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Defense Logistics Agency aims to cut contracting costs

Aug. 25, 2010 - 06:00AM   |  
By SEAN REILLY   |   Comments
Vice Adm. Alan Thompson, DLA director, said Wednesday that DLA is also beefing up its fraud-prevention efforts and updating its business operations.
Vice Adm. Alan Thompson, DLA director, said Wednesday that DLA is also beefing up its fraud-prevention efforts and updating its business operations. (Army)

The Defense Logistics Agency plans to pare contract costs and combat counterfeit parts as part of an overall drive at the Defense Department to become more efficient.

The agency's director, Vice Adm. Alan Thompson, said Wednesday in a call with reporters that DLA is also beefing up its fraud-prevention efforts and updating its business operations.

Thompson could not put a dollar figure on the potential savings, but he predicted the effects will be seen soon.

DLA will attempt to win price reductions of up to 10 percent by consolidating smaller contracts into larger, longer-term deals.

To keep counterfeit and "non-conforming" parts out of the military supply chain, the agency is enhancing the documentation needed to assure that products are legitimate. In March, the Government Accountability Office reported that the Defense Department lacked a policy for detecting and preventing counterfeit parts, starting with a standard definition of "counterfeit."

Thompson, who was joined on the call by DoD Comptroller Robert Hale, spoke from Columbus, Ohio, where DLA is holding a supplier conference. The agency, which employs some 26,000 people and expects to award $41 billion in business this fiscal year, is the main provider of food, fuel and spare parts to the military. No significant effects on the work force are expected.

The move comes as Defense Secretary Robert Gates is pressing Pentagon bureaucrats and the military services to trim about $100 billion in costs over the next five years that can be redirected toward weapons projects and other higher-priority needs.

The possible impact on the agency's suppliers remains to be seen. Small businesses will still be able to participate in DLA acquisitions, but may have to team up with larger firms, Thompson said. DLA spokesman Dennis Gauci stressed later, however, that small firms will remain "an important part of our supplier base."

At the Professional Services Council, which represents some DLA vendors, President and Chief Executive Officer Stan Soloway said the new contracting approach could work if the agency approaches it as a "collaborative" effort to weed out unnecessary costs on both the contractor and government sides of the ledger.

"Simply saying to contractors, ‘Cut 10 percent of your price' is too simplistic and not always practical," Soloway said.

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