U.S. flag

An official website of the United States government

Dot gov

Official websites use .gov
A .gov website belongs to an official government organization in the United States.


Secure .gov websites use HTTPS
A lock () or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.


  1. Home
  2. Performance Based Logistics (PBL) Implementation

Performance Based Logistics (PBL) Implementation

ALCL 099


Synonymous with performance based product support, where outcomes are acquired through performance based arrangements that deliver Warfighter requirements and incentivize product support providers to reduce costs through innovation. These arrangements are contracts with industry or inter-governmental agreements. Sources of support may be organic, commercial, or a combination, with primary focus optimizing customer support, weapon system availability, and reduced ownership costs.

General Information

PBL is synonymous with performance-based life cycle product support, where outcomes are acquired through performance-based arrangements that deliver Warfighter requirements and incentivize product support providers to reduce costs through innovation. These Product Support Arrangements (PSA) are contracts with industry or intragovernmental agreements.

A PBL arrangement is not synonymous with Contractor Logistics Support (CLS). CLS signifies the "who" of providing support, not the "how" of the business model. CLS is support provided by a contractor, whether the arrangement is structured around Warfighter outcomes with associated incentives or not. PBL arrangements, on the other hand, are tied to Warfighter outcomes and integrate the various Integrated Product Support (IPS) Elements in a cohesive product support package with appropriate incentives and metrics. In addition, PBL focuses on combining best practices of both Government and industry.

PBL Implementation

The 12-step process model used to implement PBL arrangements as addressed in the DoD PBL Guidebook is shown in the following graphic and summarized in the paragraphs below.


Product Support Strategy Process Model

Step 1 - Integrate Warfighter Requirements & Support
Step 1 is particularly important when structuring a PBL arrangement, as the outcome must be tied to Warfighter requirements. In order to properly align the objectives of the Program Management Office (PMO), the Product Support Integrator (PSI) and the Product Support Provider (PSP), it is crucial to understand the Warfighter's requirements for system performance. In most cases, the Warfighter's requirement will be some form of availability and reliability allocated by the program to the system, subsystem, or component level.

The Joint Requirements Oversight Council (JROC) requires a Sustainment Key Performance Parameter (KPP) for all Acquisition Category (ACAT) I and select ACAT II programs. The Sustainment KPP consists of two elements: Materiel Availability (Am) and Operational Availability (Ao). The JROC also requires three Sustainment Key System Attributes (or Additional Performance Attributes): Reliability, Maintainability, and Operating & Support (O&S) cost. More information is available in the Joint Capabilities Integration Development System (JCIDS) Manual.

Step 2 - Form the Product Support Management IPT
The second step is for the Product Support Manager (PSM) to leverage the subject matter expertise within the PMO, supplemented by PBL experts in the supply chain and user organizations, to form a Product Support Management IPT (PSM IPT). The PSM IPT is a collaborative working body comprising key program staff and stakeholders whose purpose is to develop a product support solution. The PSM is responsible to the Program Manager (PM) for the management and oversight of life cycle product support for the materiel system and software, and the PSM must establish and lead the PSM IPT to ensure its collective input, expertise, and support are leveraged to address the multitude of required supportability tasks. There are various disciplines represented within the PSM IPT, including Life Cycle Logistics, Engineering, Finance, Contracting, Legal, and individuals from other functional groups specific to the program and life cycle needs. For software intensive programs, it is critical to embed software representatives early in the program to ensure software-unique management issues are addressed.

The PSM maintains the PSM IPT throughout the program life cycle, as this body will be tasked with supporting the PSM in defining, developing, and implementing the product support strategy. The PSM IPT will also support the PM and PSM in preparing for milestone reviews and Independent Logistics Assessments (ILA). PSMs should ensure that members possess appropriate PBL expertise, or arrange PBL training for the team (such as a PBL Workshop), to help maximize opportunities for performance-based PSAs in the program's support strategy.

