Saturday, February 05, 2011

Performance Based Logistics vs. The Evil Empire's DoDBuzz site had an interesting bit on a new projection for the F-35s support costs showing higher costs for the F-35 than the legacy systems it replaces. The article isn't entirely balanced (a sister site has a slightly less informative but more even-handed treatment of the topic) but it brings almost all of the major points out in the open. There are interests at the Government's depots that have a vested interest in killing F-35 PBL, and all similar PBL arrangements.

PBL creates public-private partnerships that to-date have performed superbly: all systems have saved money by all estimates, while enabling equal or better weapon system readiness.

The GAO has taken a couple of shots at PBL on behalf of its masters. Nearly 6 years ago Steve Geary and Kate Vitasek, two research and faculty associates at the Aerospace and Defense Clearinghouse at The University of Tennessee called it for what it is: "A War of Ideas".

GAO recommended that the Defense Dept. should “demonstrate whether performance-based logistics contracts are resulting in reduced costs and increased performance, develop procedures to track whether program offices validate their business-case decisions and verify the reliability of contractor cost and performance data.” The Pentagon is facing a budget crunch of epic proportions, and the best the GAO can come up with after reviewing a slew of successful PBL programs is to add red tape?

GAO’s headline could just as easily read: “Defense Management: PBL Contracts Meeting or Exceeding Weapons System Performance Goals; Costs Appear to be on Track.” Like the GAO, we have looked into PBL across a number of programs and companies. Though challenges remain, the results delivered by many of these programs are as compelling as the available case studies. PBL can work, and that’s what GAO should be talking
about. It’s a war of ideas.

No matter how complicated an acquisition becomes, the essential beauty of PBL shines through. PBL contracts fundamentally align the interests of contractors with the Pentagon. If both do the job right, contractors make more money. To do this, they find ways to deliver better system performance at lower total ownership costs, so the Pentagon wins, too.

The thing that I like about PBL, is that unlike a lot of other promising programs that come down the pike, we haven't had to get it right out of the box: it's working while we're still learning how to make it work. GAO may hate that they can't quantify the magnitude to their liking yet, but they can't ignore the vector.

As to the F-35's PBL, the DoD brought in an outsider to help shape the program. they must have done an OK job-- Guess what program was selected by Defense Logistics as having the 'Best Logistics Strategy' for 2010?

Almost forgot. I had an interesting (and LONG ) exchange in the Buzz comments (may be still going on for all I know) with someone I've come to think of as "The Cost Accounting Kid". He's brimming with confidence in his ideas, hawking a self-published book full of them. Almost all of his ideas seem to be in common use already, with an exception that will require a change in the FARs - and we never got around to talking about it in detail as we seem to have gone everyplace else -even into "Bush"-es. He'll either learn or reality will break him. Yep... I was pig wrasslin' again. My favorite part was where he expressed gratitude that I didn't have the ear of 'politicians and generals'. Heh. One thing we do have in common is the opinion on cost accounting as it is currently practiced: It sucks. Beyond that, I'd just be happy if everyone played by the rules, including the laws of physics.

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