Title: Base Realignment and Closure 2005
1Base Realignment and Closure 2005 Commodity
Management Privatization Ms. Mary Horvath
2(No Transcript)
3OSD Transformational Guidance
- Establish a consolidated multi-service supply,
storage and distribution system that enhances the
strategic deployment and sustainment of
expeditionary joint forces worldwide. Focus the
analysis on creating joint activities in heavy
(US) DOD concentration areas - Privatize the wholesale storage and distribution
processes from DOD activities that perform these
functions - Migrate oversight and management of all service
DLRs to a single DOD agency / activity - Establish a single Inventory Control Point (ICP)
within each service or consolidate into joint
ICPs - Each Military Department and Joint Cross Service
Group will look at the effects of either reducing
their functions 20, 30, and 40 from the
current baseline, or reducing excess capacity by
an additional 5 beyond the analyzed excess
capacity, whichever is greater. The objective of
this analysis is to uncover ways in which
additional gains could be achieved, rather than
reasons why they could not.
4Outcomes
3 Candidate Recommendations
50 Scenarios
56 Proposals
5SS JCSG Recommendations
51 total scenarios yielded 3 Recommendations
- Supply, Storage and Distribution
- Reconfiguration
- DLR Procurement Management
- Commodity Management Privatization
6Materiel Readiness Advisory Group (MRCAG)
- Small Group, O-7 level, Expert
- Consider Larger parameters of implications
- Vet paths of each recommendation element
- Facilitate exposure of new constructs into
- parent Components
- Provide Project Office with institutional
reactions - for consideration
- Initial issue resolution point
- Meeting frequency (monthly, bi-monthly,
quarterly?) - Direct support to DLA Deputy Director
7Materiel Readiness Initiatives Project Office
(MRPO)
- Project Office created to integrate efforts
translate larger picture to execution of SS
recommendation elements - Staffed with Component personnel
- Interact with Components build visible
partnerships - Provide exposure to evolving mechanisms
- Lead implementation
- Project Office dissolves once implementation
complete
8Privatization Recommendation175 (0043R)
9BRAC Language
Transformational Intent Privatize the wholesale
storage and distribution processes from DOD
activities that perform these functions Decision R
elocate tire supply contracting function from
Detroit Arsenal and Hill AFB to DSC Columbus ICP.
Relocate supply contracting function for
packaged POL from NSA Mechanicsburg to DSC
Richmond ICP. Disestablish all other supply
functions and all storage and distribution
functions for tires, packaged POL and compressed
gasses.
Target of opportunity reduce excess capacity
saves money!
10What Does This Recommendation Do?
- Privatizes supply functions performed at
TACOM, Mechanicsburg, Hill ALC and DSC
Richmond - Privatizes storage and distribution
functions performed at other distribution
depots - Assigns responsibility for tire
contracts to Columbus ICP - Assigns
responsibilities for packaged POL and compressed
gases to Richmond ICP - Starts 2006 -
Finishes 2008 - Payback Immediate
11What Does This Recommendation Do?
- NPV (Savings) 735.8M - 1 Time Cost
6.4M - MILCON 0.0 - Positions Eliminated
133 - Positions Realigned 0 - Covered
Storage Space Eliminated 2.2M sq ft
12Commodity Management Privatization
ICP-Hill AFB
DD-Puget Sound
ICP-Detroit Arsenal
ICP-DSC Columbus
DD-Hill
DD-Tobyhanna
DD-Susquehanna
ICP-NSA Mechanicsburg
DD-Richmond
ICP-DSC Richmond
DD-San Joaquin
DD-Norfolk
DD-Cherry Point
DD-Barstow
DD-Warner Robins
DD-San Diego
DD-Albany
DD-Jacksonville
DD-Oklahoma City
DD-Anniston
DD-Corpus Christi
DD-Pearl Harbor
13How Will We Do It?
