Opening Remarks from DLA Director Admiral Skubic:
DLA hosted a 2-hour discussion with association leaders to communicate their demand forecast to industry. DLA celebrated its 60th anniversary as an organization on October 1. Tim Stark will represent their booth at AUSA and they welcome visits from industry.
Admiral Skubic discussed their recently published strategic plan to transform global logistics. In doing so she reviewed the five lines of effort (LOE) and three critical capabilities embedded in it (pictured on slide 2). Job 1 is always LOE 1: Warfighter Always.
Forecast Environment:
DLA is monitoring the political landscape that they’re operating in (see list of Executive Orders on Slide 3). They’re focused on strengthening and bolstering supply chains for a robust industrial base and they’re advancing socioeconomic goals.
They are seeking ways to domestically source microchips and raw materials for manufacturing to ensure a strong national defense strategy. While they are serving long-term goals of a strong national defense and a military that is unmatched globally, not all of the policies listed on Slide 3 work in tandem to achieve this. They’re also monitoring budget process and operating under a continuing resolution, which impacts procurement activity for the year.
The Department is moving toward innovation and investing in new platforms; they’re looking to digitize more, which means a trade off on legacy platforms they no longer want to invest in. Unfortunately, Congress also has a vote on that, which makes it impossible to forecast with 100% accuracy.
There are clear long-term transportation issues with the ongoing shortage of truck drivers that they’re looking to address as well.
FY21 Obligations:
They are tracking about $39 Billion in obligations (systems are still reconciling) of which $13billion went to small businesses. There was a surge in readiness spending, offset by support provided to the pandemic and other natural disasters. Looking forward they believe FY22 will be very similar to FY21. DLA exceeded their small business goal for the 9th year in a row. Averaged $2B in obligations to Small Disadvantaged Businesses (slide 4’s figure on that - $1.8B - is outdated).
Working collaboratively with all the services on best value solutions- how best to accomplish work on spares procurement (DLA responsibility) or repair of the repairables (Services responsibility).
Mr. George Atwood on FY22 Expectations:
A decline in demand of hardware supply chains since FY19. For FY22, DLA is accelerating a transition of industrial hardware items to aviation and land. Demand for FY22 will be inline for FY21. Demands for Hardware will be 7.1% higher in FY22 than FY21.
DLA’s Program Budget Review for FY 23 has shaped their FY22 projections. A great deal of uncertainty surrounds their role in COVID support and their support to natural disasters.
Orders from DLA to industry are estimated to range between -5% to +5% in FY22 ($23.5B- $26.2B) compared to FY21; this illustrates a current trajectory of $24,802B. Hardware supply chains are forecasting on the higher end of the range, while troop support is forecasting on the lower end of the range for FY22.
FY2020 experienced a 7.5% dip in sales of petroleum but DLA is expecting a 1% increase in FY22 from FY21. This is largely due to reductions of military operations from the Afghan withdrawal and fuel saving initiatives in the Air Force (who take up 50% of DLA’s fuel demands).
Service Acquisition:
$46M in inefficiencies were identified in FY2020 and accounted for in FY21. Electronics and Communications services (ECS) make up the largest portion of their FY22 spending as they continue to invest in automation.
MSC Commanders on how they will be furthering communications of this forecast throughout upcoming months:
General David Sandford, DLA Aviation: They plan to continue the virtual supplier conferences started last summer. Their Supplier Relationship manager will continue to meet with strategic suppliers at all levels, several times a month to discuss performance and discuss where they see investment opportunities and where performance needs improvement moving forward. They are focused on engagement; information sharing is critical to their success.
Mike Cannon, DLA Disposition Services: Their job is to dispose of excess and surplus of services. Primary operations fall into 3 areas: service contract opportunities for equipment maintenance (worth $20m in FY21), Hazardous Waste Disposal (worth $90M in FY21), and Public Sales ($99.3M in public sales of surplus property in FY 2020).
General Keith Reventlow, DLA Distribution: They have 24 centers globally. 80% of their spending is on services, rather than other actions. They hosted a Virtual Industry Day in June: 180-person turn-out reflecting 80 industries. They plan to host their next Virtual Industry Day in June 2022.
Dave Buss, Deputy Commander, DLA Energy: World Wide Energy Conference 28th-30 March 2022 at Gaylord National Hotel, their premier event and opportunity to discuss initiatives with industry and ways to partner in the future. Small business is a key part of their outreach, they are seeking ways to best support the warfighter and federal partners.
Admiral Kristin Fabry, Land & Maritime: Held an Industry roundtable on 24 Aug 2021; 27 vendors attended. They will host their next Supplier Conference 6-7 April 2022 in Columbus, Ohio. They continue to engage their 6 strategic alliance partners in-person and virtually. They anticipate smaller but more frequent buys with a shift on the land side from legacy to maintenance systems.
Bill Kenny, DLA Troop Support: They are sending forecast letters this week to all industries regarding clothing and textiles; these letters will also be posted on their website. They are hosting a Joint Advanced Planning Brief for Industry 17-18 November 2021. FY21 reflected a record year of small business participation; 95% of their obligations are long-term contracts to create long-term partnerships; rather than transactional business.
