PBL Support Alternatives Contractor Support CONTRACTOR DoD More DoDMore Commercial Traditional DoD...

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PBL Support Alternatives Contractor Support CONTRACTOR DoD More DoD More Commercial Traditional DoD Support Environment Contractor Responsible For Majority of Support Public/Private Partnering Opportunities MIX DoD Support • Most DoD support workloads are performed by a combination of DoD and contractor providers Challenge: Find right “mix” to support Challenge: Find right “mix” to support the system the system

Transcript of PBL Support Alternatives Contractor Support CONTRACTOR DoD More DoDMore Commercial Traditional DoD...

PBL Support Alternatives

Contractor Support

CONTRACTORDoD

More DoD More Commercial

TraditionalDoD Support Environment

ContractorResponsibleFor Majorityof Support

Public/PrivatePartnering

Opportunities

MIX

DoD Support

• Most DoD support workloads are performed by a combination of DoD and contractor providers

Challenge: Find right “mix” to support the systemChallenge: Find right “mix” to support the system

Workload Allocation Planning• Objective is to identify BEST support alternatives

– Comply with law (USC Title 10)– Comply with DoD policy (Public-Private Partnering) – Performance– Capability – Skills, Infrastructure– Cost– Flexibility

• An effective support plan considers “best competencies” and partnering opportunities

Where will the work be done? Who will do it?Where will the work be done? Who will do it?

Best

Value

Support Workload AllocationStatutory

Requirements Title 10

DoD Policy Best Value

Structure Agreements

Statutory Requirements

Title 10DoD Policy Best Value

Structure Agreements

What you WANT

to doWhat you HAVE

to do

Planning Process

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

Applicable Sections:• 2460: Definition of Depot Level Maintenance• 2464: CORE Logistics Capability• 2466: Depot Level Maintenance Limitations• 2469: $3M Rule (Competition)• 2474: Centers of Industrial and Technical Excellence

Workload Allocation Planning

Workload Allocation Restrictions & OpportunitiesWorkload Allocation Restrictions & Opportunities

US Code Title 10 Subtitle A Part IV Chapter 146 Section xxxx

2460: Definition of Depot-Level Maintenance and Repair

“Material maintenance or repair requiring overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment, regardless of the source of funds or the location at which the maintenance or repair is performed.”

Each military service manages and operates its own organic Each military service manages and operates its own organic depot-level maintenance infrastructuredepot-level maintenance infrastructure

• Excludes procurement of major modifications or upgrades

• Does not address non-maintenance logistics functions such as:– Technical data– Engineering– Configuration Management– Supply Support

2460: Definition of Depot-Level Maintenance and Repair cont.

2464: Core Logistics Capabilities

• “Performance of workloads necessary to maintain a core logistics capability that is Government owned and operated (including personnel, equipment and facilities).”

• “SECDEF…shall assign such facilities sufficient workload to ensure cost efficiency and technical competence in peacetime while preserving surge capacity and reconstitution capabilities…”

• Services have flexibility to define Core workload

− Usually by weapon system or major commodity group

• Services determine when Core requirement has been met

─ Bottom line: A portion of CORE workload will always be performed by government personnel

─ The amount, if any, that can be contracted out will depend on Service assessments

2464: Core Logistics Capabilities cont.

Core Logistics Capability•Maintain and repair systems identified by SECDEF as necessary to fulfill the strategic and contingency plans

•Must be in place NLT 4 years after Initial Operational Capability

•Exceptions: Commercial Items, Special Access Programs, Nuclear Aircraft Carriers

Core Logistics Capability•Maintain and repair systems identified by SECDEF as necessary to fulfill the strategic and contingency plans

•Must be in place NLT 4 years after Initial Operational Capability

•Exceptions: Commercial Items, Special Access Programs, Nuclear Aircraft Carriers

Core Logistics Workload”Depot workload needed to maintain DoD Core Logistics Capability”

•Sufficient workload to ensure cost efficiency and technical competence in peacetime

•Preserve surge capacity and reconstitution capabilities necessary to support DoD strategic and contingency plans

