What are the obstacles that prevent a PM from incentivizing an organic depot vice having an industry PSI provide that same incentive?
There is nothing in statute or policy that precludes a PM from incentivizing an organic depot, vice having an industry Product Support Integrator (PSI) provide incentives in a direct sales type Public-Private Partnership (PPP) arrangement. The incentives at the PM’s disposal, however, are not the same as industry’s incentives, and this is a key difference.
Open full Question Details
Performance-based arrangements with commercial entities are facilitated by the use of legally binding contracts, which allow the incorporation of clear outcome based incentives and disincentives. These incentives typically involve profit and loss by the commercial provider, and can be very motivational and effective, if crafted properly. A commercial entity who is serving as a PSI with a direct sales partnership has tools at their behalf to help incentivize the organic partner. The most powerful strength commercial partners can deliver is significant capital investments, which can be applied to improvements in facilities and equipment.
Individual PMs and depots have various types of incentives at their disposal, to include the award of additional work (or the converse - moving the work elsewhere), and performance awards to the extent our Federal system will allow. The PM does not usually have access to a significant capital investment, however, unless there is an infusion of government Research, Development, Test and Evaluation (RDT&E) funds, which are not usually available for a program that is already in sustainment.
Commercial entities have other strengths upon which they can rely to improve organic PPPs as well. Some examples include:
· Direct access to commercial expertise and management methods to help improve overall logistics support.
· When commercial partner is also the OEM, a depot can obtain improved access to technical support for depot maintenance production and process issues.
· State-of-the-art information management systems for supply chain visibility which. enables commercial partners to anticipate demand, identify and implement desirable change in design, fabrication or transportation of items, and even alternative maintenance practices.
PSAs directly between the Program Management Office and an organic depot are generally facilitated by the use of interagency agreements, such as Memorandums of Agreements (MOA), Memorandums of Understanding (MOU) or Service Level Agreements (SLA). These arrangements are designed to hold each party accountable, but are not legally binding, and do not contain profit and loss factors. Therefore, other means of depot motivation are necessary. The challenge is not an easy one.
OSD recognizes the importance of – and challenge in - incentivizing organic depots. In 2013, DoDI 1348.30, Secretary of Defense Maintenance Awards, was reissued as one way to “enhance maintenance awareness and encourage maintenance excellence by providing appropriate recognition through an annual maintenance awards program.” This award recognizes mission accomplishments; effective support to military operations; logistics process innovation; and quality of life programs, acknowledging that improving the effectiveness, motivation, and morale of maintenance personnel is key to achieving depot performance outcomes.
When all is said and done, a PM can incentivize an organic depot vice having an industry PSI provide the incentives - but they do not have the same tools at their disposal. From an overall DoD perspective, we need to leverage the strengths of the industry and organic partners. Sometimes the PM has all the tools necessary to incentivize the performance requirements of an organic facility; but at other times the PM may opt to leverage a commercial entity’s incentive tools. At the end of the day, achieving the warfighter’s requirements is the goal, and both approaches should be part of the PM’s toolkit.