USAF Learning Asset PBL Contracting Insights - Best Practices Elements in Performance-Based Logistics Contracts - Second Edition, DTD June 2012

Foreword: "Performance-based logistics (PBL) is the Department of Defense’s preferred product support strategy to deliver improved weapons systems readiness at the same or lower total cost. Additionally, AFI 63-101 states, “A performance-based logistics (PBL) strategy shall be used in accordance with the PBL guidance section in this AFI”. The cornerstone of PBL is the purchase of weapons system sustainment as an affordable, integrated package based on output measures such as weapons systems availability, rather than input measures such as parts and technical services. Simply put, performance-based strategies buy outcomes, not products or services. Air Force program offices managing a weapons system have to make tradeoffs in the face of finite resources. On one hand, weapons systems should be designed, maintained, and modified to continuously reduce the demand for logistics; this requires investment. On the other hand, logistics support itself respects budgetary constraints; this often drives for postponement of expenditure, no matter how compelling the payback. To succeed at PBL, a program office must integrate these perspectives, investing in the future while providing current support, all the while staying within statutory and budgetary guidelines. And the program office must adopt the viewpoint of a life cycle strategy, in particular, providing to the maximum extent possible a stable funding environment, from program inception through retirement. Using PBL creates a cost avoidance opportunity for Air Force program managers, which facilitates investments in affordability, reliability, and availability when Support Providers with system knowledge and investment-oriented business models innovate to convert cost avoidance into performance gains. This guide is designed to be a tool for those who want or need practical guidance on developing contracts in line with a PBL approach to Product Support. There are a variety of factors that go into developing an Acquisition Strategy, but ultimately, for the strategy to be executed, a set or series of agreements, either contracts or MOU’s, must be executed. For an in-depth exploration of the topic by the Department of Defense, consult the Product Support Manager (PSM) Guidebook, signed and issued by the Assistant Secretary of Defense for Logistics and Materiel Readiness (L&MR) in April 2011, and available in .PDF on the DAU website www.acc.dau.mil." This document is part of a series of learning assets developed by the Air Force in conjunction with the University of Tennessee.  These learning assets were commissioned to provide more detailed guidance on the implementation of performance-based life cycle product support, and are applicable to the USAF and the other Services.