Defense Logistics Agency Advances Government's Category Management Efforts

 Nov. 17, 2020 | BY Beth Reece , Defense Logistics Agency

The federal government's push to share contracts for common items to achieve widespread savings and efficiencies through an effort called category management is advancing as the Defense Logistics Agency expands supply and acquisition support outside the Defense Department.

Category management emerged in 2014 with the Office of Management and Budget's directive to transform the federal marketplace by eliminating duplicate contracts for a variety of things, including office supplies, construction equipment, information technology and janitorial services. 

"If multiple agencies are buying the same, exact things, it makes sense to consolidate requirements and have one contract that everyone can order off of instead of 15 or 16 separate contracts," Robert Warnick, with DLA's Industry Engagement Program Office, said. "Not only does it save contracting resources and time, buying in bulk rather than in pieces usually leads to better prices." 

DLA has been consolidating requirements since it was established to do that for the military services in 1961. Of the 4.5 million contract actions carried out by the federal government in fiscal 2019, 3.6 million belonged to DLA, DLA Acquisition Director Matt Beebe said. 

"Despite the volume, DLA has a four-year "spend under management" average of 81% compared to a governmentwide average of 46%," he said. SUM is the percent of an organization's spending that's actively managed according to category management principles to ensure best-value solutions, remove redundancies and save money for multiple buyers. 

OMB assigns best-in-class designations to contracts that represent a preferred governmentwide solution because they incorporate pre-vetted, market proven strategies. DLA Energy's Direct Delivery Fuels Program and DLA Troop Support's Electronic Cataloging System for medical items are both rated as best in class. 

ECAT allows customers to browse, compare and order items ranging from pharmaceuticals and lab equipment to commercial medical supplies with U.S. delivery within 72 hours of order receipt. The Direct Delivery Fuels Program provides worldwide acquisition, material management and shipment of commercial fuel.

"Any time an organization like NASA, the Federal Aviation Administration or Customs and Border Protection lands a plane at an airport and uses our DLA AIR [Aviation Into-Plane Reimbursement] card, that's considered use of a BIC contract," Warnick said.   

DLA has spent the past decade expanding contract support for common items to whole-of-government partners. Although the agency's primary mission is warfighter support, $7 billion of its $40 billion in contract obligations during fiscal 2020 supported government organizations at federal, state, local and international levels, he added. 

In 2015, the agency began working with officials from the Department of Agriculture's Wildland Fire Protection Program and the Forest Service to determine types and quantities of items to order and pre-stock in DLA warehouses for wildfires across the nation. DLA now manages 295 wildland firefighting items, allowing the USFS to focus on fighting fires rather than acquisition and logistics.

DLA's support during disaster relief and humanitarian assistance operations to agencies like the State Department, Federal Emergency Management Agency and Army Corps of Engineers also fall within category management. 

"Category management really comes to light when there's a crisis like the COVID-19 pandemic or a natural disaster because nowadays other agencies immediately turn to DLA for support. They realize we've been doing this, we've built the relationships with suppliers and already have the strategic-level contracts, vendor management and demand management in place to surge quickly," Warnick said.

Though category management strategies often focus on price, Beebe said aspects like agility and flexibility are just as important. DLA's ability to procure rapid COVID-19 test kits within a week of requests from the Department of Health and Human Services illustrates the importance of being able to rapidly acquire direly needed supplies, he said.

"It's the same with hurricane support," Warnick added. "You never know when a storm is going to happen, but when it does you want somebody to be able to provide a quick response. That's exactly the capability we've developed through our long-term contracts with vetted, trusted contractors." 

Making other federal agencies aware of DLA's existing contracts and sharing information about the supplies and services it offers is a key part of category management, he continued. DLA is working with the Defense Health Agency and Department of Veterans Affairs officials to assess how they can benefit from contracts already in place for the services. Contracting officers also take extra steps when reviewing new requirements to determine whether an existing contract could be leveraged.

Even without category management initiatives and federally recognized designations like best in class, Warnick said DLA would still consolidate requirements and compete for the best prices. 

"Our business model has always been about looking at ways to be the most efficient as we meet customers' needs; that's what DLA is about," he said.