Step 3 - Baseline the System
This step assesses the "As-Is" product support strategy, plan, and arrangements and determines if further analysis is warranted to change the plan from its current baseline. The "As-Is" analysis identifies possible impediments and improvement opportunities. This step is conducted in three phases: data gathering; data review and analysis; and recommendation generation. This step is intended to give the program insight as to whether an alternative performance-based strategy is feasible and if more detailed analysis should be conducted. Part of this step will include evaluating IPS Element and other information captured in the product support package. This assessment provides sufficient decision-making information to determine if an investment in more detailed analysis is warranted.

For a new system, establishing an initial baseline requires engineering and supportability data. The initial baseline should be established at Milestone A (or the applicable first milestone) and is typically based on analogous data from similar systems that are required to project the system's baseline. As the program advances to later milestones, additional data will be available from systems engineering and product support analyses.

For fielded systems, this step begins with the inventory and performance review of existing assets and the current product support strategy - including a review of how all IPS Elements are being addressed. If the result of the analysis indicates that an alternative strategy with PBL arrangement(s) can maintain or improve performance and reduce costs for the program, a decision to proceed with more detailed analysis (if needed) to evaluate performance-based alternatives will be made by the PM.

Step 4 - Identify / Refine Performance Outcomes
A key component of any performance-based arrangement is the establishment of metrics. The desired performance outcome for the specific PBL arrangement(s) should be linked to the top-level sustainment requirements of the system (such as Am or Reliability) identified in Step 1. Additionally, the PBL arrangements must deliver the needed performance at reduced total cost when compared to transactional arrangements.

Metrics for support should be identified early in strategy development, documented in the Life Cycle Sustainment Plan (LCSP), and refined as the program progresses into implementation of the PBL arrangement. Once the PM/PSM determines the appropriate support level (system, subsystem, or component), and combination of IPS elements, the selection of metrics can begin. For arrangements at the system level, the PSM may decide to delegate responsibility to a PSI for all aspects of product support with corresponding metrics of Am, Ao, and/or Reliability. Other system-level metrics could be 'ready for tasking' or 'network connectivity.' These metrics are only appropriate as part of the PBL arrangement if the PSI has control over all applicable aspects of product support that affect system availability and/or reliability.

The PSM may decide to delegate responsibility for one or more (but not all) of the IPS elements for the system to a PSI or directly to a PSP. The appropriate metric(s) would be those that measure performance against the specific IPSE(s) over which the PSI/PSP has control. For example, if the PSP is responsible for performing training for an aircraft system, measuring the number or pilots qualified or maintainers certified per month would be an appropriate metric. If the PSM decides to delegate responsibility at the subsystem or component level, then holding the PSI or PSP accountable for Am or Ao of the entire system would be inappropriate. The provider cannot be held accountable for aspects of performance that are outside of its control. No matter how the support responsibilities are delegated, the PM/PSM always retains ultimate responsibility for the performance of the overall product support strategy.

Step 5 - Business Case Analysis
The term "Business Case Analysis (BCA)" is commonly used within DoD and is included as Step 5 of the DoD Product Support Strategy Process Model. As such, the phrase 'BCA' appears throughout the PBL Guidebook. Examples of similar terms are "cost benefit analysis," "analysis of product support alternatives," and "economic analysis" among others. In this guidebook, the term BCA is not intended to mandate a specific methodology or level of analysis. Any analysis discussed here is intended to be tailored to the needs of the program and the nature of specific product support decisions. The PM/PSM should identify the appropriate analytical methodology for their program and include in any methodology an assessment of cost, benefits, risk, and sensitivity to changes in the available support alternative(s).

The analysis is a structured methodology that identifies and compares product support alternatives by assessing mission and business impacts (both financial and nonfinancial), risks, and sensitivities. The analysis should produce clear distinctions among the alternatives to support the program's selection of one. It should give a clear comparison of each alternative in terms of cost, benefits, and risk to aid the PM in selecting the alternative that meets Warfighter requirements at an affordable O&S cost. The analysis should not be performed just to validate a predetermined solution. The PSM may determine outside assistance (either Government or commercial source) is required depending on the complexity of the weapons system or potential support arrangements.

The scope should also account for constraints under which a potential PBL arrangement must function (e.g., restrictions to technical data and Title 10, USC Section 2464 (Core) and 2466 ("50/50") requirements). The BCA alternatives will define the relationship(s) between Government and commercial PSPs. Thus, the analysis should include consideration of partnership relationships and the type of arrangement between providers.

