Performance-Based Logistics - Transforming Sustainment

Performance-Based
Logistics: Transforming
Sustainment
Performance-based logistics (PBL) is an innovative approach to acquisition that represents a
cultural shift away from buying parts, to buying performance. Successful deployment of PBL
strategy could signify definitive results for your organization.
BY DEIRDRE MAHON
Abstract
The 2001 Quadrennial Defense Review (QDR)

identified logistics transformation as a key transformation pillar. Specifically, the QDR mandated logistics
enterprise integration, a reduction in logistics demand,
and a reduction in the cost of logistics. One tool the
Department of Defense (DOD) identified for use in
achieving these goals is performance-based logistics
(PBL). This tool is an innovative acquisition approach
that represents a cultural shift away from buying parts
to buying performance. In practice, application of PBL
can be at the system, subsystem, or major assembly level.
Executed through long-term incentive based contracts,
PBL is a means of system sustainment that integrates
supplier support and warfighter requirements with the
objective of improving operational readiness while
reducing costs. In todays environment of constrained
budgets and reduced manpower, PBL represents a
potentially cost effective and efficient method for
system sustainment. Using research findings and
available scholarly studies of PBL implementation, this
article will examine PBL as a means of sustainment,
beginning with a working definition and concept of
PBL and examination of DOD and service policy, as
well as key components of PBL implementation, to
include stakeholder roles and responsibilities, business
case analysis, development of performance metrics, and

barriers and enablers to implementation. The U.S. Air
Forces (USAF) C-17 Globemaster program will be
used to examine the USAFs implementation of PBL
concepts. It will conclude with recommendations for
successful deployment of the PBL strategy in the DOD
and services.
Introduction
If the end of the Cold War presaged the need for

transformation in the DOD, September 11, 2001
brought it to the fore. To support a fundamental
shift from traditional army warfare to asymmetric
warfare, the 2001 Quadrennial Defense Review
(QDR) put transformation at the heart of DODs
objective to build a capabilities-based defense
strategy (p. IV) and identified logistics transformaAbout the Author
DEIRDRE MAHON, LT COL, USAF, is the 2007 recipient of the annual NCMA Award for Excellence in
Research and Writing, which honors the top author
of a paper at the Industrial College of the Armed
Forces. Her research advisor was Terrance Egland,
Captain, USN. Send comments about this article to
cm@ncmahq.org.
Journal of Contract Management / Summer 2007
53
Performance-Based Logist ics : T r ansforming Sustainmen t
DOD Compared to Commercial Firms

Process
DOD
Commercial Companies
Distribution
21 days average
1 day
Motorola
3 days
Boeing
2 days
Caterpillar
Repair
Cycle Time
4144 days
3 days
Compaq
14 days
Boeing Electronics
14 days
Detroit Diesel
Repair
Shop Time
835 days
Army tank/truck
1 day
Compaq
10 days
Boeing Electronics
5 days
Detroit Diesel
88 days
DLA
4 days
Texas Instruments
.5 day
Portland General
Minutes
Boeing, Caterpillar
Procurement
Admin Lead Time
Source: Gansler and Lucyshyn, 2006, p.4

Table 1.
tion as a key transformation pillar. Specifically, the

QDR highlighted shortcomings in the efficiency and
effectiveness of force sustainment and directed
implementation of logistics enterprise integration, a
reduction in logistics demand, and a reduction in the
cost of logistics (QDR 2001, p. 35). To mitigate
these shortcomings and achieve stated goals, QDR
logistics transformation initiatives included
initiatives such as compressing the supply chain by
modernizing business processes and using performance based logistics (PBL) (QDR 2001, p. 56).
In 2006, the QDR again highlighted opportunities for acquisition and logistics process improvements focusing on supply-chain logistics costs and
performance. As in 2001, the 2006 QDR highlighted PBL as a tool to improve the DODs supply-chain
process (p. 72).
Performance-Based Logistics
Whats Driving PBL?
DOD logistics is big business. According to the Office

of the Secretary of Defense (OSD), Materiel Readiness and Maintenance Policy, the DOD 2005
maintenance budget was $81 billion (DOD Fact
Book, 2006, slide 3). Historically, 80 percent of the
budget is spent on sustainment (Kratz, 2002, p. 2).
The DOD maintenance program involves 650,000
military and civilian maintainers and several
54 Summer 2007 / Journal of Contract Management
thousand commercial vendors supporting 280 ships,

14,000 aircraft, 900 strategic missiles, and 330,000
ground combat and tactical vehicles (DOD Fact Book,
2006, slide 3).
Since the end of the Cold War, base closure and
realignment actions have reduced the number of
military depots from 38 to 19 and manpower by
two-thirds (Fogarty, 2006, p. 2728). In parallel with
the DODs shrinking logistics support base, the fleets
have continued to age, weapons system and parts
availability has continued to decline, obsolescence had
increased, and vendors have disappeared, all leading to
increased DOD sustainment costs (Sarra, 2004, p. 3).
These facts, coupled with the desire to better
manage the total life-cycle support costs of weapons
systems and improve logistics support to the warfighter,
resulted in the selection of PBL as a key logistics
transformation initiative. DOD senior acquisition
leaders believe that by applying PBL strategies, DOD
can take advantage of commercial industry core
competencies such as engineering expertise, best
business practices, newer technology, superior supplier
network, fresh viewpoints, and innovative solution sets
(Fowler and Reed brief, slide 22).
While DOD has made considerable progress in
logistics improvements, DOD logistics lags commercial sector performance. Driven by competition, the
commercial sectors focus is on meeting customer
needs as quickly and as efficiently as possible. As a
result, commercial sector performance in distribution,
repair and repair cycle time, and procurement time

has become the hallmark of successful logistics
management. When compared to commercial sector
firms in these four logistics activities, the DOD is
considerably less capable (see Table 1 on page 54)
(Gansler and Lucyshyn, 2006, p. 4).
Pursuing a PBL strategy in the acquisition and
sustainment of weapons systems and leveraging
private industry core competencies in the process may
well provide the DOD the best opportunity to achieve
the QDR goals of reduced logistics costs, reduced cycle
time, and modernized business processes.
PBL Working Definition and Concept
Both the 2001 and 2006 QDR (QDR 2001, p. 56, QDR
2006, p. 72) directed use of PBL as a strategy to overcome
the hurdles facing the DOD logistics mission. In concept,
PBL is a cultural shift away from buying parts to buying
performance. In practice, application of PBL can be at
the system, subsystem, or major assembly level. Executed
through long-term incentive based contracts, PBL is a
means of system sustainment that integrates supplier
support and warfighter requirements with the objective
of improving operational readiness while reducing costs.
In the March 2005 Defense Acquisition University
(DAU) guidebook titled Performance-Based Logistics:
A Program Managers Product Support Guide, PBL is
defined as:
The purchase of support as an integrated, affordable,
performance package designed to optimize system
readiness and meet performance goals for a weapon
system through long-term support arrangements with
clear lines of authority and responsibility (p. 11)
As a new DOD business model, PBL differs from

