Competitive Product Support
R-TOC Pilot Programs have been at the forefront of DoD's recent initiatives to promote Total Life Cycle Systems Management (TLCSM) and Performance Based Logistics (PBL). Several Pilots have developed innovative new support arrangements that are now models for all DoD systems.
Planning for Support. Significant cost savings can be achieved by competing work traditionally performed in government depots. Because it takes time to build and coordinate an innovative product support strategy, it is important to begin this planning early in the system's life cycle.
Life Cycle Support studies should include representation from all stakeholders, including the program office, depots, and users.
Contractor Logistics Support (CLS). 1) Get early involvement and support in the proposed support concept from the user community. 2) Ensure support concept minimizes changes to the way the soldier maintainer currently conducts his support mission. Example: retain standard information systems. 3) Don't impact the military force structure. 4) Work funding issues early. 5) If contractor supported, focus on contractor on the battlefield issues in planning/developing support concept.
CLS Funding. To adequately fund a multiple year CLS contract, the Government must commit long-term Operations and Maintenance (O&M) funding. A long-term shortfall of O&M funding will adversely affect weapon system readiness and soldier support. In other words, budget reform has not kept pace with acquisition reform or logistics reform.
Performance Based Logistics (PBL). PBL efforts have produced cost avoidances in administering repair parts transactions and higher spares availability, but it requires 1) a dedicated team of cost, logistics and engineering personnel to support annual negotiations and ensure equitable established prices, and 2) good failure history to negotiate a fair fixed price.
Government Responsibility. Even in cases where a contractor is given Total Systems Performance Responsibility (TSPR), the program director still has the ultimate responsibility for customer satisfaction. The program should consider "off-ramps" to maintain competitive pressure on the contractor and protect the government in case the arrangement doesn't work out (e.g., provisions for recompetition, return to organic support, etc.)
Life cycle support partnerships between the depots and private industry can provide a successful way to reduce TOC while taking advantage of the best available capabilities.
Incentives. Incentive is the key to energizing the contractor. Allowing the contractor to program savings internally to other cost saving initiatives offers appropriate incentive for effective implementation of R-TOC. If the savings are not recouped by the initiative owner and R-TOC is simply mandated, there is likely to be substantially less imagination and creativity generated.
Award fee and award term contracts, which increase the contractor's profits or the length of the contract, can provide strong incentives to reduce TOC.
Policies. Some relief from legislative or policy requirements (e.g., A-76 procedures, 50:50 workshare requirements, core logistics capabilities, etc.) may be required before it is possible to implement competitive product support on a widespread basis.
Timing. The ability to implement competitive product support is limited for legacy systems. Major modifications and other major events provide an important opportunity to implement these arrangements.
Commercial Improvements. Incorporating improvements that occur naturally in the marketplace (commercial technologies, products, and processes) is one way to reduce O&S costs.
Benefits. Besides reducing costs, competitive product support arrangements can make substantial improvements in maintenance lead time, reliability, and readiness.
