Figure 1. The Product Support Decision Matrix
Figure 2. Each IPS element will have a recommendation to achieve Warfighter requirements at a best value...
The Product Support Value Analysis must stand on its own and be able to withstand rigorous analysis and review by independent audit agencies. According to the Federal Acquisition Regulation, “best value” means the expected outcome of an acquisition that, in the Government’s estimation, provides the greatest overall benefit in response to the requirement. Since a best value determination is in the “Government’s estimation,” due diligence requires that extensive documentation be developed and maintained. Often, the value analysis relies on data developed in the BCA process.
The Product Support BCA is an iterative process, inter-related with the value analysis, periodically revisited or updated throughout the life cycle. Portions of value choices informed by BCAs can include:
- Initial decision to invest in product support;
- Decision to select among alternative approaches;
- Validation of any proposed scope, schedule, or budget changes during the course of the program;
- Identification of the various budget accounts and amounts affected by the various product support strategies;
- Should be a living document—as Program or organization changes occur, they should be reflected in updates to the business case;
- Should be used to verify that planned benefits are realized at the completion of the project.
This information should be used in further decisions to sustain or enhance the best value decision and to refine estimation of benefits and costs for the program and future programs in the organization. Throughout this process, collaboration and negotiation by the PSM across the stakeholder community is vital in order arrive at the best value recommendation, including qualitative or subjective factors as well as quantitative analysis, to the PM for the selected Product Support Strategy.
Best Value analysis should span:
- Optimum level of support (System, Sub-system, or component level), evaluation of product support strategy considerations related to the 12 IPS elements;
- Supply Chain Management strategy, including the DoD Joint Supply Chain Architecture;
- Workload allocation strategy (including depot maintenance Core, 50/50, $3M Rule, and Public-Private Partnering (PPP) considerations);
- Refinement of Technical Data Rights Strategy (TDS);
- Strategies for continuous modernization and improvement of system reliability, availability, and maintainability (RAM), and proactively addressing obsolescence, Diminishing Manufacturing Sources & Material Shortages (DMSMS), and corrosion issues;
- Life cycle cost control and risk mitigation;
- Affordable alignment with Department strategic objectives.
Product Support Value Recommendations are constrained by Title 10 requirements. The most significant sections are:
All involved in Product Support Value Analysis should take the time to understand each of these requirements, with a particular emphasis on Public-Private Partnering. Section 2640 defines depot level. Maintenance and Public-Private Partnering allows the inclusion of organic depot maintenance activity in an overall support plans. Title 10 USC, sections 2474 (designation of Centers of Industrial and Technical Excellence, or CITEs) and 2563 (Articles and services of industrial facilities: sale to persons outside the Department of Defense) together provide the statutory foundation for effecting a partnering arrangement. In essence, the organic depot accomplishes repair or overhaul of items included within the scope of a product support strategy, and ‘sells’ those items to the PBL contractor. This allows PBL contracts to facilitate compliance with other Title 10 requirements such as section 2464 CORE workloads and section 2466 50/50, which limits depot maintenance performance by contractor personnel to no more than 50% of the total expenditures for depot maintenance, at the overall Service level, in any given fiscal year.
In Best Value Analysis decision makers must embrace the idea that public-private partnerships can work. When implemented to truly leverage key capabilities of both government and our industry partners, DoD has significantly enhanced weapon system product support. This has repeatedly been demonstrated in the area of depot level maintenance. Going beyond depot maintenance, we must continue to refine, improve, and enhance these collaborative organic and industry sector relationships to deliver best value, efficient and effective long-term, outcome-based product support not only for our own program, but also for our Service, the American taxpayer, and ultimately our Warfighters.
Public-private partnerships are emphasized in statute and policy. DoD policy requires that sustainment strategies shall include the best use of public and private sector capabilities through government/industry partnering initiatives, in accordance with statutory requirements. (DoDD 5000.01, para E1.17) On September 14, 2010, the Under Secretary of Defense for Acquisition, Technology, and Logistics issued guidance on obtaining better buying power. This memo details the 23 efficiency initiatives that speak directly to the issue of obtaining best value for the government. The Defense Acquisition University maintains a website for the “Better Buying Power” Community.
