1. Performance Based Logistics
Initiatives
Carlo Montemayor
29 April 2015

2. Performance Based Logistics Initiatives
Agenda Topics
PBL Efforts
PBL Strategy
PBL Office
Honeywell Enterprise PBL

3. Current DLA PBL Contracts
Project
Vendor
Value
(then year)
Projected Savings
KPI/Metric
Boeing COI
Phase 1 – Performance Based Material
Boeing
$293M (Phase 1)
5 year total
20%
90% Material Availability
GE F Series Engines COI GE
$349M
6.5%
95% Order Response Time
Boeing COI (all phases) – Boeing/DLA approach for DoD to save 20% by increasing Boeing’s role in management of supply chains for its platforms by providing faster and more cost-efficient delivery of logistics services.
Phase 1 awarded: 17 Sept 14 Phase 1 (SS Cons/DLR Spares) First increment settled at $295M for 5 years with projected savings of 20%. Firm Fixed Price Incentive (FPI) contract with ~20% or $76M in potential savings (Savings at $52M or 14% at max ceiling of 121% of target price)
Phase II in planning and will include Depot support
Aircraft supported: AH-64, AV-8, B-1, B-52, C-17, CH-47, E-3, E-6, F-15, F/A-18, KC-135 and associated support equipment - -
GE F Series: Firm Fixed Price with Incentive and shared savings
Contract awarded 24 Nov 14. Value for 5 year base $349M, 3 year option available. ~6.5% or $25M in potential savings over 5 years
(Performance Based Material Support for OK-City Depot (OK-ALC) KPI is 95% Air Force
Metrics: Order Response Time (ORT) with an incentive to reach 100% for Depot Support and 95% MA on Worldwide Support .
COI – Captains of Industry

4. Planned DLA PBL Contracts
Project
Description
Projected Value
Boeing COI
Phase II
Depot support
Reduce inventory levels, material cost reduction, increase availability and improve reliability
12.6B
over 10 years for all phases
CFM F108 COI
Improve reliability, enhance depot turn around times, reduce inventory, and reduce material costs.
$1.6B
over 8 years
Honeywell PBL
Prototype multi service effort from the Big Ideas Initiative.
$3.5B
over 10 years
Raytheon Radar Initiative
Phase 1 covers Raytheon sole source depot level reparable (DLR) assemblies and their associated consumable parts that are used to maintain multiple radar systems.
$2.3B
(all 3 increments)
6 year total
Project
Description
Projected Value
Boeing COI
Phase II
Strategic acquisition to reduce inventory levels, improve customer service, improve obsolescence management, and decrease transactional workload.
$8B-$12.6B over 10 years for all phases
CFM F108 COI
Strategic acquisition to improve performance, reduce inventory, reduce workload, and reduce material costs.
Honeywell PBL
Prototype multi service effort from the Big Ideas Initiative.
$3.5B over 10 years
Raytheon Radar Initiative
Phase 1 covers Raytheon sole source depot level reparable (DLR) assemblies and their associated consumable parts that are used to maintain multiple radar systems.
$2.3B
(all 3 increments)
6 year total
BLUF: Total DoD Valued at $19.4B over average of 8 years for a total value per year of $2.4B
or 6-10% (value = J&A value)
Boeing COI:
- Results in faster and more cost-efficient delivery of logistics services.
- Phased in approach with Phase 2 (Depot Platform Support) expanding from SS consumables and DLR spares to Depot focused support to full Platform PBL support.
- Second increment estimated value $200M with similar savings projected
- More phases to come – growth potential up to $8-$12.6B – J&A is at $12.6B
- Aircraft supported: AH-64, AV-8, B-1, B-52, C-17, CH-47, E-3, E-6, F-15, F/A-18, KC-135
CFM F108 Engine
CFM the company name (not an acronym) is the OEM for F108 engines used on the KC135 (Tinker AFB)
Valued at $1.6B over 8 years
Strategy in work with the AF meetings being held next week. Initial strategy was similar to the Boeing COI. Included holistic consumable support followed by AF requirements; however, DLA is reviewing a more cost effective path with a more integrated approach with the AF up front.
Raytheon Radar – covers multiple platform radars (F18/F15, etc)
- Valued at $2.3B over a 6 year period

