Performance Based Logistics (PBL) is getting a bad rap in Pentagon and Congressional circles. PBL is an approach to acquiring services and support based on the totality of the requirements rather than just price. PBL bundles the activities associated with maintaining a weapons system or major component under the management of a single entity, usually a private contractor, working for a government program manager. The goal of PBL is to make meeting the needs of the customer, in essence the warfighter, the driving metric. Over time, costs are reduced by improving the platform or weapons systems’ performance and reducing the requirements for maintenance.
A recently published report from the Lexington Institute, Back to the Future — The Perils of Insourcing, documents the fact that well-structured contracts based on PBL principles both provides best value to the government and reduces cost. Unfortunately, this report also warns of the dangers of current government efforts to reduce reliance on private contractor support in general and PBL, in particular, and bring work back inside the government. The assertion made by Pentagon officials, refuted in the Lexington study, is that insourcing will save money.
Now from Army Times comes an article that clearly demonstrates that PBL-based contracting works. It comes in of all areas the movement of service personnel’s household goods. For generations, the Department of Defense (DoD) had a disaggregated system for moving these goods. Transportation officers at each facility separately made the decision about which company to use when moving household goods and at what price. Decisions were based on a single metric, low cost; the quality of service did not really matter. DoD is implementing a new, coordinated system based on overall value rather than low cost. According to the article, “The new Defense Personal Property System (DPPS) launched in late 2008 and more than 16 years in the making, awards business to movers based on ‘best value’; the previous system was based on lowest bids from movers.” When fully implemented, the new system is also likely to save the government money. This is a win-win situation with the service people getting better service and the government getting reduced costs.
Similarly, the U.S. Transportation Command implemented a plan for the movement of cargo between U.S. military facilities called the Defense Transportation Coordination Initiative (DTCI). Like the DPPS, the DTCI employs modern transportation management practices based on a long-term partnership with a world class coordinator of transportation management services. Currently, DTCI has achieved an on time pick up rate of 98%, on time delivery rate of 93% and a damage free movement rate of 98%. Both DPPS and DTCI provide ample evidence that PBL works.
DoD needs to rethink its knee-jerk approach to insourcing. The rush to insource flies in the face of the demonstrable advantages of a logistics and support system based on the principles of PBL. The assertion that government managers can do a better job than private corporations managing complex programs is undercut by the examples of DPPS and DTCI. Even if the government can demonstrate low cost, there is no reason to believe that insourcing will achieve best value to the warfighter.
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