Performance Based Logistics (PBL): Overcoming Barriers to Cost Control

During the past 15 years of executing performance-based arrangements, the Department of Defense DOD can cite many examples of both program success and failure. Based on the review of years of publications by acquisition professional regarding the PBL initiative, there is widespread consensus that performance metrics operational availability, operational reliability, cost-per-unit usage, logistics footprint, and logistics response time effectively influence program improvement in almost every domain. However, the literature suggests that such success is less prevalent in the domain of program cost control. This research explores and examines a body of best practices beginning to form, and a consensus on some avenues for improvement. The following research will show well-documented barriers that Government Program Managers are overcoming which involve agreements that do not contain proper incentives for contractors to control costs. Such impediments include contracts which 1 utilize a structure that does not encourage cost control 2 apply shorter periods of performance which limit contractors opportunity for return on investments in affordability improvements 3 do not properly assign asset and process ownership and 4 apply inconsistent funding streams which de-incentivize the contractor to devote resources towards enhancing process efficiency. This analysis is a literature review of publications outlining barriers and enablers from past United States DOD PBL agreements. The research identifies aspects of previous and existing PBL agreements that did not work or were inefficient. This research further offers potential solutions towards achieving improved PBL agreement performance for attaining the higher goals of enabling the best-performing systems for the Warfighter and the best value for the taxpayer.