the traditional support model in many ways. In the
traditional model, the DOD/Service bought a
weapon system and associated parts. From there,
supply, transportation, maintenance, and engineering logistics support agencies and processes were
responsible to sustain the system and receive, store,
and issue the parts. Service depots, commercial and
organic suppliers, distribution centers, engineering
activities, and accounting activities all navigated a
complex system of requirements determination, data
sharing, parts procurement, shipping and/or
transportation, and financial accounting, to get a
part to the end user. More often than not, the end
result was untimely logistics response. Inherent in

this process were redundant storage locations and a
web of automated systems that may or may not have
captured real-time parts status. To reduce risk
associated with untimely logistics response and lack
of parts status visibility, services tended to increase
demand to ensure they had enough spare parts to
meet any need, which resulted in large unused
inventories. This incentivized industry to sell more
parts to the services instead of getting at the root
cause; poor system performance and reliability
In contrast, PBL moves the DOD from buying
parts to buying performance, or outcome. Instead of
paying a supplier for individual transactionsspare
parts, repairs, or hours of technical supportthe
DOD pays for weapon system performance with the
ultimate goal of increased readiness, reduced support
costs, and reduced logistics footprint (Vitasek, et al.,
2006, p. 1). Breaking the paradigm further, PBL
contracts do not provide in-depth descriptions of the
government processes contractors must follow. With
the focus on system performance, the DOD simply
tells the contractor the what e.g., the system
performance expectations and desired outcomes, and
then lets the contractors figure out how to deliver
that performance. The contractor is paid based upon
meeting the performance expectations or outcome,
not for parts used, hours worked, or services provided
(Geary, 2006, 10).
Another shift brought about by PBL is the increased
involvement of manufacturers and other service providers
in the direct support of weapon systems. In PBL, contractors must be proactive rather than reactive. In a traditional
relationship, the contractor responds to DOD requirements, e.g., specifications, quantity, and schedule. As the
product support integrator (PSI) in a PBL strategy, the
contractor not only determines requirements, quantity,
and schedule, but they also integrate other support
resources to effectively align the entire supply chain and
deliver performance to the warfighter (Vitasek et al., 2006,
p. 7). PBL also incentivizes the contractor to continuously
improve reliability, maintainability, and technology to
affect performance (Cothran, n.d., pp. 1112). This may
be infrastructure investment and process improvements to
yield efficiencies, or spiral development of technology to
improve parts reliability, availability, and maintainability
(Blumberg, 2006, p. 57). The incentive to deliver performance at lower costs results in lower total ownership costs
for both the contractor and DOD (Geary, 2005, p. 57).
55
DOD and Service Policy

Implementing PBL
Following the 2001 QDR directive to implement PBL,

DOD implementation policy and guidance emerged
through a series of deputy and under secretary of
defense (USD) memorandums, DOD directives, and
guidebooks. In 2002, in line with QDR direction, the
USD (acquisition, technology and logistics (AT&L))
tasked the services to develop and submit a schedule to
aggressively apply PBL to all new weapons systems and
all acquisition category (ACAT) I and II legacy
systems no later than May 1, 2002. Services were
directed to a guidebook on the AT&L Web site with
guidance for development and implementation of PBL
strategies (Aldridge, 2002, 14).
PBL was codified as the DODs preferred approach
to implementing product support in the May 2003
DOD Directive 5000.1, The Defense Acquisition
System. It requires program managers (PMs) to
develop and implement performance-based logistics
strategies that optimize total system availability
while minimizing cost and logistics footprint.
Sustainment strategies shall include the best use of
public and private sector capabilities through
government/industry partnering initiatives, in
accordance with statutory requirements (5000.1,
2003, E1.1.17.).
Of note is the fact that this is the only paragraph in the

document that refers to PBL. DODD 5000.1 has no
language or guidance outlining how to implement PBL.
In March 2003, USD (AT&L) released a template
listing key activities and outputs PMs should consider
when assessing a program for a PBL strategy
(Aldridge, 2003, 2). This template provided the first
detailed collection of activities and criteria PMs
should consider when implementing PBL. In August
2003, USD (AT&L) established targets for the
percentage of contract dollars awarded using performance-based service agreements. The targets were FY
2003, 25 percent; FY 2004, 35 percent; and FY 2005,
50 percent (Wynne, 2003, 3).
In January 2004, USD (AT&L) issued the 11
guiding principles for conducting a PBL business
case analysis (BCA). The principles are designed to
support best value assessments of product support
strategies (Wynne, Jan 2004, 2). This memo provided the first detailed guidance for conducting BCAs.
In February 2004, the deputy secretary of defense
directed USD (ATL) and the USD (comptroller) to

issue guidance on purchasing using performance
criteria and directed the services to provide their plan
to aggressively implement PBL, including transfer of
appropriate funding, on current and planned weapon
system platforms for FY20062009. It also established a 60- and 120-day reporting requirement
(Wolfowitz, 2004, 3, 4). In March 2004,
USD(AT&L) directed services to assess all ACAT I
and II programs for PBL implementation and conduct
a formal business case analysis in accordance with the
guidance released in the January 2004 memorandum.
AT&L provided specific guidance regarding assessment of capabilities, cost, and risk (Wynne, March
2004, 2, 5).
In August 2004, USD(AT&L) released guidance
on performance criteria. Defining performance in
terms of military objectives, criteria targeted system
availability, cost, and logistics footprint. The
memorandum also established PBL contracts as
long-term, fixed-price contracts with incentives
(Wynne, August 2004, 4, 6). Guidance issued in
November 2005 provided definitions and formulas
for computing the performance criteria (Kreig,
2005, pp. 15).
In March 2005, the Defense Acquisition
University released a guidebook titled PerformanceBased Logistics: A Program Managers Product
Support Guide. This guidebook is a compilation
of DOD policy and guidance to assist PMs in
implementing PBL.
Services promulgated PBL in service instructions.
The U.S. Navy in Naval Air Systems Command
(NAVAIR) Instruction 4081.2A Policy Guidance For
Performance Based Logistics Candidates; the army in
Army Regulation (AR) 700-127 Integrated Logistics
Support; and the U.S. Air Force in Air Force
Instruction (AFI) 63-107 Integrated Product Support
Planning and Assessment. Both the U.S. Navy and
the U.S. Army have developed PBL handbooks. The
U.S. Air Force handbook is in draft format. All
published DOD and Service policy and guidance is
available on the DAU Web page at https://acc.dau.
mil/CommunityBrowser.aspx?id=18075.
The incremental release of policy and guidance
suggests that DOD implemented a major transformation in product support without first defining,
developing, and providing prescriptive guidance. For
example, USD (AT&L)s February 2002 memorandum tasked services to aggressively implement PBL
without first defining requirements, process, and