-
- Careful Planning and Teaming
- Aggressive Disposal Attrition Privatization
of Materiel - Maximizing Remaining Storage and Distribution
Processes -
14Milestones
- POAM
FY2006 2007 2008 2009 2010
2011 - BRAC Recommendations Becomes
- Law
- Execution of Contracts
- Transfer Management of Tires to DLA
- Execution of Materiel Attrition Plan
- Execution of Manpower Reduction
- Transfer Navy Tire PBL to Columbus
15Way Ahead
- Establish DoD Implementation Team
- Identify requirements forecasts, inventory
levels, and contract data required - Develop strategy and transition plans for
Military Services contracts - Develop strategy for interim customer support
- Coordinate with DRMS on disposals
16Defense Supply Center Richmond
- Privatization
- Industry Day
- Sallee Justis, Deputy Director, Supplier
Operations
17Agenda
- Notional Strategy
- General Scope
- Timeframe
Moving Ahead
18Notional Strategy
- Regional Contracts based on Commodities CONUS
- Use two iterations of industry days to engage
supplier base and gain insight - Involve Small Businesses by having second
industry day to focus on mentor/protégé and
teaming
19Scope
- 3 Federal Supply Classes
- 6830 Compressed Gases (Bulk and/or Cylinders)
- 8120 Cylinders
- 9150 Petroleums, Oils, and Lubricants
- Services
- Demand Planning (Forecasting), Procurement,
Storage, Distribution (including Disposal),
Station Returns, and Demilitarization - Estimated Annual DLA Sales 70 million
20Scope
- Technical/QA Requirements Stay The Same
- Packaging, Marking, Labeling, Testing, CoC
- Re-refined Oil/Bio-based (FAR 23)
- Reporting (FAR 34)
- Security Requirements
- Background Checks
Not All Items Are Commercial-Off-The-Shelf!
21Scope
- Storage/Delivery/Transportation Requirements
- Cylinder Refurbishment Contractor
Responsibility - War Reserve, Surge
- Depot Work Orders install valves, correct
mistakes, fix paint - Customer Returns Uncertain if DLA or Contractor
will be responsible for PQDRs
DLA Depots Will No Longer Be Used
22Source Selection
- Best Value Award
- Pricing
- Management Plan will include a transition plan
- Past Performance
23Post Award Government Support
- Contract Administration
- 8 people at Defense Supply Center Richmond
- Personnel mix being determined
24Draft Timeline
- Development of Requirement through February
2006 - (includes interaction with industry)
- Release Draft Solicitation March 2006
- Anticipated Final Solicitation Issue Date May
31, 2006 - Proposals Due July 15, 2006
- Award Date December 31, 2006
Contracting process to begin full-scale 3
January
25Backup Slide
120,386 Customers
55,113 Customers
79,685 Customers
Susquehanna
54,833 Customers
San Joaquin
Warner Robins
Oklahoma City
26Additional Information
- Website
- http//www.dscr.dla.mil/UserWeb/FAGA/index.html
- Under Specialized Support, Click on
Privatization Efforts - P.O.C.s
- MAJ Broughton, Johnny.Broughton_at_dla.mil, phone
804-279-5520 - Cindy Lantz, Cindy.Lantz_at_dla.mil, phone
804-279-5789
27Chemical Management Services a supply-chain
approach to chemical management
Tom Votta, Deputy Director Chemical Strategies
Partnership 617-822-2005 tom_at_chemicalstrategies.or
g www.chemicalstrategies.org
Privatization Industry Day Defense Logistics
Agency Defense Supply Center, Richmond
VA December 14, 2005
28Objectives and Agenda
- Objectives
- Share understanding of CMS, trends,
opportunities - Obtain industry feedback in regard to packaged
oils and lubricants and gases (bulk and
compressed cylinders) - Agenda
- What is Chemical Management Services (CMS)?
- Industry trends
- Major items for feedback
29Purchasing Spectrum
Regional Contract
TCO Chem Mgmt Services (CMS)
National Contract (NC)
Individual Purchases
NC Vendor Managed Inventory (VMI)
- Rationalize supply base
- Negotiate price savings
- Vendor owns and manages inventory
- Vendor manages purchasing admin
- Customer-retention-level process efficiency
improvement - Still More is More
- Incentives to continuously reduce volume
- Gatekeeping/ MSDS Mgmt
- EHS reporting/ compliance
- Cost analyses/ procurement support
30Chemical Management Services (CMS) is a
market-based approach to reducing chemical use
and costs
- A strategic, long-term relationship in which a
customer contracts with a service provider to
supply and manage the customer's chemicals and
related services - The provider's compensation is tied primarily to
quantity and quality of services delivered, not
chemical volume - Goes beyond invoicing and delivering product
CMS optimizes processes and continuously reduces
chemical lifecycle costs, risk, and environmental
impact - These chemical services are often performed more
effectively and at a lower cost than companies
can do by themselves
31CMSmanaging the entire chemical lifecycle
The Chemical Lifecycle
upstream
downstream
Chemical management can cost up to 7 for every
1 of chemical purchased.
