Outsourcing military work to contractors has been under much scrutiny lately. The Obama administration has unleashed plans to curtail outsourcing and bring more work in-house. But one area where the practice is not likely to slow down is weapons maintenance. A recent Deloitte study predicts 50 percent growth in “performance based logistics,” which is Pentagon-speak for contracts that the military services award to companies to support and maintain their weapons systems. The Defense Department has supported the use of PBLs as money-savers because contractors make much of the upfront investment in spare parts and tools, and the government only pays for services performed. PBL contracts have grown from $1.4 billion in 2001 to an expected $5 billion in 2009, and could reach $7.4 billion by 2013, said Deloitte’s Tristan Whitehead.
Among the largest beneficiaries of PBL contracts is the Boeing Co. Jim O’Neill, vice president of integrated logistics at Boeing, said he does not expect business to slow down despite expected cutbacks in military spending. For the government to get more bang for the buck, O’Neill suggested, the Pentagon needs to standardize the criteria for measuring PBL cost savings, which currently differ in each military service.