May 29, 2015 —
As part of the Better Buying Power 3.0
initiative, the Defense Logistics Agency is applying strategic sourcing methods to drive down acquisition times and costs and provide faster service to the agency’s customers at a lower cost. The DLA Land and Maritime
Strategic Acquisitions Program Directorate has long-term contracts covering 52,000 items representing more than $650 million in annual spending.
“With such a large number of our items and spend covered on long term contracts, it’s imperative that we aggressively manage these contracts to ensure our suppliers consistently perform at the necessary level to meet warfighter needs,” DLA Land and Maritime Commander Navy Rear Adm. John King said.
King explained that DLA Land and Maritime has used this strategy on recent long-term contracts for tires. The average price per tire decreased by 5.2 percent, and prices decreased on 75 percent of the impacted items. At current demand levels, this equates to about $8 million in annual savings.
Milton Lewis, DLA Land and Maritime’s acquisition executive said that long-term contracts generally provide win-win solutions for the government and its industry partners. The government obtains a reliable source of supply at a competitive cost while suppliers get a steady customer. Both parties typically have lower administrative costs, because long-term contract delivery orders can flow on a largely automated basis, instead of requiring numerous manual contract actions.
According to Lewis this type of arrangement helps keep the supply chain and procurement system operating at maximum efficiency. SAPD has more than 350 very high-demand items on long-term contracts exceeding $250 million annually. These items support numerous weapon systems like Abrams tanks and several attack and support vehicles.
“We’re focusing our efforts to make sure we take advantage of every opportunity fulfill our customer’s requirements,” said Navy Capt. Kerry Pearson, director DLA Land and Maritime Strategic Acquisition Programs Directorate. “And we’re not just waiting on opportunities to come to us; we’re actively engaging and planning our investment strategies through the next two to three years to maintain our momentum in producing cost savings throughout our procurement processes.
“This is demonstrated by SAPD’s work on implementing a basic ordering agreement with General Dynamic’s Electric Boat, one of DLA Land and Maritime’s key suppliers. The agreement will improve acquisition efficiency in support of Land and Maritime’s shipyard detachments.”
King said collectively, incorporating these acquisition practices throughout Land and Maritime’s operations contributed to more than $41 million in material savings from fiscal 2012 to fiscal 2014, in addition to $25.6 million in savings for this fiscal year.
“DLA’s work in this area will continue to improve readiness, foster competition and create opportunities for savings while pursuing the important goals of the Better Buying Power and Time to Award initiatives, King concluded”
Editor’s note: This is part of a series of articles that DLA will highlight on BBP 3.0 called "Better Buying Power in Focus."