procedures for performing business case analyses
(BCAs), or defining and standardizing performance
criteria and measurements. This guidance eventually
was provided by USD (AT&L); however, it was late
and resulted in ad hoc implementation by the services,
ultimately resulting in ineffective implementation of
PBL strategies as reported in an August 2004 DOD
Inspector General Report (DOD IG, 2004, pp.
1213). More prescriptive guidance should have been
provided upfront to ensure successful implementation,
particularly given legal and regulatory limitations on
PBL implementation.
Of the three services, the navy has the most
comprehensive PBL policy. NAVAIR INSTRUCTION
4081.2A Policy Guidance for Performance-Based
Logistics Candidates is a stand-alone publication
dedicated to the navys process for submitting a PBL
candidate. It outlines requirements for a PBL
Integrated Product Team (IPT), includes a PBL
Candidate Analysis Guidebook, and mandates a
standard BCA format (NAVAIRI 4081.2A, 2004,
pp. 138).
The air force revised AFI 63-107 Integrated Product
Support Planning and Assessment (AFI 63-107) to
incorporate PBL; however, AFI 63-107 is not as
prescriptive as NAVAIRs instruction. It does direct a
BCA and an IPT; however, does not mandate a
standard BCA format. It does require candidate
programs to be submitted to the deputy chief of staff
(DCS) for installations and logistics (I&L) and the
assistant secretary of the air force for installations,
environment, and logistics (AFI 63-107, 2004, p. 9).
Similarly, the army revised AR 700-127 Integrated
Logistics Support to incorporate PBL; however, like
the air force, short of prescribing a BCA, the regulation does not provide procedural guidance (AR
700-127, 2005, p. 12).
Implementing a PBL Strategy
Under the traditional acquisition model, the

acquisition of a system or product and the sustainment of the system or product are separate interests
and activities. Once the system or product is
delivered, there are multiple handoffs to distributed
entities that are responsible for materiel management, distribution, and maintenance to ensure the
systems operational readiness.
PBL implements a fundamental shift by integrat-
ing acquisition and sustainment early on in the

acquisition process. This early integration gives PMs
the ability to develop a program that optimizes system
readiness and availability while at the same time
minimizing cost and logistics footprint. To implement a PBL strategy that truly integrates acquisition
and sustainment, optimizes system readiness, and
minimizes cost, you need to identify and assemble
your key stakeholders as part of a PBL team, conduct a
sound business case analysis, and define meaningful
performance measures.
PBL Stakeholders
A critical step in the PBL implementation process is to

assemble the stakeholder team, a collaborative team of
functional experts, support providers, and customers
who will assist in the development, management, and
oversight of the PBL strategy (PBL Guide, 2005, p.
34). Figure 1 on page 58 depicts a notional PBL team;
however, the three stakeholders in the process that are
key to success are the program manager (PM), the
warfighter, and the product support integrator (PSI).
The Program Manager

Under the traditional model, the function and responsibility of the PM was to work with industry to develop
and produce a system or product that met technical
requirements. Once the system was delivered, the PMs
role diminished. Under PBL, the PMs role is to not
only work with industry to develop and produce a
system or product that meets technical requirements,
but also develop and produce a system that meets
warfighter performance requirements. Additionally,
the PMs role has been expanded to be the single point
of contact (POC) for total life-cycle system management (TLSCM) (DODD 5000.1, 2004, p. 3). As the
TLCS manager, the PM must develop an acquisition
strategy that plans out and integrates sustainment
activities for the entire system, cradle to grave (PBL
Guide, 2005, p. 33). The priority objective of the PM
and his stakeholder team is to develop a strategy that
matches weapon system performance to warfighter
requirements (PBL Guide, 2005, p. 21).
The Warfighter
As the ultimate customer of the process, the warfighter is perhaps the most critical stakeholder and
establishes the requirements that are the basis for a
PBL strategy. The PBL strategy will provide the
57
Notional PBL Team
Engage Key
Stakeholders Early!
Customer and Program Office

DOD
Warfigher
FMS
Customers
Program
Manager
Logistics
Manager
Industry
Support
Providers
Product
Support
Integrator
Contracting
Officer
PBL
Team
DLA
Systems
Engineer
Inventory
Managers
Cost
Analyst
Govt
Repair
Depot
Legal
Counsel
Financial
Manager
Support Providers
Source: DAU Brief, 2006, Slide 22.
Figure 1.
capability and performance requirements defined by

the warfighter to meet doctrine and wartime
planning and peacetime training readiness factors,
and ensure the capabilities (system) are mission-ready
immediately upon delivery. The warfighter must be
fully integrated in all of the acquisition and logistics
steps leading up to delivery (PBL Guide, 2005, p.
32).
Product Support Integrator

The PSI is responsible for integrating all sources of
support, both public and private, to meet agreed to
performance outcomes. There may be one or several
PSIs and they may be a government or private sector
representative. For Acquisition Category (ACAT) I
and II system, the PSI is normally the prime vendor/
original equipment manufacturer; however, for other
categories, the PSI may be from a depot or a thirdparty logistics provider. Regardless of whether they
are government or private, the PSI establishes the
strategic relationships with support providers
necessary to achieve the performance outcomes
(PBL Guide, 2005, pp. 312 to 315).
Business Case Analysis
A business case analysis (BCA) is mandatory for ACAT

I or II programs and recommended for all others.
Per DOD guidance, the BCA is used to assess
changes from existing support strategies for legacy
systems and to support the product support strategy for
new weapon systems (Wynne, Jan 2004, 5). The BCA
may be performed by either government personnel or a
contractor, and will result in decisional data supporting
either PBL strategy or a traditional strategy. The BCA is
an expanded cost benefits analysis (CBA) that compares
alternative sources of support for best value. The sources
of support can be organic, contract, or a mix of organic
and contract (PBL Guide, 2005, pp. 327).
The BCA should identify systems that are known
or potential high-cost drivers and have improvement
potential; e.g., false failure indications, premature
failures after repair, and turn-around times. It should
also identify requirements, metrics, and costs
associated with the current process. Data used should
be valid, documented data adjusted for inflation and
changes to utilization rates if applicable. A profile
with future predicted quantified costs, predicted cost
avoidance, and other savings should be developed and

compared to a cost analysis of future costs to maintain
current support strategy. To enter a PBL strategy, the
business case must show a breakeven or better CBA
(Monin, 2001, n.p.).
Pitfalls to avoid include entering the process with
predetermined outcome, having no basis for cost
estimates, having an unrealistic implementation
schedule, and limiting the understanding of potential
cost changes and second- and third-order effects that
may impact other cost areas and organizations
(Monin, 2001, n.p.). To ensure an unbiased assessment that can stand up to an outside audit, the BCA
must individually assess each support alternative and
document how each alternative meets program
objectives, how each alternative fulfills product
support performance measures, and the impact on
stakeholders (PBL Guide, 2005, pp. 327).
Defining Performance Measurement
The stakeholder teams job is to develop performance