Core Logistics Workload”Depot workload needed to maintain DoD Core Logistics Capability”

•Sufficient workload to ensure cost efficiency and technical competence in peacetime

•Preserve surge capacity and reconstitution capabilities necessary to support DoD strategic and contingency plans

DoD identifies both core logistics capabilities and the DoD identifies both core logistics capabilities and the workload required to maintain those capabilitiesworkload required to maintain those capabilities

2466: Limitations on Performance of Depot-Level Maintenance

PBL Workload Allocation Impact: • Limits funds spent on depot-level maintenance and repair by

non-Federal Government employees to 50% – By fiscal year– Calculated at Service or military agency (not program) level– Applies to depot maintenance, not other ILS elements

“Not more than 50 percent of the funds in a fiscal year to a military department or a Defense Agency for depot-level maintenance and repair workload may be used to contract for the performance by non-Federal Government personnel”

PBL Workload Allocation Impact: • After CITE designation, the Secretary may authorize and encourage

Center to enter into public-private cooperative arrangements – Referred to as a '‘Public-Private Partnerships”– Excluded from Service’s 50-50 (10 USC 2466) calculation if:

• Depot designated as a CITE• Work pursuant to partnership, AND• Is performed at depot by industry personnel

2474: Centers of Industrial and Technical Excellence (CITE) “The Secretary concerned, or the Secretary of Defense in

the case of a Defense Agency, shall designate each depot-level activity of the military departments and the Defense Agencies…as a Center of Industrial and Technical Excellence in recognized core competencies”

Depot Partnering:Enabled by Sections 2474 and 2563

• Can include articles manufactured or services performed by working-capital funded industrial facility

• Provides the basis for a Depot activity serving as a sub-contractor to a Commercial “Prime” contractor (i.e., Product Support Integrator)

• PBL Context – Organic Accountability: Purchaser (i.e. PSI) agrees to hold Government harmless except in the case of: – Government willful misconduct or gross negligence– Failure of the Government to comply with quality, schedule,

or cost performance requirements

The Secretary of Defense may sell … to a person outside the Department of Defense articles and services…that are not available from any United States commercial source.

• Section 2563: Sales of Articles or Services

2469: Requirement for Competition

“The $3 Million Rule” “The Secretary of Defense shall ensure that performance of

a depot-level maintenance and repair workload…is not changed to performance by a contractor or by another DoD depot-level activity…”

PBL Workload Allocation Impact:

Competition required if transferring DoD depot workload – That is currently performed at a Depot– Valued at $3M per year or greater [for shared workloads (a

portion is contracted out) applies only to that portion currently performed at the depot]

– Includes labor and material costs– Applies to both CORE and non-CORE workload

Section Known

as: Addresses: PBL Workload Allocation Impact

2460 Depot

Mx Defines “depot-level maintenance and repair” as touch labor.

Does not limit support provider options for non-maintenance logistics functions such as supply support, Configuration Management, engineering or technical data.

2464 CORE

Requires DoD to retain capability to maintain and to repair essential systems through development of Core Logistics Capability as defined in 2460.

DoD depots must retain Core capability and workload, but not all Core workload must be performed by DoD depots.

2466 50/50 rule

Limits the amount of funds spent on depot-level maintenance and repair workload by non-Federal employees to 50% of the total annual spending; calculated at the Service level by fiscal year.

Computed at Military Service level annually.

2469 $3M rule

Competition before existing Government depot workload greater than $3.0M may be transferred to another Government or commercial activity.

Must compete workload if transferring over $3M annually in maintenance and repair from a DoD depot

2474 CITE

Adoption of “best-business practices” at all organic repair depots. Requires SECDEF to designate each depot as a Center of Industrial and Technical Excellence (CITE).

Authorizes and encourages Public-Private Partnerships (PPP) with CITE.

2563 Sub-

Contracting

Sales of articles or services to a Commercial source.

