Military maintenance is moving to a new model, with payments earned for keeping aircraft flying and available for deployment. In the United States, the trend is called Performance Based Logistics (PBL), while British planners call it Availability Based Contracting (ABC). Other countries are moving in a similar direction, not as fast or as fully, but toward the same general goal: paying private firms for the effectiveness of their work, not just for work done or parts supplied.
While the overall trend is clear, there are still plenty of choices and complications. PBL contracts differ widely along several dimensions. The first dimension is the level supported. Kate Vitasek, who teaches PBL techniques at the University of Tennessee's Center for Executive Education and is a co-author of a study called "Performance Based Logistics: The Changing Landscape in Support Contracting," classifies PBL in four levels:
Level 1: Components, for example aircraft tires. Performance is the consistent and timely delivery of needed components.
Level 2: Major subsystems, such as aircraft engines. Availability is the main performance metric here.
Level 3: Entire aircraft. Availability is the goal.
Level 4: Mission Capability. Defense officials eventually may pay private firms for providing both readiness and steady enhancements in capabilities for military aircraft.
According to the study, which was co-authored by Vitasek, Jerry Cothran, Steve Geary and Steve Rutner, the second dimension is functional integration. Individual firms may provide only parts, repairs or technical services such as design and maintenance manuals. Or one firm may be responsible for integrating all three functions. For aircraft, thoroughly integrating all three functions offers the greatest potential gains, but integration also makes the greatest demands on both companies and the government agencies that negotiate and work with them.
Payment terms are another critical difference. Companies can receive traditional fixed and time-and-material payments, adjusted by rewards or penalties for meeting contract goals. Or firms may be paid for actual performance, for example per flying hour. Either way the choice of the performance metric(s) is crucial. Readiness of aircraft and timely delivery of parts are the most common metrics, but there can be many more measures that suit the complicated needs of different systems.
Finally, PBLs can run for short periods and be rolled over frequently, or they can be negotiated for much longer terms. Short contracts give both government and industry a chance to learn, develop trust and make alternative choices. Longer contracts give government more certainty and allow private firms to plan for the most thorough optimization of design, repair and logistical support.
Despite complications, defense planners are moving ahead. The United Kingdom has been very aggressive in shifting to the new maintenance model.
PBLs in Action
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