criteria and metrics that are straightforward, measurable, achievable, and are tied to requirements provided
by the warfighter. Metrics are typically effectivenessdriven, such as assured system availability (percent)
and assured component availability (percent); or
efficiency-driven, such as assured number of flying
hours, assured number of sorties, etc. (KMC/OPI,
n.d.)not all metrics will be objective measures.
Some aspects of product supportfor example,
customer satisfaction, may be subjective measures
(PBL Guide, 2005, pp. 26). The top-level metric
objectives established by USD (AT&L) include:
Operational Availability. Percent of time a
system is available for a mission or the
ability to sustain operations tempo (PBL
Guide, 2005, pp. 25);
Operational Reliability. Measure of a
system meeting mission success objective;
e.g. a sortie, tour, launch, or destination
reached (PBL Guide, 2005, pp. 25);
Cost Per Unit Usage. Total operating costs
divided by the unit of measurement for a
given system; e.g. flight hour, launch, or
miles driven (PBL Guide, 2005, pp. 25);
and
Logistics Footprint. Size or presence of

deployed logistics support required to
deploy, sustain, or move a system.
Measurable elements include inventory,
equipment, personnel, facilities, transportation assets, and real estate (PBL Guide,
2005, pp. 25).
Pitfalls to avoid include developing metrics that
cannot be tied to warfighter performance, metrics
that dont challenge performance to be better than
youre doing now, metrics where data is difficult to
collect and verify, and metrics that hold the PSI
accountable for a function or process over which she
has no control (PBL Guide, 2005, pp. 26).
Barriers to Implementation
Public Law
Current Title 10 U.S. Code has three provisions that
constrain, though do not preclude implementation of
PBL. Section 2464 requires the DOD to maintain core
organic logistics capabilities required for mobilization,
national defense contingency situations, and other
emergency requirements (U.S. Code, Title 10, Sec
2464). Additionally, Section 2466 establishes a 50/50
restriction, where Not more than 50 percent of the
funds made available in a fiscal yearfor depot-level
maintenance and repair workload may be used to
contract for the performance by nonfederal government personnel (U.S. Code, Title 10, Sec 2466).
Finally, Section 2469 requires the DOD to ensure that
performance of a depot-level maintenance and repair
workload valued at over $3 million is not changed to
performance by a contractor or by another DOD depotlevel activity, unless the change is made using either
merit-based selection procedures for competition
among DOD depot activities, or competitive procedures for competitions among private and public sector
entities (U.S. Code, Title 10, Sec 2469).
Culture
Depending upon the scope of a PBL and the public
private partnership mix, PBLs may require government organizations to change roles and release control
over inventory, processes, and manpower. PBLs with
partnerships require a change in behavior, where
instead of keeping contractors at arms length in an
adversarial relationship (the old way of business),
59
government and industry become active partners and

build trust. For depot workers, PBL may be viewed as
taking jobs away from government workers, which
adds to government mistrust of contractors. PBL
partnerships can also result in shifting work to depots
that requires development of new skill sets, forcing
the workforce to accept new challenges with which
they are not comfortable. Implementation of PBL will
require leadership commitment to changing existing
organizational culture and accepting new organizational roles (Gansler and Lucyshyn, 2006, p. 36, 37).
Funding
Annual fluctuations in the DOD budget may impact
PBL implementation. For example, PBL contracts
are long-term firm-fixed-price contracts. As long as the
contractor delivers the expected performance, they must
be paid. With an organic workforce, the DOD retains
the flexibility to align their fiscal decisions to competing
demands. This flexibility is lost with PBL (Canaday,
2006, 41). The DODs multiple funding streams also
create challenges for PBL. End-to-end maintenance
and sustainment of a system for its entire life cycle may
require funding from multiple appropriations, each with
different constraints, over which the PM has limited
control. PBL will also affect the Services working capital
fund if the source of support goes outside Army Materiel
Command, or Air Force Materiel Command (Gansler
and Lucyshyn, 2006, p. 39). The DOD budget process
further complicates timely acquisition and procurement
of parts, and spares the contractors needs to meet
performance. The service is responsible for making sure
requirements get programmed in a process with a
two-year cycle and specific programming windows.
Training and Education

PBL is a new concept both to DOD and even to the
private sector. Getting the word out and educating
and training both DOD PMs and commercial
vendors is key to facilitating a cultural shift from the
traditional way of doing business (Blumberg, 2006, p.
60). DAU currently offers PBL classes; however,
classes are restricted to acquisition-coded personnel
(Hardern, 2007). Classes need to be made available to
anyone who is involved with managing a program that
is in a PBL strategy or who is a PBL candidate.
Risk
Another potential barrier to implementation is the
unknown risks associated with the PBL strategy both
on the side of the contractor and on the side of the

government. One of the tenets of PBL is the sustainment of a system over its total life cycle. Is industry
willing to support a weapon system that may have a
life cycle of 25 years or more, or in the example of the
B-52, 53 years? Contractors may resist tying themselves to long-term contracts that carry unknown
risks. If a contractor does jump ship, it will be
difficult for DOD to transition a PBL to another PSI,
much less to an organic workforce (Canady, 2006,
40). Conversely, if a contractor provides a good
product, the contractors risk should be minimal.
From the view point of the government, the risk is the
uncertainty that performance outcomes will be met,
impacting operational readiness.
Contractors on the Battlefield

The experience of contractors on the battlefield
during Operations Enduring Freedom and Iraqi
Freedom highlight the success of this workforce;
however, this experience also highlights some of the
risk that a company incurs to deploy contractors into
harms way. Meeting performance objectives during
the fog and friction of combat, dealing with
contractor misconduct, ensuring the security and
force protection of contractors, applying Geneva
conventions to captured contractors, and dealing
with loss of life are but a few of the risks companies
and the DOD are dealing with (Hunter and Goure,
2007, pp. 2,6,8).
Enablers to Implementation
Incentives Aligned with Performance
Properly aligning incentives with performance
ensures maximum integration between the
contractor and the customer. Additionally, paying
for performance on a fixed-price contract incentivizes the contractor to provide the best product
possible up front. The contractor will not want to
deliver an unreliable product that may cause him
cost overruns due to unreliable performance
Supply-Chain Management
Right part, right place, right time. Leveraging
commercial best practices in supply-chain management and integration will reduce order to receipt time,
repair time, and increase availability and readiness
PublicPrivate Partnerships
A PBL strategy can be organic, private, or a mix.
Publicprivate partnerships (PPPs) satisfy legal
requirements and leverage the strengths of both
sectors. Private sector partnering with service depots
to perform maintenance and repair reduces infrastructure costs and gives the private sector access to a
ready workforce (Gansler and Lucyshyn, 2006, p. 41).
Analysis of the C-17 Globemaster

