsibility for the management of such things as demand forecasting, warehousing, obsolescence management, repair/overhaul or replace decisions, consumable piece parts used in depot level repairs and overhauls, and technology/reliability insertion (Navy retains configuration control). The government continues to maintain existing organic capability for weapon platforms at our depots. PBL contractors, who manage the overall workload, partner with the government depots.
For the most part, PBL contracts should be transparent to the Wrench Turner. The traditional logistics pipeline remains in place. However, the expectation is that the overall level of support will significantly increase under PBL as contractors develop more efficient means of supporting program requirements. With revenue received from negotiated contract payments, PBL contractors may, for example, determine that it is beneficial to hire and strategically place Technical Representatives (Tech-Reps) at various Naval and Marine Corps installations. Their Tech-Reps seek to identify trends, engineering improvement opportunities, potential packaging improvements, and virtually anything else that will keep their respective component/system out of the logistics pipeline and in IMA inventories or on aircraft.
At the macro-level, PBL efforts are accomplished at the same or lower cost to the government if it utilized traditional inventory management. NAVSUP WSS conducts an analysis of traditional inventory management costs, and only enters into a PBL arrangement if the cost is determined to be the same, or less, than traditional support.
As previously stated, in most cases PBL contractors receive a payment based upon a negotiated Firm-Fixed Price Contract, funded with Navy Working Capital, to achieve a desired outcome. Over time, if the PBL contractor is successful with reliability improvements and demand decreases, a Supply officer at the IMA may notice an increase in the unit price of an item. NAVSUP WSS must raise the individual unit price proportionately, based on new demand projections to ensure its ability to capture sufficient Navy Working Capital to pay the contracted payment.
What is sometimes missed is the fact that reliability has improved -- substantially in most cases -- enhancing the Naval Aviation Enterprise’s ability to achieve its overall objective, “to advance and sustain Naval Aviation warfighting capabilities at an affordable cost.”
The Rockwell Collins F/A-18 Heads-Up Display (HUD) and Digital Display Indicator (DDI) are great examples of a PBL success. Young Marines and Sailors would not think of the F/A-18 HUD or DDI to be a significant degrader. Today, when a HUD or DDI is requisitioned, it is filled 100 percent of the time, and currently has zero back orders. Long forgotten is the fact that when the Rockwell Collins PBL went into effect in late 2003, Naval Supply held 583 Fleet back orders, with a 46 percent fill rate. These are now components the Wrench Turner no longer has to spend man hours cannibalizing from aircraft to aircraft.
This concept has worked very well for Naval and Marine Corps Aviation. Of the 28 aviation PBLs existing today, 26 have met or exceeded contract metrics. Much like an aircraft in the Test and Evaluation phase of acquisition, NAVSUP WSS has learned from both its PBL successes and failures, adjusted and refined its practices, and is positioned to lead the Department of Defense in seeking potential cost avoidance, and most importantly, improve support to you, the warfighter.
By Maj. Joseph Skryd, NAVSUP WSS, Supply Chain Operations, and
Lt. Cmdr. La-Hesh Graham, NAVSUP WSS, Director, Common Systems Contracts