Defense Logistics Announces Distribution Competition Results
The Defense Logistics Agency announced that it has tentatively decided that operations and management of its Defense Distribution Depot, Tobyhanna, PA, (DDTP) would remain in-house rather than be contracted to a private company.
The decision for this small business set-aside competition was made after a detailed study indicated it was more cost effective to retain the operations there as a federal workforce-run operation. The federal employees at DDTP presented a streamlined operations proposal that was determined to be the best overall value and projected to yield a net savings of approximately 40 percent over the five year period. Four private sector companies submitted proposals. The government’s “Most Efficient Organization” proposal was evaluated against the best of the private-sector proposals.
This announcement culminates more than two years of public-private competition using the guidelines of Office of Management and Budget Circular A-76, “Performance of Commercial Activities.” DDTP was announced for A-76 study on October 10, 2001. The competition process establishes federal policy for deciding whether to retain recurring, commercial-like activities within the government or contract them out to a private sector source. The guidance tells how to compare performance and cost-related information to arrive at the best overall value for the taxpayer.
“The DLA competitive sourcing process determines the best structure to perform depot operations in support of America’s military services in the most efficient manner,” says Maj. Gen. Daniel Mongeon, U.S. Army, Director of Logistics Operations, DLA. “This process streamlines operations whether the current federal workforce continues to perform the functions or a private-sector company performs the functions.”
In March 1998, DLA announced that most of its distribution depots would undergo public-private competition. DDTP is the 11
th of 16 sites to complete the process. The remaining depots are being competed in phases scheduled to end in 2007.
“The announcement is the result of months of hard work by the DDTP employees,” says Lieutenant Col. James O’Grady, U.S. Army, Commander, Defense Distribution Depot Tobyhanna. “Their dedication and commitment to providing best value services to our war fighters has been remarkable.
“I am confident that our team will seamlessly adapt to the Most Efficient Organization structure,” says O’Grady. “My immediate focus will be to assist the DDTP employees through the transition implementation activities of the next six months.”
DDTP is located in the Pocono Mountains of northeastern Pennsylvania, 20 miles southeast of Scranton, and is a tenant at Tobyhanna Army Depot. Tobyhanna Army Depot is the largest, full-service communications-electronics maintenance facility in the Department of Defense. DDTP supports the massive DoD communications-electronics industry. DDTP receives, stores, and issues communications-electronics systems, components, repair parts, and equipment. Source: Defense Logistics Agency, Web site: www.dla.mil.
States Slow to Adopt Schedule 70
IT purchases through Schedule 70 currently represent less than one percent of total state and local IT spending, according to the Schedule 70 & Cooperative Purchasing INPUT/Output report released by INPUT.
GSA reports $41 million in goods and services have been purchased through IT Schedule contracts from October 2003 to April 2004.
“While some states are slowly beginning to use cooperative purchasing for small IT purchases, many are experiencing challenges and find more favorable pricing by competitively bidding state projects,” says Marcus Fedeli, manager of state and local opportunity products at INPUT.
While the purpose of cooperative purchasing is to maximize results and minimize the effort of IT procurement, there is significant doubt among all parties involved as to the effectiveness of the new GSA system. Fedeli adds, “States, municipalities, vendors, and the GSA agree there are limitations preventing the overwhelming adoption of cooperative purchasing.”
The new report highlights limitations such as Schedule 70 not providing the best value for states compared to the competitive bidding process; the lack of communication between parties which makes them unaware of the benefits of cooperative purchasing; and state laws that are not conducive to cooperative purchasing.
“Due to these challenges and the many federal purchasing terms imposed on state buyers by Schedule 70, we are likely to see states continue to make big purchases using their own competitive process,” says Fedeli.
He adds, “Despite the reported benefits in procurement cost savings, historical jurisdictional friction often causes state governments to avoid undertakings with the federal government.”
For complete details and analysis, download the Schedule 70 and Cooperative Purchasing INPUT/ Outputreport at: http://media.input.com.
Responder Funds Find Way to States and Localities—Eventually
In fiscal years 2002 and 2003, Congress appropriated approximately $13.9 billion for domestic preparedness. A large portion of these funds is intended primarily to assist with planning, equipment purchases, training and exercises, and administrative costs.
