1 Logistics Conference & Exhibition May 20, 2004.
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Transcript of 1 Logistics Conference & Exhibition May 20, 2004.
1
Logistics Conference & Exhibition
May 20, 2004
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Performance Based Logistics
Procuring the Performance End-State …NOT Directing “How To”Procuring the Performance End-State …NOT Directing “How To”
Buying Performance…Results and Outcomes vs. Resources
Provider Responsible for Final Result
Time on Wing and Reliability vs. Repairs and Parts
Managing Suppliers vs. Supplies
Leveraging Best Business Practices
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DOD/DON PBL Policy
USD (AT&L) Memo 7 Mar 03: Future Logistics Enterprise (FLE) Identified as a USD (AT&L) Top Priority FLE Emphasizes Use of PBL to Improve Readiness
DoD Directive 5000.1, 12 May 2003: PMs Shall Develop and Implement PBL Strategies That Optimize
Total System Availability
DoD Instruction 5000.2, 12 May 2003: PM Shall Work With the Users to Document Performance and
Support Requirements in Performance Agreements Specifying Objective Outcomes.
Deputy SECDEF Memo 4 Feb 2004: PBL Being Implemented Sporadically…..Recommended a More
Aggressive Approach Across the Services ……….Buy Availability and Readiness Measured by Performance….
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DOD/DON PBL Policy
The DoN has used numerous funding methodologies for executing PBLs. The majority PBLs have utilized the Navy Working Capital Fund as a funding source, which facilitates the use of single funding line and long-term contracts for PBL support. Additionally, the DoN has utilized various OM&N accounts to fund PBL. The Navy flying hour program, Naval aviation training program and fleet operating funds are examples of O&MN accounts used to directly fund PBL contracts. Current DoN funding sources provide adequate flexibility for PBL contract execution. Transfer of funding between DoN budget/accounts is not required.
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Key Tenets of a Successful PBL
Profit Motive Coincides With Navy Performance Objectives
Procures an Outcome or Result
Solid Business Case Analysis
Provider Empowered to Fulfill Requirements
Complies With Title 10 USC
(May Include Public-Private Partnership)
Straightforward, Measurable, Fleet Approved Metrics
Transparent to the Fleet
Optimizes Product Support and Total Ownership CostsOptimizes Product Support and Total Ownership Costs
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Why We Like PBL
PBL Coincides With Cost-Wise Readiness and CNO’s Top Five Priorities/Goals:
Manpower- Lower Fleet Man-hours/Cannibalizations
Readiness- Higher Percentage of Aircraft Availability
Future Readiness- Availability Commitment/Reliability Growth
Quality of Service- Increased Parts Availability, Premium Transportation and Field Reps for Assistance
Alignment- Multi-Organizational/Multi-Competency IPTs Including OEM/Contractors With Common Goal
PBL Coincides With Cost-Wise Readiness and CNO’s Top Five Priorities/Goals:
Manpower- Lower Fleet Man-hours/Cannibalizations
Readiness- Higher Percentage of Aircraft Availability
Future Readiness- Availability Commitment/Reliability Growth
Quality of Service- Increased Parts Availability, Premium Transportation and Field Reps for Assistance
Alignment- Multi-Organizational/Multi-Competency IPTs Including OEM/Contractors With Common Goal
F/A-18 SMS - Availability Was 65% ... Now 98%
Tires - Availability Was 81% ... Now 98%
ARC-210 Radio - Availability Was 70% ... Now 85%
APU - Availability Was 65% ... Now 90%+
F-14 LANTIRN - Availability Was 73% ... Now 90%
H-60 Avionics - Availability Was 71% ... Now 85%
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General PBL Lessons Learned
Bring In ALL Stakeholders Early in the Process Heavy Resource Investment Required for PBLs…Time & People
Establish a PBL IPT with Empowered Members
Develop a Few, Simple Metrics With Dependable Measurement Tools
Establish Trust and Work to Eliminate Adversarial Relationship Between Government and Contractors
Funding Profile Must Support Requirement
Evolving DOD PBL Processes and Policy
Get Senior Level Sponsorship
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PBL Future Challenges
Reduced Flexibility of NWCF/FHP as More PBL Contracts are Awarded
Budget, Contracting (FAR, DFAR) Changes to Account For and Facilitate Implementation of PBLs
Cultural Change Required…...Through Training of Navy and Industry Personnel in PBL Concepts and Successes
PBL Theory Generally Understood, However Implementation Still a Challenge
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Backups
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Four and 1/2 Year Firm-Fixed Price Contract Base Period; Five One Year Additional Ordering Periods $510M, Largest Aviation Fixed Price PBL Contract…BCA Projects $79M in Cost Avoidances Includes 36 F404 Major Sub-Assemblies Covering 1895 Engines Covers the Overhaul of the Major Sub-assemblies Regardless of Quantity Repaired/Replaced Provides Flying Hour and War Time Surge Flexibility
Measurable Performance Metrics (LRT, SMA and Durability) 85% Availability; Disincentives for Lower Than 75%, Incentives Up to 3% for 90% Availability (SMA 3 Year Average is 55%)
Public Private Partnership With NADEP Jacksonville- Leverages OEM “Best Practices” Efficiencies
GEAE Responsible for Depot TAT, Repair Parts, Inventory Management and Control, Workscoping, Attrition Replacement, Current Backorder Reduction Program
Wholesale Inventory Management and Storage
F404 PBL (F/A-18A-D)
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F404 PBL Results
129
285
468
0
100
200
300
400
500
600
700
800
Ba
cko
rder
s
IPG1 Stock Goal
57% Total Backorder Reduction Contract-to-Date 67% IPG1 Backorder Reduction Contract-to-Date
57% Total Backorder Reduction Contract-to-Date 67% IPG1 Backorder Reduction Contract-to-Date
Exceeding Expectations!