Step 6 - Product Support Value Analysis
Once alternatives are defined to sufficient detail to support analysis, the next step is to quantify the relative costs, benefits, and risks. The analysis of product support alternatives includes both financial and nonfinancial considerations, and quantifiable and non-quantifiable elements. The analysis may also include evaluation of performance, reliability, availability, maintainability, and supportability. Programs may place different levels of importance (weight) on cost, benefits, and risks in the use of these factors in their decision. Assigning numerical weights based on the relative importance of cost, benefits, and risk is one way the program can better shape the analysis to support its decision making. The PSM IPT's ability to effectively perform this analysis is greatly enhanced when a cost estimating subject matter expert is on the team.

Step 7 - Determine Support Method(s)
Once the product support alternatives have been analyzed, the PSM IPT is ready to recommend an option for PM approval. The selected product support alternative is then used to structure appropriate PBL arrangements. The team's critical thinking in its analysis of alternatives yielded information that will be used in structuring the appropriate PBL arrangements. This information includes:

The chosen product support alternative includes information on the timing and phasing of costs. The PSM should use this information to advocate for funding needs with the military Service resource sponsor. The funding requirement should be justified using the results of the analysis, which included an assessment of the sensitivity of the sustainment performance to the IPS Elements; this assessment provides the PSM with an explicit linkage between funding requirements and readiness. This information should be used to establish any appropriate funding transfers between the acquisition and materiel commands or to plan any transition in funding responsibility from the program to the Service materiel command.

Step 8 - Designate Product Support Integrator(s)
Desired performance outcomes were identified in Step 4, followed by an analysis of options and a determination of a support method in steps 5-7. Now, the PM/PSM must decide if the objectives and complexity of the PSA requires the level of management and oversight associated with a PSI. In some cases, particularly in the case of simple programs with well-established cost, schedule and performance baselines, the PSM may decide a PSI is not needed, and the PSM will work directly with the PSP(s). If the role of the PSI is warranted, the PSM may select a PSI from Government or commercial sources.

The PSI will work closely with the PSM in overseeing the performance of the PSPs. PSIs may assume many different types of roles. A PSI could be responsible for the performance of one or more PSPs, they may be a system-level PSI that manages subsystem-level PSIs, or they may also perform the function of a PSP. But whatever the role, their function in the PBL arrangement should remain consistent: PSIs will act as an integrator, an organizer, and an aggregator of information on behalf of the program, as they drive toward readiness targets at the platform level.

Typical candidates for the PSI role are:

Step 9 - Identify Product Support Providers
The PSP can be a DoD activity, commercial business, or combination of both. PSP options are narrowed through the analysis completed while evaluating support alternatives. Typical candidates for the PSP role are:

  • The system's OEM or prime contractor
  • Commercial sector suppliers, vendors, subcontractors, support contractors
  • A DoD provider (e.g., systems command, logistics command, or organic depot)
  • Commercial sector logistics, maintenance, repair, and overhaul and transportation organizations

For fielded weapons systems, PSMs often base their product support strategy via a Government – Industry teaming arrangement with the OEM. OEM PSPs can influence design for reliability, maintainability, and supportability and can leverage the production line for concurrent procurements, redesigns, and upgrades. The OEM is also in a position to affect obsolescence or Diminishing Manufacturing Sources and Materiel Shortages (DMSMS) mitigation efforts by utilizing economic order quantity purchases with their suppliers across multiple product lines.

PBL arrangements with the OEM are often pursued through sole source contracts, which require a Justification and Approval (J&A) at leadership levels appropriate to the type and dollar value of the procurement. PSMs should ensure the J&A clearly articulates the unique capabilities of the OEM and why no other source is capable of providing the addition of new components or new users and resolving sustainment challenges through the most optimal combination of additional spares, training, redesign, support equipment, maintenance, planning, etc.

Whether competed or sole source, given today's Contested Logistics Environment and the need to be responsive to changing operational conditions to meet Combatant Commander needs to flex (quantity, type, and location) and surge (accelerate or increase) support where needed, PBL arrangements should include, where appropriate, provisions to deliver support in a manner capable of meeting these requirements.

