#6

050 National Defense:Increase Use of Performance-Based Logistics

Savings in Millions of Dollars
  • 2016
    9000
  • 2017
    10362
  • 2018
    11930
  • 2019
    13736
  • 2020
    15816
  • 2021
    18210
  • 2022
    20966
  • 2023
    24139
  • 2024
    27793
  • 2025
    32000
  • 2016-2020
    60844
  • 2016-2025
    183952

Sources

 

 

 

Savings are expressed as budget authority and were calculated based on a range of estimated savings from the reports: John Boyce and Allan Banghart, “Performance Based Logistics and Project Proof Point,” Defense AT&L: Product Support Issue (March–April 2012), and Aerospace Industries Association, “Modernizing Defense Logistics,” June 25, 2009. The estimates of cost savings range from a notably conservative or low level of $9 billion per year to $32 billion per year. Heritage conservatively assumes that the DOD would initially realize the lowest range of these savings, at $9 billion per year, with that figure growing to $32 billion over the 10 year period (growing at an annual rate of 15.1 percent).

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Technical Notes on Scoring

CBO Baseline

Unless otherwise noted, calculations for savings for each recommendation relies on the most recent Congressional Budget Office baseline, as found in “An Update to the Budget and Economic Outlook: 2014 to 2024,” published August 27, 2014, has been used.

Savings “Totals”

While totals for the five and 10 year savings are provided by section and for the complete set of recommendations, there are two reasons they should not be viewed as representing total savings for The Budget Book.

First, as noted in the introduction, The Heritage Foundation would recommend that the savings realized in the Function 050 Defense section would stay within the Department of Defense to strengthen the nation’s defense capabilities.

Second, the numbers cannot be deemed to represent the realized savings if every single recommendation were adopted because policy changes made in one program can impact spending levels in other programs.  Thus, the numbers in the table do not reflect any potential interactions between the various policy changes affecting spending or savings.

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Heritage Recommendation:

The Department of Defense should increase the use of the performance-based logistics method in weapon systems maintenance and sustainment. This proposal saves $9 billion in 2016, and $184.0 billion over 10 years.

Rationale:

Did you know the military uses an outdated weapon maintenance system? Fix it & save $

To operate a weapon system, the DOD must pay for the full life-cycle cost of the equipment, which includes the development and procurement of the system, as well as the far more costly maintenance and sustainment of the weapon system. In fact, the DOD spends about $90 billion on maintenance and sustainment of weapon systems each year.1

Performance-based logistics (PBL) is a proven method used for sustainment work that enhances the military capability and availability of weapon systems at a lower cost. Rather than measuring stovepipe metrics, such as number of aircraft repaired or the quantity of repair parts acquired, the PBL approach uses metrics that measure whether the system is meeting the capability requirements for the warfighters. In other words, the PBL method emphasizes the readiness of the platform as the desired outcome.

The benefits of PBL have been known in the Pentagon for a while, and are even listed as the preferred practice in the DOD’s acquisition regulations. A DOD report has also verified that PBL practices, when implemented correctly, lead to both cost savings and improved system performance.2 That being said, PBL is not appropriate for all systems and should be judiciously applied. Furthermore, there are existing barriers and cultural biases against PBL that would make a universal application unfeasible. For those reasons, cost savings for the effort vary from $9 billion a year to $32 billion a year.3

Endnotes

  1. John Boyce and Allan Banghart, “Performance Based Logistics and Project Proof Point,” Defense AT&L: Product Support Issue (March–April 2012), p. 30, (accessed November 12, 2014). 

  2. Ibid. 

  3. Baker Spring, “Performance-Based Logistics: Making the Military more Efficient,” Heritage Foundation Backgrounder No. 2411, May 6, 2010; and Boyce and Banghart, “Performance Based Logistics and Project Proof Point.” 

Did you know the military uses an outdated weapon maintenance system? Fix it & save $

Contributing Expert

Diem Nguyen Salmon is the Senior Policy Analyst for Defense Budgeting in the Heritage Foundation's Allison Center for Foreign Policy Studies. Intimately familiar with both U.S. defense platforms and government contracting practices, she brings special expertise to questions of defense hardware investment.

See publications by Diem Nguyen Salmon

Diem Nguyen SalmonSenior Policy Analyst for Defense Budgeting

Heritage Experts

James Jay Carafano, Ph.D., a leading expert in national security and foreign policy challenges, is The Heritage Foundation's Vice President, Foreign and Defense Policy Studies, E. W. Richardson Fellow, and Director of the Kathryn and Shelby Cullom Davis Institute for International Studies.

See publications by James Jay Carafano, Ph.D.

James Jay Carafano, Ph.D.Vice President for the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, and the E. W. Richardson Fellow

Steven Bucci, who served America for three decades as an Army Special Forces officer and top Pentagon official, is director of the Allison Center for Foreign Policy Studies at The Heritage Foundation.

See publications by Steven Bucci

Steven BucciDirector, Douglas and Sarah Allison Center for Foreign and National Security Policy

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