The Air Force has established a new unit to leverage the purchasing power of its 70 U.S.-based installations and save up to $2.3 billion during the next five years.
The Enterprise Sourcing Group, launched in late October, will follow a strengthened strategic sourcing strategy in which it buys commodities and services that are common to most Air Force bases in bulk. The goal, officials said, is to streamline the acquisition process while obtaining better prices.
“We are creating efficiencies across the Air Force as a whole, which is a good thing for everybody,” Mario J. Troncoso, the unit’s director, told Government Executive earlier this week. “Centrally procuring gives us good control. We can do continuous improvement cycles and relook at these things while at the same time being transparent to taxpayers and our government.”
The initiative has gone through a number of changes in recent years. The Air Force in 2007 announced plans to open five regional strategic sourcing contracting centers, but the economic downturn, along with various issues on bases, made the idea less “palatable than it originally looked on paper,” Troncoso said.
The service then shifted its strategy and concentrated on developing a more centrally located unit at Wright-Patterson Air Force base in Ohio. The Enterprise Sourcing Group will house about 400 contracting officials and include a small business office, a business support group and three enterprise sourcing squadrons. Six commodity councils will manage the acquisition process. The Air Force also is standing up satellite offices for the unit in Texas, Alabama, Florida and Nebraska.
Expectations are high. Domestic Air Force bases spend about $10 billion on contracts for commodities and services annually and the Enterprise Sourcing Group will manage roughly half that total within the next five years. Internal estimates show the unit could save up to 15 percent of what the service now spends for common goods and services by standardizing requirements, better analyzing past purchases and eliminating redundant acquisition efforts.
For example, the group’s Information Technology Council has begun awarding centralized procurements for desktop computers while its Force Protection Council has issued contracts for gear and equipment for security personnel, Troncoso said. Agreements for office supplies, furniture and medical services also are under way.
“We will be saving money and manpower by approaching installation contracting from a strategic perspective,” Gen. Donald Hoffman, commander of the Air Force Materiel Command, said during an Oct. 28 activation ceremony. “However, we will not lose sight of small business. That’s been my pledge and my challenge to the new group to motivate, stimulate and encourage small business.”
Getting small firms involved often has been difficult for agencies implementing wide-ranging strategic sourcing plans. Typically, when small contracts are bundled together, the total cost and labor required to complete the work are out of reach for small businesses, leaving midsize and large firms as the primary bidders.
But, Troncoso said the Air Force is willing to make cost trade-offs in an effort to consider small businesses. Other times, the service might have to expand its market research to seek out new candidates, he said.
“There is no one cookie-cutter answer to how we can structure contracts in a way to make it more or less small business friendly,” he said. “It’s something we are going to have to roll into our entire process.”
Strategic sourcing, which gained steam during the George W. Bush administration, is part of a larger Defense Department effort to reduce overhead spending and redirect $100 billion to the warfighter. The Pentagon plan also includes closing the U.S. Joint Forces Command, a 10 percent reduction on service support contractors during each of the next three years, and decreasing funding for intelligence advisory and assistance contracts.
In addition to contracting at bases, the Enterprise Sourcing Group will award procurements for the Air Force Center for Engineering and Environment, the Air Force Civil Engineer Support Agency and the Defense Technical Information Center. The group also will support Air Force medical contracting.
– By Robert Brodsky – GovExec.com – November 11, 2010