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Bringing The PBL Ax To US Government Contractors
Arlington, Va. (UPI) Mar 11, 2009 In his Feb. 24 speech to a joint session of the U.S. Congress, President Barack Obama promised to protect the future health of the American economy by halving the projected deficit in his first term. One way of accomplishing this task, the president declared, was to reform the buying practices of the Department of Defense. Unfortunately, the president's call to reduce the use of private contractors is precisely the wrong way to reform the defense acquisition system and save money. The Department of Defense already has innovative reform programs under way that could meet the president's challenge. One of these is called Performance-Based Logistics. PBL focuses on performance outcomes, not the acquisition of individual parts or particular repair actions. Performance outcomes can include delivery time, work in progress and -- most important -- availability of systems and materiel to the war fighter. This approach forces both the government and the private sector to abandon narrow interests in favor of solutions that benefit both. The key issue is improving outcomes to the war fighter at equal or reduced cost to the government. Performance-Based Logistics also saves money. By paying contractors for outcomes, PBL reduces their incentives to maximize the price on every item sold to the government. Moreover, since the contractor is interested in keeping systems in working order, Performance-Based Logistics results in fewer repairs, less use of spare parts and reduced demand for labor. Credible estimates of PBL cost benefits to the government run into billions of dollars. Performance-Based Logistics has another benefit: It encourages partnerships between the private sector and the public organic defense-industrial base. These partnerships allow each side to do what they do best. Moreover, partnerships actually bring work into the public industrial base. Just look at two examples. One successful example of Performance-Based Logistics is the C-17 Global Support Program, a public-private partnership. The cumulative savings to the government in the first 10 years of the program agreement are estimated to have been $562 million. The other is the maintenance agreement for the Lockheed Martin/Boeing F-22 Raptor, which was given the Department of Defense 2008 Performance-Based Logistics System Level Award. In partnership with the Air Logistics Centers, a public-private team increased the mean time between maintenance for the F-22 by 69 percent across the fleet, which means jets need fewer repairs. The team also achieved a 15 percent improved mission rate and a 20 percent reduction in repair time while saving hundreds of millions of dollars. Some government officials want to dismantle this successful system and bring all the maintenance work back into the public industrial base. This is a shortsighted policy. Performance will go down. Because the private contractors would be reduced to their old role of parts providers, they would be forced to increase the price of their products, which would ultimately raise the costs to the government. Overall costs will rise, and the war fighter will have less to work with. President Obama needs to rethink his knee-jerk opposition to outsourcing. In the case of Performance-Based Logistics, it makes sense. (Daniel Goure is vice president of the Lexington Institute, an independent think tank in Arlington, Va.) (United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.) Related Links The Economy
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