The relationship between commercial and military logistics providers must take place at two levels, Defense Logistics Agency Director Navy Vice Adm. Mark Harnitchek told DLA’s senior leaders and industrial partners during a DLA Maritime Captains of Industry roundtable Jan. 16 at the McNamara Headquarters Complex.
“We already have a great relationship at the contracting-officer level, and the relationship also needs to take place at this level,” the director said. “I love my contracting officers; we can’t do anything without them. But they don’t decide what we’re going to do; they don’t decide how. We decide what and how, and then our contracting shops figure out how to go about it.”
A defense strategy that calls for leaner forces and smaller budgets requires Defense Department and industry representatives to work together more than ever, he said. As the Army and Air Force work to reduce forces, the department will no longer be sized to support large-scale, long-term stability operations.
“Probably the biggest change I’ve seen in my career is that the force-planning construct used to be that you need to be able conduct two major combat operations near simultaneously. That’s no longer part of our DNA, which means we’ve still got to plan accordingly, but with smaller forces. And the big focus will be on low-cost, small-footprint weapons systems,” Harnitchek said.
The director described the agency’s strategy to save $10.3 billion over the next five years by decreasing operating and material costs. The effort includes Strategic Network Optimization, which will reduce excessive inventories and the amount DLA pays to maintain warehouses in almost 30 countries.
“We have lots of inventory and lots of infrastructure, and when you look at the defense planning guidance that [Secretary of Defense Leon Panetta] issued, you have to ask yourself, ‘Do we need to be in all those sites still, and do we need to have all that inventory?’” he said.
DLA will also increase its use of performance-based logistics, an approach that gives commercial industry the responsibility for material readiness. The new business model is already being used by military services to improve support and reduce costs for such components as tires and aircraft engines.
And to make every dollar count, DLA employees have adopted what Harnitchek called a “culture of judiciousness.”
“If we’re spending money to make something better, we must make sure it results in an operational outcome that’s either better or as good as it already is but costs less money,” he said.
DLA’s sales peaked at $46 billion in fiscal 2011 and dropped to $44 billion in fiscal 2012. That number will naturally continue to shrink with the end of operations in Iraq and declining troop levels in Afghanistan, but budget cuts will continue to be a challenge, Harnitchek said.
Industry representatives also gave their input on how they can mutually reduce costs through such methods as long-term contracts, as well as how to reduce administrative and production lead times.