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Public-Private Partnerships (PPP)

DAU GLOSSARY DEFINITION

In general, a cooperative arrangement between an organic product support provider and one or more private sector entities to perform defense-related work, utilize DoD facilities and equipment, or both. Other government organizations, such as program offices, inventory control points, and sustainment commands, may be parties to such agreements. Under Title 10 USC § 2474, a PPP for depot-level maintenance is a cooperative arrangement between an organic depot-level maintenance activity and one or more private sector entities to perform DoD or Defense-related work and/or to utilize DoD depot facilities and equipment. Also referred to as Public-Private Partnering (PPP).

General Information

Law and Policy

There are many legal and regulatory references applicable to PPPs. The primary ones are listed in the section below, and others are discussed, as applicable, throughout this article. 

  • DoD Directive (DoDD) 5000.01,The Defense Acquisition System, emphasizes that Product Support Strategies (PSS) "include the best use of public and private sector capabilities through government and industry partnering initiatives, in accordance with statutory requirements."
  • 10 USC 4324Life-cycle management and product support, clarifies that a PSP can be any entity that provides product support functions within the DoD, an entity within the private sector, or a partnership between such entities.
  • DoD Instruction (DoDI) 4151.21, Public-Private Partnerships for Product Support mandates that PPPs "for depot-level maintenance shall be employed whenever cost effective in providing improved support to the Warfighter, and to maximize the utilization of the government's facilities, equipment, and personnel at DoD depot-level maintenance activities." Further, this instruction states that "Performance-Based Logistics [PBL] implementation strategies shall consider public-private partnerships to satisfy the core capabilities requirements of 10 USC 2464 [Core logistics capabilities] and the limitations on the performance of depot-level maintenance and materiel requirements contained in 10 USC 2466 [Limitations on the performance of depot-level maintenance of materiel]."

Guidance

According to the DoD Public-Private Partnering for Product Support Guidebook, "by law and policy, the Department of Defense maintains a "ready and controlled" source of technical competence and resources necessary to respond to contingencies requiring the application of military capability anywhere around the globe. One of the keys to those competencies is embodied in the Department's major organic depot maintenance activities, augmented with commercial contract support. ... Partnering serves as a singular bridge to meld the public and private sectors in support of increasingly complex advanced technologies, and the combined technical competence is essential to produce an assured mission response for the sustainment life cycle."

PPP Types

There are three basic types of PPPs in contemporary use in the defense sustainment community. Two of the types are specifically authorized by law, while the third does not require legal authority to proceed. The bulk of the current authorities for partnerships are focused on depot maintenance. The three basic types and their related legal authorities are:

  • Workshare - A partnership in which a government buying activity, in collaboration with a contractor and a depot maintenance activity, determines the best mix of work capitalizing on each partner's capabilities. The workload is then allocated to each partner. The contractor is funded through a contract, and the organic activity is funded through a project or work order (in the case of depot maintenance). The partnering agreement between the contractor and organic activity focuses on the roles and responsibilities of each partner. The partners work jointly to accomplish the overall requirement.
    • Funding is not exchanged between the partners under a workshare agreement, and therefore workshares exist without specific legal authority.
  • Direct Sale (Sales of Articles and Services) - An arrangement, currently authorized primarily for depot maintenance activities designated as Centers of Industrial and Technical Excellence (CITE), and other working capital funded industrial facilities under specified circumstances, whereby military and commercial entities enter into a quasi sub-contractual relationship for the sale of depot maintenance articles and/or services to an outside (non-government) entity, usually a contractor.
    • A direct sale agreement begins with a government contract that funds a commercial activity. In turn, after development of a partnership agreement with an appropriate implementing agreement, the contractor pays an organic depot maintenance activity (or other industrial funded activity as authorized) for goods and services provided to the contractor. Depending on the legal authority applied, the funds may be paid to the U.S. Treasury or directly to the depot's working capital fund (WCF). The contractor may also supply materiel to the depots in support of the partnership. The purchase of articles and/or services by the commercial entity establishes a quasi-subcontractor relationship for the depot, permitting (as authorized by law) the depot to be held accountable for willful misconduct or gross negligence, or from the failure of the government to comply with cost, schedule or cost performance requirements in the contract agreement to provide articles or services.
    • Primary legal authority for CITEs is 10 USC 2474, Centers of Industrial and Technical Excellence: designation; public-private partnerships, which authorizes the payment from non-government entities to the WCF for articles and services produced. 
    • Additional authority for "sale of articles and services" is in the following statutes:
      • 10 USC 2208(j), Working-capital Funds 
      • 10 USC 2563, Articles and Services of Industrial Facilities: sale to persons outside the Department of Defense
      • 10 USC 4544Army industrial facilities: cooperative activities with non-Army entities
      • 22 USC 2770Sale of defense articles and services by President to United States companies; restriction on performance of services; reimbursement credited to selling agency
  • Lease - An arrangement that allows a private sector entity to have access to, and beneficial use of, facilities or equipment located at an organic depot designated as a CITE. Facilities and equipment may be made available for lease so long as the arrangement does not preclude the depot maintenance activity from performing its mission. The goal is to make government-owned facilities more efficient through better utilization.
    • Lease payments may be made as monetary payments from the contractor to the depot maintenance activity, or as full-value "in-kind" consideration (e.g., provision of property maintenance, protection, alternation, repair, improvement, restoration; construction of new facilities; provision of facilities; and provision or payment of utility services).
    • 10 USC 2667Leases: non-excess property of military departments and Defense Agencies and 2474 are the primary authorities for lease of non-excess real property.

 

Additional Policy Considerations

DoD policy requires programs, prior to entering into a partnership, to conduct an independent analysis that considers costs, benefits, opportunities, risks, investments, resource needs, constraints, and best practices of public and private sector capabilities. In addition, programs are encouraged to identify outcome-oriented metrics to measure the intended benefits of PPPs for use in the governance of product support PPPs (e.g., routine reviews) and to support Analysis Reviews which require the Program Manager (PM) to review the PPP along with the product support strategy every 5 years or when there is a change to the product support strategy. (DoDI 4151.21 paragraphs 3.1 and 3.2)

 

Additional Partnering Authorities

Additional partnering authorities apply to other defense industrial activities beyond depot maintenance, including the Defense Logistics Agency (DLA). Many of these authorities are designed to facilitate test and development activities, and Cooperative Research and Development Agreements (CRADAs). Consult with the government organizations to explore specific applications. A partial listing of examples includes:

Several related references also include: