Even in this day of near trillion dollar bailouts, stimulus packages, and ever-expanding government spending, $150 billion should still be enough to get people's attention. It does mine. And it should get yours, especially if you're a hard-working taxpayer being asked to carry all this on your tired back.
That's the amount the Office of the Undersecretary of Defense for Acquisition, Technology, and Logistics (AT&L) at the Department of Defense (DOD) spends in acquisition dollars each year. Recent testimony by Ashton Carter, the nominee for undersecretary of defense for acquisition, technology, and logistics, to the Senate Armed Services Committee offers insight into the new administration's thinking, and it's not heartening for either a taxpayer or a logistician. During the hearings, Carter and the committee members spent a lot of time discussing "acquisition" and "technology." What they didn't talk much about was "logistics."
Can we please get logistics into the conversation? I mean, it's in the name of the operation and all. That's where most of the money gets spent. The real money is in weapons systems support, and that's what the military calls logistics. In fact, annual expenditures on weapons systems support (a.k.a. logistics) are actually greater than what taxpayers spend to design and build these systems.
So why aren't we talking about logistics in the Senate hearings? And why don't we talk more about the innovative technique the DOD and defense contractors have developed in the past decade to rein in support costs and improve weapons systems performance? We should, because it works.
This proven approach to product support is called performance-based logistics (PBL). It not only works; it helps the government save taxpayer dollars. Under the performance-based logistics approach, suppliers are paid not for specific goods and services, but rather for a guaranteed level of performance and system capability. To put it another way, PBL strives to align payments to support contractors so they get paid when a system operates, instead of getting paid to repair it when it breaks.
The DOD's experience with PBL to date has shown it to be a success. The war fighter gets better performance, the system costs less to operate, and the contractor takes on the risk—only if all goes well does the contractor earn respectable profits. That's a formula that should make sense to any businessperson, or any taxpayer, but the politicians may be missing the point.
According to Dan Goure of the Lexington Institute, an Arlington, Va.-based think tank, "One successful example of PBL is the C-17 Global Support Program (GSP). The cumulative savings to the government in the first 10 years of the GSP agreement is estimated to have been $562 million." Goure also likes one of our favorites, the F-22 Raptor project. DOD recognized this program with its 2008 PBL System Level Award for excellence in performance- based logistics. Triple crown winners are few and far between, but F-22 is one: Intervals between maintenance are up, mission readiness and execution are up, and repair times are down.
Instead of applauding the "PBL partnership" between industry and the government, Carter appears to be toeing the populist line and bashing big business. "It is absolutely essential we have a sufficient amount of qualified government civilian or military personnel dedicated to perform meaningful oversight of contractor activities," he said at the hearings. Perhaps Ash Carter can borrow Secretary of State Hillary Clinton's "reset button" and try again. Logistics matters, and contractors can be our friends.