1. Naval Inventory Control Point 1 PBL Background The Support Spectrum Mini-stock point Commercial Off-the-shelf “Full Service”Contractor Logistics Support Increasing supplier responsibilities PBL Support Spectrum ORGANIC SUPPORT  Warehousing  Rqmts Determination  Some Level of Repair  Warehousing  Rqmts Determination  Wholesale Ownership  Config Mgmt  Some Obsolescence Mgmt  Some Repair / Overhaul / Replace  Vendor Manages ILS Elements  Warehousing  Rqmts Determination  Wholesale Ownership  Config Mgmt  Obsolescence Mgmt  Reliability Guarantees  Eng / Tech Support  Govt / Industry Partnership  Repair / Overhaul / Replace COMMERCIAL SUPPORT TraditionalMSPFull PBLPBL-CPBL-OCLS

2. Naval Inventory Control Point 2 Acquisition Process  Cultivate Long Term Partnerships: Promote Supplier Investment Technology Infusion Enable Supplier ROI  Leverage Best Business Practices Supply Chain Management Warehousing Forecasting Other?  Obsolescence Management  Reward Performance  Metrics: Meaningful and Measurable Joint Review Boards  Manage Supplier NOT Supplies  Contract Type: Fixed, Cost, Both, …Hybrid Requirements, IDIQ  Length: 5–15 Years; Base & Option(s)  Metrics: Cost, Availability, Reliability, Availability  Incentive: Profit (Monetary, Non-Monetary, Gain Sharing  Risk Sharing: Ramp-up Periods Exit Provisions PBLs: One Size Does NOT fit All …Each is Unique! Procuring the Performance End-State …NOT the How To

3. Naval Inventory Control Point 3 Process Selection Acquisition Process Candidate Selection New Items Commercial for Life Obsolescence Challenges Low Reliability Poor Availability High Cost/High Demand NAVICP Targets NAVICP Targets SYSCOM (Program Office) FLEET OSD (ACAT I, II, and New Start Programs) DON APR 02 MEMO Industry

4. Naval Inventory Control Point 4 Mission Need Identified HSC Selects OEM E&MD Full Rate Production IOCMSD Traditional Ideal RINU/AHRS NGS ALR-67 (V)3SCADC Process Systems… earlier is better Acquisition Process Systems… earlier is better

5. Naval Inventory Control Point 5 Low High Good Poor Performance Index = RI + SI Cost Index = DCI Median = 0.033 Median = 0.79 AAS-38 F-18 FLIR AWG-9 F-14 Radar H-53 Xmission ASN-92 INS (Common) APG-73 F-18 Radar APG-71 F-14 Radar F-18 MLG Performance Cost APU Cost-Performance Matrix - Top 200 Aviation Systems AAR-50 F-18 Infrared APG-65 F-18 Radar 0 0 H-53 MRH P-3 Prop APS-120 E-2 Radar F-18 Arresting Gear AWG-9 Ctrls and Displays EA-6B Longitudinal Pitch Ctrl Surface Process Targeting Legacy Systems Acquisition Process Targeting Legacy Systems E-2 Signal Processor