Improving F404 Availability While Reducing $/EFH Cost!
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F/A-18E/F Integrated Readiness Support Teaming (FIRST)
F/A-18E/F Integrated Readiness Support Teaming (FIRST)
3,800 E/F Unique WRAs, Associated SRAs and E/F Unique Maintenance Significant Consumables 76% of E/F Systems Touched by FIRST 68% of Total E/F WRAs Covered
332 Peculiar Support Equipment Items 19,000 Non-Maintenance Significant Consumables DLA Functions As ICP for A-F Common and Multi-
platform Consumables (FIRST provides 2nd source support)
FIRST Provides non-RFI and Repair Parts to NADEPs for Organic Repair
85% availability vs 67%for F/A-18 C/D
BCA savings of $52.4M over 5 years
Growth Plans, including APG-65, 73 and 79 Radars
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Predecessor ALR-67(v)2 MTBF 100 Hours, $200M+ in ECP Costs, Traditional 3 Level Maintenance ALR-67(v)3 PBL Contract Awarded Sep 1999, 6 Year Base Period, 5 Year Ceiling Priced Option, funded by NWCF and APN (Reliability Growth) State of the Art, More Complex, More Capable Initial Plan for 125 Hours MTBF, 3 Level Maintenance Plan Change MP to O-D With Reliability Commitment of 300 Hours, Growing to 600 Hours in 11 Years; Achieved 600+ Hours After 4 Years Availability 90% in 5 Days; Achieving 100% in 3 Days Obsolescence Management and Technology Insertion vs. High ECP $ i.e. Analog Encoder Replaced With Digital Encoder (Lowers Cost, Far More Reliable, Less Prone to Obsolescence, Reduces Heat Signature of WRA Contributing to Reduced Failure Mode for Other WRA Components Allowances Being Reviewed for Reduction, No High ECP Costs Being Driven, Reduced Fleet Cannibalizations, Reduced Logistics Footprint
ALR-67(v)3 Radar Warning Receiver (F/A-18E/F)
Bottom Line: Better Product, Better Support, Lower Total Ownership Costs
Bottom Line: Better Product, Better Support, Lower Total Ownership Costs
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Based on Commercial “Maintenance Service Agreement” Provides Support for APUs Used on the C-2, F/A-18, S-3, C-130 and P-3 Aircraft Navy’s First Public / Private Partnership
NADEP Cherry Point... Touch Labor Honeywell... Program Management
10 Year Performance Based Contract, Firm Fixed Price (5 Year Base & 5 One-year Incentive Terms) Availability, Reliability Increases Guaranteed Delivery Guarantees... 2 Days (IPG 1) Priced by the Flight Hour TAV- Requisitions/Data Via EDI and Web Obsolescence Management Product Support Engineering Surge Capability... 120% of Annual Flight Hours G Cond 232 to 0, BOs 125 to 0, SMA 65% to 97% Tech Insertion- Over 30 Reliability Improvements Over $50M in Cost Avoidances and Provides Relief to the CIP, PRL and APN-5 Accounts Added P-3 EDC in FY03 and Adding F404 MFC in FY04
Auxiliary Power Unit Total Logistics Support
All Inclusive “No Excuses” PerformanceAll Inclusive “No Excuses” Performance