Agency works to ensure 'Every Dollar Counts'
August 26, 2010
WASHINGTON (Aug. 25, 2010) -- The Defense Logistics Agency is taking steps to cut costs and boost efficiency as part of a larger effort to reform the way the Pentagon does business, defense officials said today.
"We recognize that we are asking the U.S. Congress and American people for a lot of money to maintain our national security," Robert F. Hale, the Defense Department's comptroller and chief financial officer, told reporters during a teleconference. "We've got to make sure every dollar counts."
Earlier this month, Defense Secretary Robert M. Gates laid out his plans to reform the way the Pentagon does business and to eliminate duplicative, unnecessary costs. Among his directives, the secretary tasked the services and defense agencies to achieve up to a $100 billion in overhead savings over the next five years.
Joining Hale on the call, Navy Vice Adm. Alan S. Thompson, director of DLA, outlined the steps his agency is taking to comply with Gates' initiative.
"Warfighter support is our organization's primary focus, but along with that comes the need to deliver products and services efficiently and to reduce prices," he said. DLA has taken several steps toward that end, he added, with additional actions planned for upcoming months.
Thompson said DLA will pursue price reductions as much as 10 percent in select areas by providing a greater focus on reasonable prices, incorporating price reduction factors in strategic sourcing opportunities and establishing more long-term contracts.
The agency also will work to improve business efficiency by enhancing documentation to ensure "nonconforming" and counterfeit parts don't enter the Defense Department's supply chain, the admiral said. The Defense Department has a "zero tolerance policy" for suppliers that provide counterfeit parts, and while the majority of suppliers are above board, the agency must weed the others out, he added.
Thompson also touched on a new enterprise business system that's enabling DLA to do a better job of demand planning and forecasting. The enterprise business system, he explained, is the "engine" the DLA uses to run.
"We don't want to underbuy, [and] we don't want to overbuy," he said. "This adds extra costs to our supply chain."
On the information technology front, the agency plans to use a procurement module, called e-procurement, to replace its legacy contract writing capability, Thompson said, and it also plans to merge a number of legacy information technology systems.
An operational evaluation team also is looking to reduce the risk of procurement fraud by seeking potential vulnerabilities and developing risk-mitigation strategies, Thompson noted.
"As a result of the team's work, we've implemented several actions to tighten up our acquisition processes," he said. To leverage buying power, the agency is consolidating purchases across the agency rather than entering into separate, smaller contracts, the admiral explained.
Also, agency officials are meeting with more than a thousand DLA suppliers and potential suppliers to discuss the need to work together to cut costs and increase efficiencies. DLA is a high-volume organization, Thompson noted, executing more than 10,000 contract actions daily.
DLA has a history of continuous cost reduction, Thompson said, but it will redouble its efforts to meet Gates' initiative.
"We're focused on warfighter support and, frankly, good stewardship of American taxpayer dollars," he said. "We're going to hold support to the warfighter constant at the very high level we've been providing in recent years."