III PBL Program
The C-17 Globemaster
The C-17 Globemaster is the U.S. Air Forces
advanced long-range cargo/transport aircraft. It
became operational in 1993, and flew its first combat
mission in 2001. Combining the best of the C-5
Starlifter and the C-130 Hercules legacy systems, the
C-17 gives the air force increased flexibility. The
C-17 is capable of providing strategic delivery of
troops and cargo to main operating bases or to
forward operating bases, performing both tactical
airlift and airdrop missions, and can be configured
for aeromedical evacuation when required (AMC/
PA, 2006, 1). The U.S. Air Forces Air Mobility
Command operates the C-17 at 11 U.S. air bases.
The United Kingdom, Canada, and Australia also
operate the C-17 (Gomez, 2007, interview).
The aircraft was designed to support a 30-year,
30,000-hour life-cycle requirement. Currently, the
C-17s operational tempo is 40 percent higher than
originally anticipated and is flying 400 more hours
above the 1,000 originally planned (Jordan, 2006,
6,14). On March 19, 2006, the C-17 fleet reached
the one million flight hours milestone a year ahead of
plan (Lesser, 2006, 1, 5). The final Air Force C-17
delivery was scheduled for 2008, which would have
brought the total inventory to 180 aircraft; however,
10 additional C-17s were inserted in the Senate
House Defense Appropriations Conference Report
for FY 2007 (DID, 2006, 1,2).
The Globemaster Sustainment Partnership

The original C-17 Globemaster sustainment strategy
planned for organic sustainment; however, due to base
realignment and closure actions, the product support
strategy changed to a PBL strategy with The Boeing
Company using a concept called flexible sustainment. Under the flexible sustainment strategy, all
support was contracted; however, Congress directed
the air force to develop core logistics capabilities for
the C-17 in accordance with U.S. Code, Title 10, Sec
2464. As a result, in 2004, C-17 support strategy
shifted to a PPP with Boeing referred to as the
globemaster sustainment partnership (GSP) (DODIG, 2006, p. 3).
The GSP is considered a Level 3 or full weapons
system PBL strategy. Boeing has total system
support responsibilities (TSSR) for the C-17, which
includes program management; sustaining logistics,
materiel, and equipment management; and sustaining engineering, depot-level aircraft maintenance,
engine management, long-term sustainment
planning, ALC partnering support, and support to
foreign military sales customers. As the PSI, The
Boeing Company is responsible for integrating all
support requirements between the ALCs, private
subcontractors, suppliers, and other government
agencies (PWS C-17, 2004, p. 5).
The GSP contract consists of five annual pre-priced
options (FY 0408) and three annual unpriced
option years, FY09FY11. The ceiling price of the FY
04FY08 contract is $4.9 billion. The contract is split
between a firm-fixed price-award-fee (FFP/AF) and
cost-plus-incentive-fee (CPIF) contract. Sixty-five
percent of the contract, which includes the Pratt &
Whitney engine subcontract and labor, is FFP/AF; the
remaining 35 percent, which includes Boeings hours
and all materiel support and procurement, and
component repair, is CPIF. Award is based upon two
metrics: (1) aircraft availability (85 percent), and (2)
customer satisfaction (15 percent) (Sparks brief, 2004,
slides 20, 21). In 2006, Boeings award fee was two
percent of the FFP; the total award fee pool was $28
million (Voegtly, 2007, e-mail).
Under the terms of the GSP, three air logistics
centers, Ogden, Warner-Robbins, and Oklahoma
City, are subcontracted to Boeing to provide
depot-level maintenance capability for the C-17
(Table 2 on page 62). This organic support is a depot
maintenance workload that is considered to be core.
Maintenance at the field level is performed by blue
suit maintenance; however, Boeing has field support
teams at C-17 bases to provide engineering expertise
and assistance to trouble-shoot maintenance issues
outside the scope of field-level maintenance capability (Gomez, 2007, interview). Boeing also has
61
recovery and modification service (RAMS) teams

positioned at air force bases around the world that
deploy to recover damaged or hard-broke aircraft
(Brabant, 2006, 9). Use of a RAMS team is
considered over and above work on the contract
(Voegtly, 2007, interview).
The Globemaster Sustainment

Partnership BCA
A 2006 DOD inspector general (DODIG) report
censured the air force for the methodology used to
make the C-17 PBL support decision. Specifically,
the report cites that the contract awarded to Boeing
in 2004 was not based on a proper BCA, and as a
result, the air force risks implementing a sustainment
strategy for the life cycle of the aircraft that does not
represent a best value for the air force. The DODIG
also censured the air force for a $62 million investment Boeing made in air force air logistic centers to
support the C-17 workload (DODIG, 2006, pp. i, ii).
In citing the U.S. Air Force for an improper BCA,
the DODIG challenged that the BCA was incomplete
because it only analyzed a performance-based
partnership. It did not include a comparative
evaluation of total organic sustainment to total
contractor sustainment over the life of the aircraft, did
not include non-core workload, and did not compare
C-17 sustainment costs with sustainment costs of like
aircraft. By omitting these comparisons, the air force
failed to explore sustainment approaches that may
have had greater cost-savings (DODIG, 2006, pp. 5,
6). The DODIG recommended that the air force
conduct a BCA that considers multiple sustainment
options to include core and non-core workloads, no
later than the second quarter of 2009. The air force
concurred (DODIG, 2006, p. 7).
Regarding improper funds augmentation, the
DODIG challenged that this action also hides the real
cost of the C-17 program and sets a precedent for future
improper augmentation by other defense contractors.
The DODIG recommended that the air force discon-
tinue the Boeing partnership investment; however, the

air force and DOD general counsel both nonconcurred
with the DODIGs assessment, citing 10 U.S.C.
Section 2474, which states the that the secretary may
authorize such centers as air logistic centers to enter
into PPPs to achieve certain outcomes, and the
objectives may include private sector investment for
recapitalization of plants and equipment. General
counsel also concluded that the investment in air
logistic centers by Boeing is for the benefit of Boeing, in
that it enables them to satisfy their performance
measurements, and therefore, is not improper augmentation (DODIG, 2006, pp. 89, 1112). While the
DODIG disagrees with the legal interpretation by air
force and DOD general counsel, they accepted the air
forces response to modify the Globemaster Sustainment Partnership language to identify what core
capability the investment covers, specify what work will
be performed using the investment, and track with
metrics (DODIG, 2006, p. 24).
C-17 Performance Measurement Plan

