The fiscal realities of 2013 were challenging, and declining demand significantly decreased customer fuel orders, Defense Logistics Agency Director Navy Vice Adm. Mark Harnitchek said during a roundtable discussion at the McNamara Headquarters Complex Nov. 8.
The discussion on bulk petroleum brought DLA officials together with industrial partners to improve business processes and strengthen relationships.
“The Captains of Industry meetings have presented us a unique opportunity to gather senior industry representatives who have vast experience in supporting the bulk petroleum program to openly discuss opportunities to achieve additional savings for the defense department,” DLA Energy Bulk Petroleum Products Director Kevin Ahern said.
During the meeting, Harnitchek described the agency’s strategy to save $13 billion in the next six years.
“I need your help in driving down costs in fuel processes,” Harnitchek said. “Our big challenge is how to stretch logistics dollars further. … We need to be more mindful in spending money, and we need your help”
Attendees received updates on last year’s captains of industry actions.
“We implemented many suggestions discussed at the 2012 Captains of Industry and are seeing positive results,” Ahern said. “One of the actions we are going to take is to hold quarterly get-togethers with suppliers to go over [the] demand/supply plan.”
The intent is to drive and influence supplier behavior, he said. The earlier suppliers know the agency’s intentions, the more they can discuss additional opportunities for savings.
“Our goal is to achieve best value for the warfighter while partnering with industry to adopt best commercial practices, improve negotiation processes, and return to a more predictable program award cycle,” DLA Energy Deputy Commander Michael Scott said.
One example of DLA Energy’s efforts toward commercial product specifications and practices was to meet the commercial specifications of converting from using military-specification JP8 to commercial Jet A fuel. Almost all domestic locations will have converted to Jet A by the end of fiscal 2014.
“[There have been] two big changes since we started the bulk Captains of Industry meetings,” Scott said. “We have taken efforts to improve the negotiation process including a ‘second look’ process and adding an online reverse auction tool. We have also implemented multiple-year contracts and changed a number of quality provisions to be more commercial in process.”
In fiscal 2013, DLA Energy achieved $400 million in savings by using reverse auctions to get better prices and increase competition in awarding fuel contracts, Ahern said.
During the meeting, industry representatives suggested dialogue and communication could be improved by sharing demand forecast data on a more timely and detailed basis. Better communication would help drive down costs and assist industry partners in managing expectations.
The vendors also expressed their appreciation for the efforts DLA took in keeping them informed during the recent government shutdown.