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MILITARY PROCUREMENT: TRADITIONAL PROCUREMENT VEHICLE LIMITATIONS

INSIDE MILITARY PROCUREMENT, PART 2: TRADITIONAL PROCUREMENT VEHICLE LIMITATIONS

An Air Force joint terminal attack controller prepares his gear before participating in raid scenario during Southern Strike 17 at Camp Shelby Joint Forces Training Center in Gulfport, Miss., Oct. 31, 2016. Air Force photo by Senior Airman Clayton Cupit.

PROCUREMENT CHALLENGES OF USING THE NATIONAL STOCK NUMBER SYSTEM AND AD HOC CONTRACTS

Military Supply Officers (SUPPOs) and enlisted logistics specialists have a challenging job. In addition to the complexity of navigating immense budgets and the Federal Acquisition Regulation (FAR), their mission to rapidly supply units can conflict with the need to control costs and combat waste.

In essence, a supply officer must become a problem solver when quickly obtaining equipment is at odds with the traditional supply chain.

In the previous installment of this series, we looked at the basics of the military procurement system. This piece will examine some of the challenges of military supply in greater detail—specifically the limitations of using the National Stock Number (NSN) system and creating ad hoc contracts.

military men next to tank
NSN SYSTEM: BENEFITS AND DRAWBACKS

The National Stock Number (NSN) System remains administratively, the easiest and professionally, the safest way for supply personnel to obtain military gear. This central repository contains hundreds of thousands of NSN numbers for military gear with a wide variety of items.

It’s typically the first place where a supply officer or logistics NCO looks when sourcing an item.

The NSN military system may be simple, but it has limitations:

"Typically, [the success of using the NSN system] just depends on what you’re buying and what your timeframes are,” explained an active duty supply officer. “I may have a need for a widget and it’s got a stock number, but for whatever reason that warehousing organization is out. They may be buying 10,000 more to replenish their stock but it’s on a contract that could be six months out. Perhaps I can find a vendor across the street from where I work who actually has it on the shelf, but I may pay more for it because of markups and not buying in bulk. These challenges are where we wind up using a lot of [alternate vehicles]."

- -Active Duty Supply Officer

AD HOC CONTRACTS LIMITS

If a supply officer fails to find gear with an NSN, he or she can submit a request through a program office to initiate a new, ad hoc contract. These vehicles also have drawbacks, however.

  • Again: the time it takes to get something. Initiating a new contract is a time-consuming process that may take months. The contract must carefully adhere to Federal Acquisition Regulation guidelines (FAR), Defense Federal Acquisition Regulation Supplement guidelines (DFARS) and Financial Improvement and Audit Readiness (FIAR) requirements, including Berry Amendment and Buy American Act compliance.

The larger the contract, the longer it will take to create, approve, and execute.

  • A unit’s budgeting schedule is often at odds with the contracting schedule. The flow of money to a unit tends to build throughout the year. As the fiscal year progresses, resources intended for units that come in under budget for certain items are transferred to units that require more of these items. These new funds typically come online in the last few months of the year but, because of the time it takes to design and initiate a new contract, the contracting season usually shuts off around March.

“Anything over a million dollars, you’re probably not going to get it executed from March to October,” said an active duty supply officer.

  • Receiving the wrong equipment. Many contracting officers are administratively focused on achieving the lowest price technically available (LPTA), which may involve initiating a contract for a substitute item. Like many of the substitutions experienced when using the NSN system, this can result in rejected equipment.


"Let’s say I’ve got a need for a holster and I know exactly what holster I want because I did my research. I write up a document that says Hey, contracting command, I want this holster; here are three quotes for it, along with a picture and a description,” explained Smith.


“The problem is that a contracting specialist is mandated to find that holster at the very lowest price and there are probably a thousand holsters that could meet that general description. In reality, it’s those small differences that make all the difference in the world, like the tensioning screws that keep the pistol from falling out of the holster.”


These details can result in purchasing equipment that simply does not meet requirements. In the example, the delivered holsters may be the wrong color or they might be completely incompatible with the pistols used by the unit. Again, rejected substitutions are sent to Defense Reutilization and Marketing Office, and, ironically, the quest for a lower price ends up costing the military more money when the equipment is rejected and sold for pennies on the dollar, mothballed, or destroyed.

Unfortunately, rejected equipment—due to an incorrect order, improperly updated records, or shifting unit requirements—is common. A 2014 study of DoD officials and uniformed military officers by the Government Business Council found that “67 percent [of respondents] say their unit has been forced to dispose of unnecessary equipment.”

Procurement challenges are common and significant, but military supply officers have adapted to the system to make sure units are supplied, and the Defense Logistics Agency (DLA) has tapped the private sector to deliver innovative solutions.

Sources:
  1. Interview with a US Navy Supply Officer.
  2. Interview with Warren Dykes, ADS.
  3. Interview with Brad Smith, ADS.
  4. Interview with Scott Bryant, ADS.
  5. Cornillie, Chris. DoD Officials Say the Pentagon's Logistics Challenges Are Threatening Military Readiness. Insights. http://www.govexec.com/insights/pentagons-logistics-challenges-threaten-military-readiness/104631/

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