Performance-Based Logistics Status Report 2 March 2004

Weapon System Support Challenges Availability of parts High maintenance levels Retention/turnover of maintenance personnel Large maintenance/supply footprint Operational Challenges Implications for Transformation Mid-Term Solutions Will not support rapid force projection Large footprint (people and equipment) Complex, disjointed logistics chains Limited asset visibility Total Life Cycle Systems Management Performance-Based Logistics Depot Partnering Conditioned-Based Maintenance + Structural Challenges Equipment designed to 75-85% availability Disjointed acquisition and logistics processes and accountability $67B per year in cost; no link to output Disjointed, functional support structure 16-day CWT for high priority parts 50% of cost tied to maintenance; vast majority at O&I level Aging organic depot infrastructure Integrated strategy to achieve end-to-end accountability for weapon system support that meets transformation goals and requirements.

Performance-Based Logistics JACG Oversight via DAB/DAES Oversight via R-TOC Forum DoD 5000 Policy New program implementation 30 Pilot Programs Quadrennial Defense Review Second major topic for today was status of PBL Currently preferred sustainment strategy for new systems in 5000.2-R Endorsed by QDR for application to legacy systems 03 DPG included requirement for Service Implementation Schedules to be submitted by March 2002 Reengineer Product Support Performance-Based Logistics Legacy Systems FY03 DPG Service Implementation Schedules Lessons Learned Operational Demonstrations Adjustments CY02/03 PEO/SYSCOM PM Roundtables AIA Product Support Industry/Government Tiger Team A joint, disciplined program to successfully implement PBL!

Future System Sustainment Real-Time System Status (CBM+) Industry/Government Performance- Based Logistics Weapon System Manager Force Provider Partnerships Ensure system is sustained at optimum level Performance Agreement Performance Agreement Provide continuous, reliable, affordable support Acquisition Visibility into cost/risk decisions across life cycle Sustainment Disposal Providing operational availability; not parts.

PBL FY03 Accomplishments Policy and workforce development in place Program migration on schedule Documented $15B in savings in PBBE 05 Demonstrated best in class readiness during OIF Initiated PBL Roadshows Established Logistics Community of Practice (DAU) Completed DBB Review

Logistics Response Time* Sentinel Days F-18 E/F APU PBL Programs MCRS F-117 HIMARS (To date) Calendar Year *National level fills, all requisitions PBL programs providing significantly improved response times.

PBL Logistics Response Time Aircraft And Equipment Pre-PBL and PBL Logistics Response Times (LRT’s) Availability Improvements F/A-18 Stores Management System (SMS) Pre - PBL LRT = 42.6 Days PBL LRT = 2 Days CONUS 7 Days OCONUS F-14 LANTIRN Pre - PBL LRT = 56.9 Days PBL LRT 5 Days Tires Pre - PBL LRT 28.9 Days PBL LRT = 2 Days CONUS 4 Days OCONUS H-60 Avionics Pre - PBL LRT = 52.7 PBL LRT = 8 Days ARC-210 Pre - PBL LRT = 22.8 Days PBL LRT = 5 Days APU Pre-PBL = 35 Days PBL PBL LRT = 6.5 Days Achieving Commercial Standards through PBL.

Programs Contributing to GWOT* JSTARS B-2 F/A-18 E/F Delivering Capability NOW! F-117 C-17 Common Ground Station AWACS * PBL programs readiness exceeded traditional support; several achieved historically high availability!

GWOT PBL Results Availability on Demand

Common Ground Station PM is life cycle manager Government led PBL strategy Tobyhanna is product support integrator Deployed 30 CGS to support OIF Streamlined maintenance flow Achieved 99% Ao during OIF Forward-located repair activity at Baghdad International Airport Achieved real-time fleet management/asset visibility

DBB Recommendations Major Recommendation Key Elements (From the DBB) Ongoing Action 1. Pursue PBL Aggressively New and legacy system application as supported by business case Services on schedule for BCAs Pending SPG language 2. Issue Standard Guidance Consistent approach to PBL Consistent Business Case Analysis Consumable item manager BCA Tiger Team 11/7 Coordinated BCA guidelines Updated Guidebook 3. Reform financial and contract management Move toward a single manager Seek funding flexibility and multi-year authority Management Improvement Directive 4. Leverage DAU to accelerate PBL implementation Create PBL Center of Excellence Partner with industry to share lessons learned Create Exportable teams to assist PM offices Ongoing at DAU Ongoing via LOGCOP and AIA Roadshows emerging via DAU regional centers 5. Increase exposure to private sector practices Expand AF education with industry Leverage Defense Corporate Fellows Program to include supply chain assignments 6. Change structure/culture of PM office Create a central “log provider” entity to coordinate all logistics activity for the PM Streamline program offices based on the F-117 and FCS models Review PM assignments for applicability of civilian PM Specify tenure for Deputy PM for Logistics Enforce Congressional mandate to keep military PMs in place for 4 years

Weapon System Sustainment Roadmap PM accountable for life cycle JROC established sustainment requirements Enabling Depot legislation Revised Maintenance Policy Industry Supply Chains Reengineered Training Number Number of Partnerships (1998 & 2002) Joint Strike Fighter Future Combat System Advanced Amphibious Assault Vehicle Historic Suppressed Readiness Marginal reliability Fractionated Accountability $67B/year Huge footprint Warfighter-driven readiness Ultra-reliability Clear PM accountability Minimal Footprint s Financial Reform (PR05) Single-line Accounting Life Cycle Cost Management Operational requirements synchronized with PBBS 2000 2005 2015

FY 04 PBL Acceleration Strategic Planning Guidance Directs assessment of PBL at system level for all ACAT I and II programs Management Initiative Directive Lead programs for single-line accounting OSD Special Interest Programs Application of commercial supply chain practices Weapon System Support Metrics Implemented via Logistics Balanced Scorecard Government/Industry Tiger Team Monthly meeting to eliminate barriers

PBL Road Ahead Still On Schedule!! TLCSM WG JROC Adjustments 5000 Series Updates Revised WSM Logistics Curriculum Workforce Development Service PBL Schedules Program Transition per Service Schedules Enabling Financial Mechanisms Still On Schedule!!

We Must . . . . . . therefore, we will!! FIELDED CURRENT FUTURE Transaction-based Fractured Supply Chains Random Failures Batch Process orders Limited Accountability Performance-Based Integrated Chains Fleet Management Integrated Systems PM Accountability Capability-Based Industrial Integration Autonomic Logistics End-to-End Solutions Single-Line Accounting F-18 C/D DDG BRADLEY F-18 E/F LPD-17 Stryker JSF DDX FCS Response Time: 2000 2010 16 days 5-8 days 1-5 days . . . therefore, we will!!