The C-17 GSP has six performance metrics that
require the contractor to provide sustainment
support to ensure aircraft availability, flying hours,
maintenance scheduling, and logistics response time.
The overarching measure is the number of C-17
aircraft available to meet daily mission requirements.
The six performance measures include:
1. Globemaster Sustainment Aircraft Availability.
The required performance in this measure is to
maximize the number of aircraft available for
missions. The requirement equals the percentage of mission capable aircraft relative to total
fleet assigned. It is a monthly measurement
and is adjusted to account for aircraft undergoing modification. The measure provides a
90-day period following surge operations
during which Boeing is relieved of meeting the
performance measurement if the metric
Air Logistics Center C-17 Maintenance Capability

WR-ALC
Software Integration Program
Airframes IT
Avionics IT
Structures IT
Source: DMAWG, 2006, 4.
OC-ALC
Oxygen IT (non-core)
Instruments/displays IT
Pneudraulics IT
Fuel Accessories IT (non-core)
Table 2
OO-ALC
Landing Gear IT
Hydraulics IT
Power systems IT
Instruments/Displays IT
variance is five percent less than the previous

12 months average as measured prior to the
surge. The annual performance will be the
12-month average of the adjusted GSAA
requirement (RMP C-17, 2004, p. 3, 4).
FY04 FY05 FY06 FY07 FY08
Requirement % 75.0
76.3
77.6
78.4
79.1
2. Flying Hours Achievable. The required

performance in this measure is to maintain
the highest level of flying hours available for
wartime mission availability based upon the
Weapon System Management Information
System-Sustainability Assessment Module
(WSMIS-SAM). The measurement is the
percent of wartime flying hours achieved
given spares availability compared to the
number of required hours as compiled by
WSMIS-SAM. It is measured the first week
of the month. Upon receipt of readiness
spares packages (RSP), Boeing is given a
60-day grace period to reconcile the RSP,
during which the measurement is not
counted (RMP C-17, 2004, p. 14).
Requirement % 95.0
95.0
95.0
95.0
95.0
3. Mission Capable (MICAP). The required

performance in this measure is to deliver
MICAP assets within 48 hours in the
continental United States (CONUS) and
within 96 hours in the FMS United Kingdom. The measurement is the percent of
MICAP events successfully fulfilled within
the 48 hours CONUS or 96 hours UK
compared to the actual number of MICAP
events. The event starts when the government
requests MICAP services and documents it in
a MICAP log, and ends when the MICAP
item is received at the end destination and
entered into the Standard Base Supply System
(SBSS) (RMP C-17, 2004, p. 15).
Requirement %
80
80
80
80
80
4. Aircraft Depot Maintenance Scheduling

Effectiveness. The required performance in
this measure is completion of scheduled
maintenance tasks to include negotiated and
approved work, including over and above
work requirements, within the negotiated
schedule time. Performance is calculated by
dividing the number of days taken to
complete scheduled maintenance tasks by
the negotiated number of days. The goal is
to maximize the amount of work done
within the negotiated time (RMP C-17,
2004, p. 17).
98
Requirement % 100
98
100
98
100
98
100
98
100
5. Issue Effectiveness. The required performance in this measure is the issue effectiveness at field units SBSS for assets for which
Boeing is the inventory control point. It
represents the number of issue requests filled
compared to the number received, and is a
monthly measure. Issue effectiveness at new
beddown bases will not be counted in overall
issue effectiveness during the time aircraft are
being delivered. This measure has incentives
to forecast demand rather than rely on past
demands (RMP C-17, 2004, p. 1819).
Requirement
XD items %
Requirement
all others %
82
82
82
82
82
67
75
78
80
80
6. Customer Satisfaction. The required performance in this measure is customer satisfaction. Using a concept called the shared
destiny/operating principles, the customer
scores 11 focus areas of the performance work
statement across six criteria (See Appendix 1).
Administered quarterly, the survey coincides
with the award-fee schedule. The survey is
distributed to the C-17 Special Program
Office, C-17 system support manager, using
commands, and the Defense Contract
Management Agency. The rating is deterJournal of Contract Management / Summer 2007
63
mined by averaging scores in each focus area

and then averaging all areas to obtain a single
rating (RMP C-17, 2004, p. 1922).
C-17 Globemaster Sustainment

Aircraft Availability Matrix

Requirement % 25
25
25
25
25
Award-Fee and Performance

Measurements Structure
Eighty-five percent of the award fee is based upon the
GSAA performance measurement. The percent of
award fee available is based upon three tiers of
performance.
Standard of Excellence Performance level where Boeing
earns 100 percent of the award
fee
Exceeds Requirements Performance level where Boeing
earns 50 percent of the award
fee
Minimum Award Fee
Performance level where Boeing

begins to earn an award fee;
starts at 25 percent
C-17 PBL Performance

In FY04, Boeing earned 100 percent of the award fee
by meeting the adjusted GSAA requirement of 69
percent; however, each year the GSAA measure
increases and since 2004, Boeings performance has
not kept up with the increases. In FY05, the 73.7
percent GSAA measure earned Boeing a 50 percent
award fee; but, in FY06 Boeing earned zero award fees
on the GSAA. They earned a 13 percent award fee for
customer satisfaction (Voegtly, 2007, e-mail). Sources
from the C-17 Product Support Office were unable to
provide an explanation for the dip in the GSAA, e.g.,
causal factors such as unique engineering issues or
maintenance difficulties, lower backup aircraft
inventory, or if an air force-owned process, such as
parts retrograde, impacted Boeing achieving the
performance goal. Chart 1 contains GSAA data.
For flying hours achievable, issue effectiveness,
MICAP effectiveness, and depot maintenance
scheduling effectiveness, Boeing met or exceeded
expectations. Charts 2 through 5 on page 65 contain
actual performance measures. Customer satisfaction
metrics were unavailable for analysis.
FY04
FY05
FY06
ctual Annual
A
Average
74.1
73.7
74.4
tandard of
S
Excellence
73.6
76.1
77.6
xceeds
E
Requirement
71.3
73.9
76.0
inimum
M
Award Fee
70.1
72.8
75.1
Adjusted
Requirement
69.0
71.7
74.2
Source: Voegtly, 2007, e-mail.

