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EDITORIAL COMMENT: The Serving Line


September 2012
Two Heads Are Better Than One

The business of supplying all the food consumed by U.S. military forces brings together a large community. At the center of this commerce hub, the Defense Logistics Agency (DLA) Troop Support manages $4.2 billion in annual subsistence sales through 55 prime vendor contracts it holds with 47 food distributors worldwide, as well as dozens of supplementary agreements, each tailored to particular customer requirements.

Yet, despite the enormity, DLA Troop Support considers the prime vendors and hundreds of food manufacturers it works with to be industry partners, and insists that close working relationships always produce better results.

Fiscal realities, however, threaten to put DLA's relationships with its subsistence partners to the test. DLA Troop Support told manufacturers attending a Partnership Day last month that it is relying on strong cooperation from its industry partners in order to trim costs associated with subsistence sales by 10 percent over the next five years.

To achieve this goal, Troop Support is revising its procurement strategies to become more efficient, and is exploring ways to drive costs down by stepping up competition among those partners for its business.

One strategy, reverse auctions, is a Web-based price-negotiation tool in which suppliers place offers for the amount they expect to be paid, then can continue to lower their prices until the auction period closes.

Also, DLA Troop Support wants to negotiate with the vendors participating in its National Allowance Pricing Agreement (NAPA) subsistence prime vendor program to get bigger, better discounts that are more in line with those offered to commercial customers.

DLA Troop Support is not alone in asking for greater efficiency and stronger cooperation from subsistence industry partners to streamline costs. The Joint Services Prime Vendor Program (JSPVP) was recently restructured, consolidating its 32 contracts down to six: three in the continental United States (CONUS) and three outside the continental United States (OCONUS).

DLA Troop Support's approach and the restructured JSPVP aim to leverage buying power to gain price advantages and lower costs while encouraging closer vendor cooperation with the military.

Federal budget constraints are driving the greater efficiencies and stronger cooperation being demanded from subsistence supply chain industry partners.

It remains to be seen whether stepping up competition among the industry partners will achieve the desired cost savings in support of military services, and without adversely affecting these valued relationships.

DLA should also be sure to put quality ahead of price when going forward with Lowest-Price, Technically Acceptable evaluations as a strategy contributing to achieving cost savings.

When industry and government work closer together, both sides better understand each other. Since two heads are better than one, both sides may be cooperating toward discovering more cost savings and efficiencies in support of Department of Defense (DoD) strategies.