The funds, available to first responders mainly through the State Homeland Security Grant Programs
and Urban Area Security Initiative grants, are administered through the Department of Homeland Security’s (DHS) Office for Domestic Preparedness.
In testimony, the U.S. General Accounting Office (GAO) addressed the need to balance expeditious distribution of first responder funds to states and localities with accountability for effective use of those funds.
The testimony summarized major findings related to delays based on reports issued by the DHS Security Office of Inspector General (OIG) and the House Select Committee on Homeland Security.
Both reports found that although there have been delays in getting federal first-responder funds to local governments and first-responder agencies, the grant management requirements, procedures, and processes of the Office for Domestic Preparedness (ODP) were not the principal cause.
According to the OIG’s report, in 2002 and 2003, ODP reduced the time required to provide online grant application guidance to states, process grant applications, and make grant awards from 292 days to 77 days.
Most states met deadlines for distributing funds to local jurisdictions. The Grant Initiative required states to transfer 80 percent of first-responder grant funds to local jurisdictions within 45 days of receipt.
Delays in allocating grants are frequently due to local legal and procedural requirements, the OIG’s report found. State and local governments sometimes delayed delivery of 2002 funds, for example, because governing bodies had to approve and accept the money.
In one state, roughly four months passed from the date the city was notified that funds were available to the date the city council voted to accept the money.
Six out of the 10 states included in the DHS OIG’s sample reported that their own state’s review and approval process was one of the top three causes for delay.
One state took 22 days to accept
ODP’s award and 51 days to offer it to a municipality, who in turn took 92 to accept. Another state took 25 days to accept ODP’s grant and up to 161 days to award funds locally. Local jurisdictions then took up to 50 days to accept awards.
Because of ODP conditions in some grant years, municipalities could not draw funds until they provided detailed budget documentation, outlining how the funds would be spent, as required by ODP.
In over half of the states reviewed, local jurisdictions had not submitted detailed spending plans.
For 2002 grants, local jurisdictions and state agencies were required to prepare, submit, and receive approval of detailed budget worksheets that specifically accounted for all grant funds provided. Detailed items included not only capital equipment, but also consumable items, such as disposable gloves.
For the first round of 2003 grants, ODP required budgets but did not condition the release of funds on submission and approval. For 2004, ODP requires that local jurisdictions submit budgets to the state only.
Both reports found that state and local procurement processes, such as competitive bidding rules, have caused delays.
In Kentucky, an effort was made to organize bidding processes for localities and to provide them with pre-approved equipment and service lists. However, state and local law require competitive bidding for any purchase of $20,000.
As Kentucky’s Emergency management Director explained, “There is a process and procedure that must be [followed] before localities can actually spend the funds, and the state has not identified funds that are exempt from these local rules.”
In one jurisdiction, procurement regulations require that funds be available prior to the issuance of equipment purchase orders.
Apparent delays in spending resulted from the time normally required by local jurisdictions to purchase and contract for items, to prepare requests for proposal, evaluate them once received, and have
purchaser orders approved by legal departments, governing councils, and boards. In one case, the time between the city controller’s release of funds to the issuance of the first purchase order was about three months.
New Procurement System Does its Job
A new logistics philosophy intended to improve weapons system readiness while making military procurement more efficient and cost-effective is accomplishing those things, according to a oneyear study at The University of Alabama in Huntsville (UAH). “The best performing organizations were the ones using performance-based logistics to enhance their systems,” says Dr. David Berkowitz, Director of UAH’s Center for the Management of Science and Technology. “We found many examples of weapons systems being better maintained with better readiness and improved availability of replacement parts.”
The Department of Defense had commissioned 30 performancebased logistics (PBL) pilot projects spread across all of the services. The UAH team evaluated half of those, while also gathering information about industry best practices from both defense contractors and nondefenserelated businesses.
“We compared what was going on in the military to what was going on in industry,” Berkowitz says. “Then we compiled a list of best practices for people who want to participate in PBL efforts.”
Performance-based logistics shifts the military procurement away from short-term, transactionbased interactions to longer-term contractual mechanisms that provide incentives for service providers to improve services and better support the needs of soldiers, sailors, and air crews in combat.
DOI Modernizes Business Management
The U.S. Department of the Interior (DOI) plans to improve information sharing across eight DOI bureaus and the departmental of-
fices as part of the DOI Financial and Business Management System modernization initiative.
