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Performance Based Logistics (PBL) Overview

DAU GLOSSARY DEFINITION

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 a weapon system product support strategy addressed in Title 10 USC 4324, Life-cycle Management and Product Support, and mandated by both DoD Directive (DoDD) 5000.01, The Defense Acquisition System, and DoD Instruction (DoDI) 5000.91, Product Support Management for the Adaptive Acquisition Framework. Pertinent sections of DoDD 5000.01 and DoDI 5000.91 are included in the following paragraphs. 

  • DoDD 5000.01, section 1.2.k, l, and m state:
    • Employ Performance Based-Acquisition Strategies. "To maximize competition, innovation, and interoperability, acquisition managers will consider and employ performance-based strategies for acquiring and sustaining products and services. “Performance-based strategy” means a strategy that supports an acquisition approach structured around the results to be achieved as opposed to the manner by which the work is to be performed. This approach will be applied to all new procurements and upgrades, as well as re-procurements of systems, subsystems, and spares that are procured beyond the initial production contract award."
    • Plan for Product Support. "Product support strategies (PSSs) will be informed by a business case analysis conducted pursuant to Section 2337 (now 4324) of Title 10, U.S.C. The PSS is designed to facilitate enduring and affordable sustainment consistent with warfighter requirements. Support metrics will be established, tracked, and adjusted where needed to ensure product support objectives are achieved and sustained over the system life cycle. PSSs include the best use of public and private sector capabilities through government and industry partnering initiatives, in accordance with statutory requirements."
    • Implement Effective Life-Cycle Management. "The PM is accountable for achieving program life-cycle management objectives throughout the program life cycle. Planning for operations and support will begin at program inception, and supportability requirements will be balanced with other requirements that impact program cost, schedule, and performance. Performance based life-cycle product support implements life-cycle system management."
  • DoDI 5000.91, section 4.7.a, b and c. Performance-based Life Cycle Product Support, states
    • "The PM, with the support of the PSM [Product Support Manager], will develop and implement an effective performance-based life cycle PSS [product support strategy] (synonymous with performance-based logistics strategy) that will deliver an integrated and affordable product support solution designed to optimize system readiness for the warfighter. The performance-based life cycle PSS will be the basis for all product support efforts and lead to a product support package to sustain warfighter requirements.
    • At the program level, all product support solutions will be performance based. Product support solutions will include an appropriate mix of product and process metrics with threshold values to monitor performance that may be adjusted as needed to satisfy warfighter requirements. The PSM will employ effective planning, development, implementation, and management in developing a system’s product support arrangements in support of the product support solution.
    • While performance-based product support arrangements [PSA] may be a key component of a program’s performance-based lifecycle product support solution, this does not mean that all arrangements with industry will be performance-based logistics contracts. Performance-based logistics contracts are utilized when analysis indicates they can effectively reduce cost and improve performance. Performance-based logistics contracts will be structured to specific program needs and may evolve throughout the life cycle.
    • The PSM will maximize the best use of public and private sector capabilities through Government and industry partnership initiatives when developing the PSS."

Successful PBL PSA represent the best value mix of public (organic) vs. private (contractor) capabilities in terms of providing optimized readiness, reliability and affordability, as well as a best blend of performance-based vs. traditional transaction-based strategies, as determined through a Product Support Business Case Analysis (BCA) and documented in a Life Cycle Sustainment Plan (LCSP).

Additionally, PBL can apply to a component, a subsystem or the entire system and it can include anywhere from one to all the twelve Integrated Product Support Elements (IPS Elements). Understand that those components or subsystems that are not performance-based will default to transaction based support. Typically, the product support strategy for a system is a hybrid blend between the two which can change over time.

When appropriately implemented, PBL product support strategies have demonstrated a range of benefits in support of the Services, weapon system programs, their Warfighter customers, and ultimately the taxpayer, including:

PBL arguably works because when properly implemented, DoD obtains a comprehensive performance package, not individual parts, transactions, or "spares & repairs" actions. When leveraging commercial sector Product Support Integrators (PSI), successful fixed price "pay for performance" PBL product support arrangements totally reverse vendor incentive from traditional Contractor Logistics Support (CLS) arrangements that:

  • Motivate PSI and Product Support Providers (PSP) to reduce failures/ consumption
  • Incentivizes "less I use, the more profit I can make" vice a "more spares and repairs I can sell, the more profit I can make" mentality
  • Facilitates a long term commitment which enables PSI to balance risk vs. investment
  • Improves parts support
    • Am increases + LRT decreases, resulting in Improved Readiness
  • Optimizes depot efficiency
    • RTAT, Awaiting Parts (AWP), & Work in Process (WIP) decrease
  • Incentivizes PSI to invest in reliability
  • Incentive to invest in DMSMS and obsolescence mitigation, improve repair processes, reduce costs, and better support the warfighter

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.

PBL product support strategies are an integral part of the DoD Product Support Business Model outlined in the DoD Weapon System Acquisition Reform Product Support Assessment Report.

They are implemented using the 12-step DoD Product Support Strategy Process Model contained in the DoD Product Support Manager (PSM) Guidebook.

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.