Developing the workload allocation strategy is really the ‘heart’ of implementing a product support strategy. The decisions as to where, how, and by whom workloads will be accomplished is a significant and critical task to achieve an optimum, best value support plan. As has already been mentioned, PBL is not ‘outsourcing’, it is the considered assessment of the best public and private capabilities against a set of criteria to determine the optimum best value support solution for each discrete support function, process, and workload. An effective support strategy considers ‘best competencies’ and public/private partnering opportunities for each support function in terms of:
- Capability
- Skills
- Infrastructure
- Opportunities for partnering
- Compliance with Title 10
- Public/Private flexibility
- Affordability
Support workloads include both system unique sub-systems, commodities, or components and common sub-systems, commodities, and components. Building on this previously developed System Baseline, the PM and product support team must address each discrete workload and assess how it can best be accomplished while considering statutory (i.e., Title 10), regulatory, and pertinent Military Department (MILDEP) guidance. There are specific guidelines to consider within these categories. Some are mandatory (i.e., Title 10 sections), some preferential (e.g., Service policy and guidance), and some are workload dependent (e.g., workload characteristics such as commercial items, common organic items, etc.). The most common guidelines to consider as the workload allocation and sourcing decisions are accomplished include:
- Title 10 USC applicability (Core, 50/50);
- Existing support process (e.g., contract, organic);
- Existing support infrastructure (in-place, to be developed);
- Best capabilities evaluation (public, private sector market research);
- Opportunities for public/private partnering;
- And similar factors.
The outcome of the Product Support Value Analysis will be an optimized product support strategy which will fall somewhere on the Product Support Decision Matrix (PSDM) shown in Figure 1 (source: DoD Product Support Manager Guidebook). Note that this matrix shows the continuum between component and system-centric strategies and government and commercial capability-based strategies. The Product Support Decision Matrix is explored in detail in the Product Support Manager Guidebook.
Virtually every product support strategy is comprised of both government and commercial product support. Finding the right blend of both public and private support while simultaneously determining the level (component, subsystem, system) of support, and tailoring that support to the objective system dependent on its life cycle phase, mission, operational environment, and funding requirements is a complex process. While the PSDM shows nine discrete support strategy ―blocks, in reality there are variations within each of those blocks, resulting in a continuum of product support alternatives. This means the PSM should look at selected strategies from the perspective of what is required for their system with regard to determining the appropriate mix of support sources required to achieve Warfighter requirements at a best value.
Figure 1. The Product Support Decision Matrix shows the continuum between component and system centric strategies and partnerships using predominately commercial or industry capabilities to government or organic capabilities. See the Defense Acquisition Guidebook (DAG) Chapter 5, Sections 5.1.1 and 5.1.2 for further discussion of Product Support strategy development.
Figure 2 (source: Product Support Manager Guidebook) shows how an aircraft Sustainment BCA might recommend the best value alternative for the Sustaining Engineering, Supply Support, and Maintenance and Maintenance Planning IPS elements. Similar PSDMs would show the best value strategy for each of the remaining IPS elements. In this example, Sustaining Engineering would be performed on a subsystem basis with a dedicated team of government and commercial engineers. Supply Support would similarly have a partnership to support engines with government and commercial personnel. Conversely, the Supply Support strategy for the aircraft that is independent of the engine is to use capabilities that are predominately held by a commercial entity with only minimal government involvement to manage the airframe PSI. Finally, Maintenance and Maintenance Planning would have a partnership with roughly equal government and commercial capabilities providing Depot level maintenance services at the system level with Organizational level maintenance performed by organic personnel.
Figure 2. Each IPS element will have a recommendation to achieve Warfighter requirements at a best value, with this recommended alternative falling somewhere on the PSDM.
One of the key principles set forth by OSD for product support is that “Enterprise Means Enterprise and Joint Means Joint.” The Product Support Value Analysis, undertaken in support of the BCA, is an opportunity to embrace this tenet.
- Exhaust opportunities for joint economy and reduce unnecessary redundancy;
- Build the capability to make good enterprise decisions;;
- Enforce consistency in product support processes and infrastructure.
The challenges of affordability constraints, the need to upgrade equipment and infrastructure, and a continuing, persistent operations tempo prescribe a clear need for DoD implementation of an integrated plan to address product support across the Defense enterprise, and that should happen in the value analysis.
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