Step 10 - Identify / Refine Financial Enablers
Effective PBL arrangements demand timely budget planning and estimating in order to ensure sufficient funds are in place when needed. The PSM is instrumental in securing financial resources within the often uncertain and variable Planning, Programming, Budgeting and Execution (PPBE) process. Funding strategies for PBL arrangements (especially contracts with industry) should consider alternatives, mitigate customer and provider risks, and accommodate uncertainty and variability.

The PSM should work with PSM IPT members from the Service resource sponsor and materiel command to negotiate funding amounts, timing, and responsibilities. This process should occur early enough to ensure the program's funding requirements are included in the programming process. Funding agreements with the Service materiel command should be captured in the LCSP and validated through the concurrences provided in the Sustainment Command Representative signatures.

Within DoD, Services may use either Working Capital Funds (WCF) or direct appropriation type of funds to contract for PBL arrangements. Army and Navy use WCFs for most of their current PBL arrangements.  Air Force uses a mix of WCF and appropriated funds. WCFs are appropriate funding sources for PBL-related supply, depot maintenance, and transportation activities. WCFs may further enable the award of long-term contracts, as they are revolving funds for the military services. WCF-funded PBLs are transparent to the Warfighter interacting through supply and financial systems. It should be noted that customers reimburse WCFs with appropriated dollars for these types of arrangements.

Step 11 - Establish / Refine Product Support Arrangements
This step addressed the development of PBL arrangements, using the analysis and planning conducted in the prior steps. The objective of the arrangement is to deliver Warfighter requirements and to incentivize product support providers to reduce costs through innovation. Attributes of effective PBL arrangements include:

  • Objective, measurable work description that acquires a product support outcome
  • Appropriate contract length, terms, and pricing strategies that encourage delivery of the required outcome
  • A manageable number of metrics linked to desired Warfighter outcomes and cost reduction goals
  • Incentives to achieve required outcomes and cost reduction initiatives
  • Risks and rewards shared between Government and commercial product support integrators and providers

PBL arrangements may take a variety of forms, including contracts, Memorandums of Understanding, Memorandums of Agreement, and Service Level Agreements. PBL contracts can be structured to procure services or supply and can be funded with Operation & Maintenance (O&M) funds, WCFs, or other "colors of money" as appropriate. The majority of PBL contracts are Firm Fixed Price or Fixed Price Incentive Fee, but other contract variants may be appropriate. Cost-type contracts with performance incentives may be appropriate depending on the risk, period of performance, and availability of cost data. The period of performance (PoP) for PBL contracts is usually longer than transactional "spares and repairs" type contracts (typically a three to five-year base period with additional option periods) to allow PSPs to make long-term investments that improve system availability and reliability and realize a financial return.

Step 12 - Implement and Assess
Tracking performance is a critical part of PBL arrangement management, so PBLs cannot be a "fire and forget" endeavor. A Quality Assurance Surveillance Plan (QASP), routine reviews and performance monitoring, and close collaboration between stakeholders aid in driving successful PBL outcomes. Proactive corrective measures, based on changing Warfighter requirements or system design changes may be needed to meet performance targets. Executing a PBL arrangement is an iterative process that requires PM/PSMs to monitor performance and assess the ever-changing environment in order to achieve optimal results.

PBL programs should establish formal periodic reviews with stakeholders, including the program office, key "customer" representatives, representatives from the contracting community, and the PSI/PSP(s). Best practice organizations develop performance and cost reports regularly to help them proactively manage their programs. These teams should have internal, formal performance metrics reviews monthly and should execute working-level reviews as necessary to exercise adequate oversight of critical operational metrics. Should teams encounter "off-track" performance, weekly progress reports and meetings are recommended to drive the team back toward arrangement targets.


The 12-step Product Support Strategy development tool will guide and assist programs in developing PBL arrangements for systems, sub-systems, or components.

For more on PBL, see the following articles:

Click here to view a video on PBL Best Practices, featuring perspectives by Ms Lisa P. Smith, DASD(PS), and two Service practitioners describing successful PBL arrangements at the subsystem/component and system (platform) level.