32CMS can encompass a range of activities
Information management
- Best price purchasing
- Manage Tier 2 suppliers
- Gateway for chemical clearances
- Research on product substitutes
- Inventory mgmt
- Container mgmt
- Minimum on-site storage
- Reduce unused product
- JIT systems
- Point-of-use delivery
- Monitoring and controlling
- Use reduction initiatives
- Substitute or eliminate chemicals
- Product and process engineering
- Waste collection
- Manage transport-ation and disposal activities
- Recycling, secondary markets
33Under the CMS model, formerly conflicting
incentives are now aligned
Traditional relationship Conflicting incentives
CMS model Aligned incentives
Service provider
Supplier
Buyer
Buyer
Material (cost, volume)
Lifecycle costs (material, labor, waste
management)
wants to increase
wants to decrease
wants to decrease
wants to decrease
Changing the supply chain model results in
potential costs savings and environmental gains
34What is the Chemical Strategies Partnership?
- The Chemical Strategies Partnership (CSP) is a
non- profit project funded by foundations,
government, and private companies - CSP is helping to promote the economic and
environmental benefits of chemical management
services (CMS)
CSP Mission To reduce chemical use, waste, and
cost through transformation of the chemical
supply chain
35Chemical Strategies Partnership (CSP)
- CSP Pilot companies
- Raytheon Company
- SLAC-Stanford/DOE lab
- Nortel
- Seagate Technology
- Analog Devices
- Dartmouth College
- UC Merced
- Hyundai Motor Company
- Metal-working cos.
- Funders
- Foundations
- Government
- CMS Forum companies
CSP
- CMS Forum
- Tier I CMS Providers
- Tier II suppliers
- Customer Cos
- Other stakeholders
36CMS is a growing trend in the US
Source CMS Industry Report 2004, Chemical
Strategies Partnership
37Scope of services utilized by customer facilities
Services used, percentage of respondents
Purchasing
Inventory
Data Management
Value Added
Application
EHS
Customer
Disposal
Provider
Other
Source CMS Industry Report 2004, Chemical
Strategies Partnership
38Industry structure and changing dynamics
- Approximately 75 of the CMS providers
interviewed are - product-based providers
- The remaining 25 are service-based providers
- Changes in the marketplace
- In the 2000 survey, most providers served only
one or two sectors - In the 2004 survey, more than half of the
providers surveyed serve - four or more industries
- The dramatic growth in the number of sectors now
using CMS may be attributed to - more service expertise is being developed
among the provider base - a more highly educated customer base
- increased awareness of CMS
39Program Overview
- Materials included
- Compressed Gases (bulk and/or cylinder) FSC
6830 - Cylinders FSC 8120
- Packaged Oils and Lubricants FSC 9150
- Scope of Services
- Demand forecasting, procurement, inventory
management, storage, distribution, take-back of
cylinders and or POL (including disposal) - Items continued to be procured i/a/w ESA
mandated item descriptions (e.g., mil-specs,
drawings, etc.) - Exact requirements still being defined
40Program Design I
- Key Contracting Issues
- Combine one or more commodities or keep
separate? - Multiple regional prime vendor (PV) contracts
or a national contract with regional tier 2
vendors - Constraints of existing contracts DLA to
review all existing contracts that may impact
proposed program
41Program Design II
- Key concerns with supply base
- OSD DVD requirements are 1-3 days (high
priority and routine) can industry meet or
beat? - Program transition and roll-out
- How long to implement nation-wide
- Inventory transition issues
- Options for price volatility over a long term
PV contract - Can the supply base adequately
- Manage unforeseen demands and ensure military
readiness? - Serve overseas customers?
42QA
43Additional Case Studies and Information on CMS
can be found atwww.chemicalstrategies.orgOr
Contact Tom Votta617-825-2005tom_at_chemicalstrat
egies.org