Mr. Dennis DudekDeputy Director C&T

Defense Supply Center Philadelphia

OVERVIEW

• BACKGROUND

• TELECONFERENCE

• SURVEY and DOMESTIC SOURCING CONFERENCE

• SURVEY RESULTS

• INITIATIVES

• FOLLOW-UP

BACKGROUND

• Issues with Current SystemLength of Initial Procurements

Delivery Order Period Too Short

Length of Contract Hard to PriceEconomic Price AdjustmentsMin/Max Quantities

Unknown Future Orders

TELECONFERENCE

• Teleconference Held on 15 Feb 05 to Address the Issues AAFA Govt Contracts Committee Sponsored Good participation by Members (over 20)

• Good Discussions on Topics– Teleconference lasted over 1 ½ hours

– Many issues were debated

• Results: Conduct a Member Survey

SURVEY and CONFERENCE

Survey Issued Mar 05 and closed Apr 05 49 AAFA GCC Members Participated

(28 Mfgs / 20 Suppliers) Good Cross Section of Industry Segments

14 Page Report Issued to DSCP Report Evaluated for Potential Actions

Domestic Sourcing Conference Held 4 May 05

Reiterated a lot of the survey comments

SURVEY SUMMARIES

• 15 Survey Questions– Can Be Split Into 5 Major Elements:

Contract Length

Solicitation Improvements

Min / Max

Information Sharing

Technology Issues

CONTRACT LENGTH

• AAFA GCC Issue: – 3 or 5 Year Contracts (1 Year Plus Option Years) Is the Norm

Pros: 30%• Beneficial to Health of Value Chain• Not a Problem If Price Adjustments Allowed• Allows Recovery of Start-up / Training

Cons: 70%• Unanticipated Cost Increases (renegotiate options?)• Material Cost Increases Cannot be Passed Through• Go to 3 Year Contracts

•DSCP Response:• Evaluating possibility of EPA

• Where independent index is available• 3 Year Contracts ??• Renegotiate Option Years cannot be done

SOLICITATION IMPROVEMENTS

• AAFA GCC Issue: – Takes Too Long For DSCP To Come To Initial Award– Extension requests need to be more realistic

Solicitations Should Expire After a Set Time (21 – 3 Months / 18 – 6 Months / 9 – 12 Months) No standard Industry conclusion Not realistic to implement

Posting Of Awards Not Timely (67%)

•DSCP Response:Will Work to Achieve Time Schedule

•Solicitation (6 months to award) + PLT 1st DelWill Monitor Award Postings to FedBizOps

MIN / MAX• AAFA GCC Issue:

– Too Wide a Variation Between the Two

Half the Respondents Were Requested to Voluntarily Reduce Minimums

A Uniform Percentage Range?• Evenly Divided Between 4 Categories

If Range Were Narrowed, Most Respondents Agreed It Would Be OK If DSCP Bought Exigency

•DSCP Response:Min/Max must be developed to best utilize funding stream

It will be determined at the level of first order (25%)It is only a flexibility tool

Will Post Past 12 Months Demand Usage on SolicitationMore accurate depiction of forecast

INFORMATION SHARING

• AAFA GCC Issue: – Hard To Predict Orders and Quantities

87% Indicated That They Would Like to See More Info Sharing How?

63% - Web / 36% - Individual Contact

•DSCP Response: Web Site for Item Demand History

and Semi-Annual Forecast of Item by Contract

Planned execution of delivery orders and options

TECHNOLOGY ISSUES

• AAFA GCC Issue: – Changes Are Happening Now In Specs / RFID / VIM – ASAP

Specs:

• Pros / Cons of Spec VS Performance

• All Agreed Industry Segment Groups Would Help (71%) RFID: 78% Not Prepared; Rqmts Not Set VIM – ASAP: 19 Using It Now (Of 28 Mfgs)

• Most Like It and Have No Problems

• Some Start Up Issues

•DSCP Response:Will Support Technical GroupsWill Work With Firms on RFIDWe encourage the use of VIM - ASAP

BOTTOM LINE

• DSCP Will Strive To Make Improvements As Noted– However, we are bound by regulatory limitations

• Working Together to Improve the System

• Need the Help / Understanding of AAFA