Chart 1.
While metrics exist to measure availability and

logistics response, there is no metric to capture if the
PBL support is resulting in a downward trend in
costs and logistics footprint, which are two of the
objectives of PBL. In a Boeing background paper,
Boeing cited that operational cost avoidance on the
C-17 program for FY04 and FY05 totaled $8.5
million and $12.4 million respectively (Boeing, n.d.,
4.); however, in discussions with C-17 product
support, C-17 Globemaster Sustainment Partnership Flight, and HQ USAF/A4MM personnel, they
could not verify cost-savings. Nor could the air force
readily produce information to document cost-savings from the PBL strategy.
While Boeing has consistently met or exceeded
identified performance measures, the measure against
which the award fee is largely based, the GSAA, is an
area where they have not achieved greater performance since inception. In fact, performance has
flattened. Though information explaining why Boeing
didnt meet the 2006 GSAA performance measure is
not available, a secondary question would be, What
would it have cost Boeing to meet the performance
measure? If the cost of meeting the performance
measure in a firm-fixed-price contract exceeded the
C-17 Flying Hours Acheivable Metrics
FY04
FY05
FY06
ctual Annual
A
Average
97.3
98.9
99.2
Requirement
95
95
95
C-17 MICAP Effectiveness Metrics
FY04
FY05
FY06
ctual Annual
A
Average
90.2
96.1
91.5
Requirement
80
80
80
Chart 2.
Chart 3.
C-17 Aircraft Depot Maintenance

Scheduling Effectiveness Metrics
FY04
FY05
FY06
100.06
100.08
100.40
Minimum
Range
98
98
98
Maximum
Range
101
101
101
ctual Annual
A
Average

Chart 4.
C-17 Issue Effectiveness Metrics
FY04
FY05
FY06
ctual Annual
A
Average
76.5
76.2
79
Requirement
67
75
78

Chart 5.
65
award fee, would contractors chase the award fee?

Additionally, is a two percent award-fee incentive
enough when profit margins on PBL contracts are
estimated to be 20 to 30 percent (Blumberg, 2006, p.
58)? There may be no incentive to chase an award fee
that doesnt even match the profit margin (five to
seven percent) of a traditional contract (Blumberg,
2006, p. 58). With profit margins exceeding award
fees, contractors may feel they can afford to not meet
the performance criteria 100 percent of the time. In
writing PBL contracts, setting a realistic performance
measure that wont cause under runs or overruns is as
important as establishing an incentive plan that truly
incentivizes the contractor.
Recommendations
For the DOD to succeed in meeting the QDR goals of

improved performance and reliability, reduced logistics
costs, reduced cycle time, and modernized business
processes, the DOD must ensure that services develop
PBL performance measures that focus on all four
top-level metric objectives established by USD (AT&L).
Currently, not all PBL strategies measure all four
metrics. Some focus on availability, or reduced cost, or
reduced cycle time. Few have focused on all four
metricsavailability, reliability, cost, and logisticsas
a footprint together. As in the case of the C-17,
availability, reliability, and cycle time is measured, but
there is no metric to measure cost-savings or reduced
logistics footprint. As a result, there is no convincing
evidence that PBL is saving the air force anything on
these objectives. Additionally, as in the C-17 GSAA
example, all metrics should include reasonable annual
incremental increases. This would ensure that the
contractor makes the investments required to continuously improve reliability, maintainability, and technology to affect cost and performance outcomes.
Change begins at the top, and if the services are
going to embrace PBL as the DODs preferred
approach, the services need to establish an administrative infrastructure to support it. For example, the air
force doesnt have a PBL office or person dedicated to
PBL oversight. While USAF/A4MM is responsible for
policy and response to DOD queries, to respond to
DOD requests for information regarding USAF PBL
status, A4MM has to call the different program offices
to gather and compile the information (Hardern, 2007,
interview). The inadequacy of this arrangement became
apparent in conducting the research for this article. PBL
information is not available at the HQ USAF level,

only at the PM level, and even then, one person doesnt
have the complete picture. While everyone I spoke with
was very knowledgeable about their part, the seemingly
disjointed nature of administering PBL in the air force
was apparent. A recommendation would include
establishing a PBL Oversight Office in each Service
that issues policy and tracks status of PBL programs
and metrics. For their part, DOD should establish an
office that collects details of PBL contracts and metrics
to provide a source for information and best practices.
The office could be either DAU or USD (AT&L). These
actions would ensure that PBL has the top level
oversight necessary to succeed.
With emphasis on long-term incentivized
contracts, the integrity of the award fee program
must be maintained and only paid for performance
that meets warfighter requirements; not for average
or satisfactory performance. In the C-17 GSP, the
award fee is paid against three possible levels of
performance, which essentially rewards Boeing for a
range of performance that includes average and
satisfactory. Boeing already gets performance breaks
for aircraft in modification and surge recovery. If
Boeing can earn award fees without having to meet
the warfighters required performance, what is the
incentive to perform? Award fees should only be
awarded for meeting required performance, not for
satisfactory or average performance.
As mentioned earlier, Boeing did not meet GSAA
performance outcomes in 2006, which raises another
question. Specifically, what happens when a contractor fails to meet the performance measure? Every PBL
contract should identify the rights and remedies for
failure to meet specified outcomes. This could be cost
reductions, or as in the example of the Navys Radar
Warning System PBL contract with Raytheon,
contract provisions that require the contractor to do
something. In the navys Raytheon contract, they have
a loaner spares clause that requires Raytheon to
provide additional parts in the form of temporary
loaner spares at no cost if they do not meet required
metrics. The spares are returned during the next
measurement cycle only if Raytheon meets the
performance metrics (ASN (RD&A), n.d., 11).
Finally, policy and training is key to the success of
PBL. Perhaps the DOD policy was less prescriptive by
design; however, the services, army, and air force
particularly need to enhance their policy to ensure
standardization between PMs. Both services have
merely brushed the surface of PBL policy in their

regulations and instructions, and should follow navys
lead with standardizing processes such as the BCA.
DAU training must be readily available to anyone
who is involved with managing a program that is in a
PBL strategy or is a PBL candidate. Adequate training
will ensure a sound BCA and development of viable
performance measures.
Conclusion
PBL offers a way to integrate acquisition and sustainment and leverage commercial best practices to reduce
costs, improve performance, and ensure operational
readiness. With the expectation that the life-cycle
sustainment support of every new ACAT I and II
system will use a PBL construct, PBL is here to stay.
Key to successful implementation of PBL in the DOD
and services is a workforce of PMs and PSIs who are
knowledgeable of and trained to implement PBL
contracts. A knowledgeable workforce will be able to
prepare sound and well-constructed BCAs, and
develop straightforward, measurable, and achievable
metrics focused on top-level metric objectives tied to
warfighter requirements. Incentives need to truly
incentivize the private sector to continuously improve
reliability, maintainability, and technology to affect
performance outcomes, and emphasis from senior
service acquisition and logistics leaders, both in the
development of PBL contracts and the tracking of
performance data, is required to ensure PBL is
achieving the expected results of reduced costs and
improved performance and reliability. JCM
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69
Appendix
Customer Satisfaction Performance
Measurement
The 11 areas of the performance work statement

(PWS) that are evaluated to see to what degree Boeing
has worked to the six operating criteria include:
1.1 Program Management

Program management is comprised of managing
contractual requirements to maintain a balance
between cost, schedule, and quality; allocating
resources to meet program commitments; timely
responses to program concerns and risks using
thorough and closed loop planning; accurate and
timely data and configuration management; and
effective supplier management. This includes
configuration management, program integration,
data access/system interface, surge/contingency
support, crisis management support, and quality
assurance.
1.3.2 PSE Management