Enables depot activities to become formal subcontractors to Commercial PSIs, thus incorporating organically repaired items in an overall PBL contract

US Code Title 10 Summary

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

• Government/Industry Partnering• Public-Private Partnerships (PPP)

• Best Practices

• Funding Types & Limitations

Workload Allocation Planning

Public-Private Partnering

• DoD Policy: “Sustainment strategies shall include the best use of public and private sector capabilities through government / industry partnering initiatives, in accordance with statutory requirements.” (Source: DoDD 5000.1, paragraph E1.17, dated 12 May 2003)

• Definition: A public-private partnership for depot maintenance is an agreement between an organic depot maintenance activity and one or more private industry or other entities to perform work or utilize facilities and equipment. (Source: JDMAG Report on Partnerships for Depot Level Maintenance, dated July 2004)

Enables industry to manage depot-levelEnables industry to manage depot-levelmaintenance & repair on Core systemsmaintenance & repair on Core systems

JOINT• Program Management

• Transportation

• Supply Chain Management

• Depot-Level Maintenance

GOVERNMENT• Depot-Level Maintenance

• Existing infrastructure• Marginal workloads

• O-level Maintenance• Service preference

• DoD Transportation System• In-theater

• Configuration Control

Public/Private Competencies

INDUSTRY• Product Support Integrator• Production/Manufacturing• Depot-Level Maintenance

• Partnerships• Non-Core

• Contractor Field Teams• Sustaining Engineering• Configuration Management• Tech Data Management• Subcontractor Management• Information Networking

Supply/DLA Depot Repair Contract Support

Transportation

O-Level Maintenance

Common Commodities

PSIProgram Manager

Risk

Remember: The PSI Integrates System Support

“The PSI is…charged with integrating all sources of support, public and private, defined within the scope of the Performance Based Logistics agreements to achieve the documented outcomes” - Defense Acquisition Guidebook, Para 5.3.1.5

PBL Partnering Opportunities

Industry Prime Vendor(Product Support Integrator)

Subcontractor

Subcontractor

Subcontractor

DoD Depot(Subcontractor)

Organic Depot as Subcontractor

to Industry PSI

Contractor utilizingDepot facilities for

Work sharing

Contractor/Depotpersonnel sharing

workloads

PBL Partnering Steps

Service designates “core” capability and workloads (minimum workload level of that must be performed by DoD depots)

Industry PSI and DoD identify potential DoD depot-level maintenance and repair partnering opportunities

PSI negotiates with DoD to identify specific DoD depot(s) as partner(s) for maintenance and repair

PSI negotiates Performance Based Agreements (contracts) with DoD depot(s)

PSI provides workload oversight in partnership with DoD depot(s)

1 2 3

4 5

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

WHAT: Logistics Elements

WHO: Product Support Integrators/Providers

Workload Allocation Planning

Capability, Skills, Infrastructure, Cost, Flexibility …

Other PBL Workload Allocation ConsiderationsLogistics Support Elements (What, Who, Where)

• Maintenance Planning• Technical Data• Facilities• Design Interface• Training & Training Support

• Manpower & Personnel• Supply Support• Support Equipment• PHS&T• Computer Resources

Policy & Preferences• Contractors on the battlefield• Retrograde management• DSOR/SORAP

• In-theater distribution• Surge• DMI Evaluation

Best Competencies, Partnering Opportunities, & Support Options• Artisan skills• Affordability

• Infrastructure• Public/Private flexibility

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

text

Statutory Requirements

(Title 10)DoD Policy Best Value

Structure Agreements

HOW:• DoD Funding Sources • Performance Based Agreements

• Contract (Fixed-Price & Cost-Plus)• Memorandum of Agreement (MOA)• Service Level Agreement (SLA)

Workload Allocation Planning

A PBA is any agreement with performance-based language

Working Capital Funds (WCF)• WCF vs Appropriated Funds

• Why Working Capital Funds?