5. Planned DLA PBL Contracts
Project
Description
Projected Value
GDLS Integrated Platform Support (IPS)
Covers Abrams Main Battle Tank, Stryker Famliy of Vehicles, Light Armored Vehicle Family of Vehicles, Cougar, Buffalo, RG31
$75M
BAE Integrated Platform Support (IPS)
Covers M88, M109, M113, Bradley, FMTV, RG-33 and Caiman. Effort is in planning stage with discussions with BAE anticipated in April/May 2015.
TBD

6. Honeywell EPBL Initiative
Acquisition Strategy
10-Year Est. at $3.5–$4.0 Billion
Single Joint PBL Contract
Leverages Economies of Scale
Utilizes Organic Depots
Std. & Commercial Best Practices
Incentivizes PBL Outcome
Incentivizes Industry Investment
Expected Benefits
10-20% Projected Savings
Product Reliability Improvements
Reduce Inventory Spend by ~75%
Shorter Logistics Response Time
Metrics Linked to Outcomes
Streamlined Supply Chains
Consistent Contract Terms

7. Honeywell EPBL Requirement Portfolio
Value Proposition Platforms / Components
Aviation Ground Power Unit
B-1
APU & A/C Mounted Accessory Drives
A-10
APU
E-3 AWACS
APU
H-60
APU
F-15 Jet Fuel Starter & Acc Drives
(SPLS II)
C-5
APU
F/A-18 EnCS & Wheel and Brakes
V-22 Env Control Sys, IR Suppressor, Valves & Avionics
Existing PBL USAF SPLS I
C-130, Ground Cart APUs
Existing PBL
Navy TLS
F/A-18 APU & MFC
P-3 APU & EDC
C-2 APU
CH-47
T-55 Engine
AH-64
Apache
Clutch Assembly
M1 Abrams Tank – AGT1500 Gas Turbine Engine
F-16
Turbine Power Unit
E2/C2 ECS
Additional Opportunities (not included in savings calculations)
P-8A Poseidon – all HON Components
KC-767 – all HON Components
And associated FMS Customer orders

8. Contract Planning and Evaluation
Contract Strategy
Single Long-Term Arrangement
Commercial & Non- commercial
Mechanism for Adding Items
All Items Priced for the Period
Supply Response Time and Reliability Metrics
Metrics Linked to Payment Structure with Disincentives
Evaluation Process
10-12 Month Process
Initial Proposal BCA & Decision Point
DLA/Service Managed Evaluation & Negotiations
Pricing: Services/DCAA/DCMA
DLA/Service’s Approval Process
Final Assessment

9. Status Outlook Where Are We Now
HW Evaluated Supplier Quotes Flowing to DCAA/DCMA
HW Proposal Due 27 April 2015
Way Forward
Complete Proposal, BCA, & Analysis
Finalize Proposed Solution
Receive Stakeholder Buy-In
Determination to Proceed

10. Proposed PBL Strategy – PBL Office
PBLs - Better Buying Power Cornerstone
Discussion Topic at upcoming Supply Chain Summit
Intent to stand up a DLA HQ PBL Office

11. PBL Office Objectives Policy influence… vice program execution Policy
Logistics Operations (Drawdown, Counterfeit Risk Mgt, Planning)
Acquisition (alignment of processes to support PBLs)
Financial (Wpn System BCA integrated w/DLA costs, Compliance)
Governance (Strategically aligned)
Policy influence…
vice program execution
Customer Engagement
Develop PBL opportunities
Leverage DLA capabilities to pursue PBL opportunities
SME support to DLA PBL efforts
Strategic Communications
Support Service PBL efforts
Interface with OSD/Industry
Workforce Development
Ensure adequate resources for PBL execution
Create a single DLA PBL Environment
Influence DAU/Svc PBL Training
Develop DLA internal PBL training
DLA PBL Working Group
Source: DLA PBL Strategic Plan dtd 13 May 2011

12. DEFENSE LOGISTICS AGENCY
AMERICA’S COMBAT LOGISTICS SUPPORT AGENCY
WARFIGHTER SUPPORT STEWARDSHIP EXCELLENCE WORKFORCE DEVELOPMENT