PSE management includes acting as the single point
manager responsible for integrating and coordinating all PSE end-item issues with the SSM, DLA,
ALC, AMC, AETC, ASC, and any other agency.
This includes replacement forecasting, depot level
repair, refurbishment, storage, distribution and
disposal, delivery and distribution of PSE end-items
for main operating bases, and enroutes to required
allowance standard levels via interfaces with the
SBSS, as coordinated with SPO and AMC.
1.4 Sustaining Engineering

Sustaining engineering provides the technical
expertise in support of user operations and maintenance for aircraft and support equipment to include
customer inquiries, investigations, troubleshooting,
requirements definition, analysis to sustain airworthiness, mission readiness, system safety, and
recommendations for design changes that improve
operational performance and/or reduce O&S cost.
1.1.5 Cost Management
1.4 Field Services
Cost management includes all aspects of collecting,

analyzing, reconciling, and reporting program costs
necessary to manage C-17 sustainment efforts. Cost
management includes integration of earned value,
accurate and timely reporting of funding requirements, controlling costs, at or below negotiated costs
and providing cause and corrective action for problem
areas such as cost overruns.
Field services provide base-level field engineering

services, field service technical representative
support, induction of depot spares into the repair
system, base-level propulsion system support, and
engine handling support equipment to, include the
enroutes.
1.2 Sustaining Logistics

Sustaining logistics is comprised of supporting
organizational and intermediate U.S. Air Force
maintenance, modification, and provisioning
activities; generating associated data and delivering
initial kit-proof copy or advance copy TCTO to
support government-scheduled modification
activities; updating the PSMS database; managing
the SMR code change process; SERD data process;
TCTO process CFAE/CFE notices; and packaging
information.
1.5 Depot-Level Maintenance

Depot-level maintenance provides planning and
scheduling activities, scheduled and unscheduled
maintenance activities, and aircraft recovery missions.
1.7 Engine Management

Engine management includes all aspects of supporting
the C-17 engines by the contractor to ensure required
serviceable propulsion systems (SPS) are produced along
with satisfying all requirements related to documentation,
government data systems, parts tracking, change incorporation, engine health and trending diagnostics, and maintaining the F117 engine handling support equipment.
1.3 Spares Management
1.8 Long-Range Sustainment Planning
Spares management provides support to fielded

aircraft with spares and repair services for Boeingmanaged (F77) items. This includes management,
forecasting, repair, allocation, storage, distribution,
and disposal.
Long-range sustainment planning reflects planning

efforts to address Boeings TSSR to address any
current sustainment/support impacts, and long-range
plans and corrective actions. Planning is done to
ensure efficient and consistent support for the C-17.
This includes TSSR planning and post-production

support planning (as directed by the contracting
officer).
1.9 Air Logistics Partnering Support

Air logistics partnering support reflects efforts to
transition core designated workloads, and any other
workload mutually agreed to within the partnership,
to the designated technology repair centers as part of
C-17 long-term sustainment function. This involves
partnering, management and integration, implementation requirements definition/analysis, and ALC
activation support activities.
3.0 UK Sustainment
UK sustainment provides the unique UK C-17
sustainment tasks set forth in PWS Section 3.0.
Measure start/end: The customer satisfaction
survey will be distributed four times a year to coincide
with the award-fee schedule and will cover three
months at a time. The survey will be distributed to the
SPO, SSM, using commands, DCMA.
Performance calculation: The overall rating is
calculated by averaging the scores given against each
equally. For example:
Customer Satisfaction Weighted Factors with Assigned Weights
PWS Para
Area
Period 1
Period 2
Period 3
Period 4
1.1
Program Management
1.1.5
Cost Management
1.2
Sustaining Logistics
1.3
Spares Management
1.3.2
PSE Management
1.4
Sustaining Engineering
1.4
Field Services
1.5
Depot Level Maintenance
1.7
Engine Management
10 1.8
Long Range Sustainment Planning
11 3.0
UK Sustainment
Average per period
4.55
4.45
4.55
4.45
Appendix Source: Requirements Measurement Plan for

the C-17 Globemaster III Sustainment Partnership.
Contract number FA8614-04-C-2004.
71

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Performance-Based

The 2001 Quadrennial Defense Review (QDR)

case analysis, development of performance metrics, and

If the end of the Cold War presaged the need for

Performance-Based Logist ics : T r ansforming Sustainmen t

DOD Compared to Commercial Firms

Source: Gansler and Lucyshyn, 2006, p.4

tion as a key transformation pillar. Specifically, the

DOD logistics is big business. According to the Office

thousand commercial vendors supporting 280 ships,

Performance-Based Logist ics : T r ansforming Sustainmen t

repair and repair cycle time, and procurement time

PBL Working Definition and Concept

As a new DOD business model, PBL differs from

result was untimely logistics response. Inherent in

Performance-Based Logist ics : T r ansforming Sustainmen t

DOD and Service Policy

Following the 2001 QDR directive to implement PBL,

Of note is the fact that this is the only paragraph in the

directed USD (ATL) and the USD (comptroller) to

Performance-Based Logist ics : T r ansforming Sustainmen t

without first defining requirements, process, and

Implementing a PBL Strategy

Under the traditional acquisition model, the

ing acquisition and sustainment early on in the

A critical step in the PBL implementation process is to

The Program Manager

Performance-Based Logist ics : T r ansforming Sustainmen t

Notional PBL Team

Customer and Program Office

capability and performance requirements defined by

Product Support Integrator

Business Case Analysis

A business case analysis (BCA) is mandatory for ACAT

Performance-Based Logist ics : T r ansforming Sustainmen t

avoidance, and other savings should be developed and

Defining Performance Measurement

The stakeholder teams job is to develop performance

Logistics Footprint. Size or presence of

Performance-Based Logist ics : T r ansforming Sustainmen t

government and industry become active partners and

Training and Education

on the side of the contractor and on the side of the

Contractors on the Battlefield

Performance-Based Logist ics : T r ansforming Sustainmen t

(Gansler and Lucyshyn, 2006, p. 41).

Analysis of the C-17 Globemaster

The Globemaster Sustainment Partnership

Performance-Based Logist ics : T r ansforming Sustainmen t

recovery and modification service (RAMS) teams

The Globemaster Sustainment

tinue the Boeing partnership investment; however, the

C-17 Performance Measurement Plan

Air Logistics Center C-17 Maintenance Capability

62 Summer 2007 / Journal of Contract Management

Performance-Based Logist ics : T r ansforming Sustainmen t

variance is five percent less than the previous

2. Flying Hours Achievable. The required

3. Mission Capable (MICAP). The required

4. Aircraft Depot Maintenance Scheduling

Performance-Based Logist ics : T r ansforming Sustainmen t

mined by averaging scores in each focus area

C-17 Globemaster Sustainment