Defense Logistics Agency Seeking to Slash Billions from Procurement Budgets

By Magnuson, Stew | National Defense, March 2015 | Go to article overview

Defense Logistics Agency Seeking to Slash Billions from Procurement Budgets


Magnuson, Stew, National Defense


The Defense Logistics Agency wants to save $ 13 billion for its customers --namely the four services and other Pentagon agencies--over the next five years.

"We are very sensitive to the budget impacts or concerns that the services are facing," Matthew Beebe, DLA's director of acquisition, policy procedures and oversight of acquisition, said in an interview.

The DLA spent some $39 billion in fiscal year 2013, while managing nine supply chains containing 6 million items, according to its website. It supports about 2,400 weapon systems.

Beebe said the agency is "working aggressively" toward the goal of saving billions of dollars through the future year defense plan and is looking for creative solutions that satisfy both the services and suppliers.

Its guiding principle as it seeks new ways to do business with thousands of vendors is Undersecretary for Defense Acquisition, Technology and Logistics Frank Kendall's Better Buying Power initiative, which will soon release its third iteration, BBP 3.0.

Better Buying Power calls for smoother and more open communication with industry. DLA has taken that to heart and meets regularly with the leaders of key vendors to gain their feedback on how the procurement process can be carried out more efficiently.

They are asked: "What can we do to better the process to take time and cost out of the process?"

Since time is money, that emerged as a chief criticism.

"They were concerned with the amount of time it took us to turn around our procurement," Beebe said, referring to the timeline between when a need is first identified and the day when the contract is issued.

The bureaucracy that had built up over the years in DLA created a lot of unnecessary procedures. Since it did not require legislation to fix some of these problems, reform has come relatively easily, he said. "We leaned out the system a bit."

The agency eliminated unnecessary reviews, condensed market research and told the nine supply chain offices within the agency that they had to turn products around in a certain amount of time, he said.

In some categories, the agency has seen about a 50 percent reduction in the time that it spends in the procurement process, Beebe said. Depending on the type of procurement, some may be above or below that 50 percent line, he added.

Along with saving time, DLA wanted to know what would save costs for its vendors.

"Are we asking you, industry to do unnecessary things, which adds cost to our procurement?" the agency asked contractors.

For example, "Why do we have to have chicken 30 different ways? Really, aren't there just four or five ways that you need chicken?" A supplier has to have access to all these different cuts and varieties. Similarly, in the medical supply realm, do hospitals and doctors really need all the colors for surgical gloves or just in different sizes?

More common sense savings came from packaging. Military specifications for putting products in containers were too complicated, vendors complained. At a local auto parts store, an oil filer for a vehicle comes in a flimsy cardboard box. Yet the military requirement for filters called for extensive wrapping.

"The commercial industry does fine Soliders prepare for inspection with this standard pack and occasionally one might get damaged, but we can easily replace those. You're wasting a lot of money by doing the military spec packaging," Beebe said.

"We have, to a large extent, removed or relied upon the commercial standards for packaging ... and we are seeing significant savings there," he added.

Jet fuel is a bigger ticket item with opportunities for big savings.

DLA is moving away from military spec JP-8 fuel and switching to commercial grades. The military once saw the benefits of having only one fuel on the battlefield and settled on JP-8 so it did not have different supply lines for every air, land and sea vehicle. …

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