• How the WCF Operates

• Navy WCF and PBL

• Additional WCF Resources

Logistics Support Funds Comparison

Appropriated Working Capital Fund

Type

• Operations & Maintenance -O&M• Procurement• RDT&E• MILCON

• Revolving fund for military service

Uses• All ILS elements • Supply management

• Depot-Level Maintenance • Transportation

Restrictions

• O&M – one year funds• Procurement – 3 year funds• RDT&E – 2 year• MILCON – 5 year

• Can only be used to fund activities associated with supply, depot maintenance and transportation

PBL Impact

• Funds Expire• Cannot guarantee availability of

funds beyond appropriation limits• “Multi-year” agreements achieved

through series of 1-year contracts subject to availability of funds

• Funds do not expire• Can be used to award true “multi-

year contracts• Must get appropriated funds from

other resource sponsors to fund additional logistics support elements

Why Working Capital Funds ?

• Defense WCF established by statute

• Working Capital Funds are used to:

Finance purchase of material

Finance DoD and commercial industrial services, including depot-level repair of components and platform maintenance

US Code Title 10 Subtitle A Part IV Chapter 131 Section 2208

Defense Working Capital Funds

$$Reimbursement

$$Payment

Goods orServicesProvided

CongressRevolving

Fund

AppropriationInitially

”Capitalizes” Fund

SupportProvider

Order

Customer

Annual Appropriation

Of SupportFunds

Customer

Navy WCF & PBL

• Navy Working Capital Fund has been used by the NAVICP to fund PBL sub-system contracts – Materiel– Repair– Supply infrastructure– Obsolescence management

• WCF is replenished through sales of goods and services funded by warfighter O&M dollars– Enables WCF revolving fund to maintain solvent– Must break-even – neither makes a profit nor incurs a

loss

How The NWCF Funds PBL Contracts

NWCF PSI

Fund Contract

Unserviceable Items

“Sell”

“Buy”

DEPOT REPAIR

NAVY DEPOT

SUBCONTRACTOR

CUSTOMER

REIMBURSEMENT

TO NWCF

Serviceable

Items

Additional WCF Resources

• Primer on Defense Working Capital Fund

• OSD on-line tutorial about Defense Working Capital Funds is available at:

http://www.dod.mil/comptroller/icenter/dwcf/dwcftrain.htm

DoD Contract Categories

Fixed-Price Cost-Plus

•Maximum risk on Contractor •Contractor has greater incentive to control costs

•Minimal risk on Contractor•Government pays allowable costs incurred by contractor.

•Use when support requirements and resources are well-defined

•Use when requirements are less defined (baseline not yet firm)

•Award Fee or Incentive Fee - Metrics related to performance, schedule, and/or cost

•Award Fee or Incentive Fee - Metrics usually based on cost targets

•FAR Part 12 and 15 •FAR Part 15 only

•Minimizes administrative burden on both parties

•Increased administrative burden on both parties

•Government must establish price reasonableness

•Government obtains full Contractor cost information

Got off the deck

Take AwaysPBL Workload Allocation

• Statutory requirements have significant impact on

depot workload and PBL support strategy

• Most DoD support workloads are performed by a

combination of DoD and commercial providers

• Multiple DoD funding sources must be considered

• Contract type can help mitigate risk

• Public Private Partnerships consider best use of both

public and private sector capabilities

PBL workload allocation is ‘best value’PBL workload allocation is ‘best value’

IAW statutes, policy, and guidanceIAW statutes, policy, and guidance

Next… Performance Measures

Monday Tuesday Wednesday Thursday Friday

Student

Read

Ahead

USAF C-21 Case

PSI Whitepaper

Navy F-18 Case Parts I & II

Title 10 Primer

WCF Primer

Navy F-18

Case Part III

Army M109

Case

Joint Strike Fighter Case

PBL Questions

EOC Survey

AM Course Introduction

PBL Refresher

Exercise

DAU Resources

PBL Critical Thinking Exercise

PM

LOG235B Schedule

LegacySupport Strategies

Supply Chain Opportunities

WorkloadAllocation

PerformanceMeasurement

BusinessCaseAnalysis

New SystemLevel PBL Strategies

Wednesday Student Preparation

Performance Measures • Navy F/A-18 Case Part III• PBL Performance Measures• Performance Assessment Plan

Business Case Analysis • Army M109 Case