Affordable Defense Logistics
Recent AIA findings support an independent study commissioned by DOD showing that life cycle product support, outcome based partnerships and management of commodities have the potential to save the department an estimated $20-25 billion annually. In a memorandum for senior acquisition executives entitled “Endorsement of Next-Generation Performance-Based Logistics Strategies,” the acting Under Secretary of Defense Acquisition, Technology and Logistics Frank Kendall affirmed that appropriate use of PBL strategies will help achieve DOD’s affordability goals. AIA will continue to leverage our long-standing partnership with DOD to stay abreast of these potential savings.
Affordable Defense Logistics
We are entering uncharted and perilous waters; global economic turmoil combined with looming national budgetary uncertainties are real threats to national stability. The aerospace and defense industry is reshaping itself to mitigate against the major budgetary reductions being taken by the Defense Department and is concerned about the adverse impacts of draconian budget reductions that sequestration will trigger. The aerospace and defense industry will be forced to let go tens of thousands of employees to survive this unparalleled acquisition spending downturn. Without a viable integrated commercial and government industry plan, highly skilled aerospace and defense workers from all levels of the enterprise are at risk.
In 2009, AIA published a position paper outlining several initiatives to modernize DOD logistics and a range of potential cost benefits for each initiative. Since the publication of that paper, Congress and DOD have taken several promising steps to obtain greater efficiency and productivity in defense spending. However, the Defense Department has been slow to implement proven strategies that will yield annual cost benefits without negative impact to our nation’s warfighter readiness.
There are some positive steps being taken by industry and government alike. Encouraged by recent DOD initiatives, policy and guidance, AIA validated the recommendations given in a “Modernizing Defense Logistics” position paper. The findings and recommendations reaffirmed the need for DOD to:
- Aggressively implement existing DOD guidance and immediately expand the use of Performance Based Agreements and Outcome Based Public-Private Partnerships at the component, subsystem and system levels
- Capitalize on the use of commercial supply chains and their superior forecasting, ordering, storage and distribution capabilities for all commodities and reparable items.
- Further enhance commodity management through the implementation of contracts for common parts, subcomponents and components used by multiple military services to drive efficiencies across commodity classes.
Savings documented within this study are consistent with OSD’s Proof Point study. When the recommendations are fully implemented, these best practices could save an estimated $20-25 billion annually. For additional details, please read more at Affordable Defense Logistics.
AIA Source: paul.fowler[at]aia-aerospace.org