Financial solutions and integration and application platform, from SAP America, Inc., will streamline operations and improve financial management controls. The fouryear rollout will occur in phases.
The system will allow DOI’s 70,000 employees real-time access to integrated financial management, acquisition, property management and other subsidiary systems.
The application platform will replace the two existing accounting systems and at least 10 other subsidiary systems to enable interoperability across acquisitions, grants, travel, property and fleet management, real property, and budget formulation.
Intergovernmental Solutions Receive Recognition
The American Council for Technology (ACT) announced the winners of the 2004 ACT Intergovernmental Solutions Awards. Applicants demonstrated progress through collaboration and technology. The winning programs were selected based upon success in the following four areas: Intergovernmental and Collaborative, Value Add and Real Results, Available and Transferable, and Use of Technology.
The five federal programs and two state and local programs presented with awards were:
Department of Defense, Office of Procurement and Acquisition Policy—Standard Procurement System (SPS),
Department of Justice, Office of Justice Programs—Global Justice XML Data Model and Data Dictionary,
Department of the Navy, eBusiness Operations Office—Joint Expeditionary Warfare Logistics System (JEWLS),
Federal Trade Commission— National Do Not Call Registry,
General Services Administration—GSA Advantage,
Kentucky Transportation Cabinet and City of Louisville, KY— Traffic Response and Incident Management Assisting the River Cities (TRIMARC), Auto Incident Recording System (AIRS),
Montgomery County, MD, Department of Technology Services— Bi-directional Amplifier System for the Potomac River.
For more information on these and the other programs chosen as ISA Award finalists, visit “What’s New” on the ACT portal front page at: www.actgov.org.
City Presents Sustainability Award
The Office of Sustainable Development, City of Portland, OR, has awarded Rodda Paint Co. the 2004 BEST (Businesses for an Environmentally Sustainable Tomorrow) Sustainable Product award.
The company won the award for Horizon, a Green Seal certified line of low-volatile organic compound (VOC) paint. Horizon is the first such interior paint available in the western United States to have earned the Green Seal endorsement and the only exterior paint in the U.S. to earn the same designation.
Portland is a national leader in encouraging sustainability for all businesses. For more information on the annual BEST awards, visit www. sustainableportland.org.
Women-Owned Businesses Grow at Twice the Rate of All Firms
Nearly half of all privately held firms in the U.S., 10.6 million, are owned 50 percent or more by women, says a new Center for Women’s Business Research study sponsored by Wells Fargo and Co. (WFC). According to the study, “Women-Owned Businesses in 2004,” between 1997 and 2004 the number of women-owned firms with employees was estimated to grow more than 28 percent, nearly three times the rate of all privately held firms, and twice the national rate of all firms. Employment grew over 24 percent, more than twice the rate of all firms, while revenues increased about 39 percent.
“Women-owned firms are growing and increasing their employment faster than the general market,” says Joy Ott, Regional President for Wells Fargo in Montana and National Spokesperson for Wells Fargo’s Women’s Business Services program. “These firms are driving growth in the American workplace, while generating revenues at a similar rate to all firms. This is a powerful statement about this fast-growing segment of American small business owners.”
“Businesses that are 50 percent or more women-owned are growing at twice the rate of all firms, 17 percent versus 9 percent,” says Sharon Hadary, Executive Director, Center for Women’s Business Research. “These businesses are a critical component of the national economy, not only in terms of their sheer numbers, but also in terms of their impact on employment and revenue generation.”
The latest and most complete snapshot of women-owned businesses in the U.S. also highlights the top 10 fastest growing states for women-business owners. Based on an average rank 1997 to 2004 growth rates in the number, employment, and sales among privately held, 50 percent or more womenowned firms, these states are:
1. Utah 2. Arizona 3. Nevada 4. Idaho 5. Kentucky 6. New Mexico 7. South Carolina 8. North Carolina 9. Arkansas 10. Oregon The study results offer the most comprehensive view of the growth and expansion of women-owned businesses, tracking information like composition, spending habits, and core industries of women entrepreneurs nationwide.
The center conducts research, shares information, and increases knowledge of women entrepreneurs. Visit: www.womensbusiness research.org.