DLA Vendors Face “Pressure on Pricing” The Defense Logistics Agency will consolidate contracts and demand lower prices from suppliers. DLA’s director, Navy Vice Admiral Alan Thompson, outlined cost-cutting plans at a conference with about 2,500 vendors in Columbus, OH, last month. The moves respond to Defense Secretary Robert Gates’s directive to reduce spending on overhead by $100 billion over the next five years so that money can be diverted to the warfighter. In an Aug. 25 media conference call, Thompson said, “We will pursue price reductions of as much as 10% in selected areas by profiling greater focus on price reasonableness, incorporating price reduction factors and establishing more long-term contracts.” In addition, DLA will upgrade its business enterprise system so it can better forecast its needs, and consolidate purchases for all military services to leverage the department’s buying power. “This will allow us to make larger buys, which will be targeted at reducing costs,” Thompson said. He said small businesses may have to team with large corporations to handle the bigger contracts. DLA bought about $48 billion in food, fuel, spare parts and other supplies for the armed services and defense agencies last year. Because the agency continually re-orders consumable items, Thompson said, “The payoff from our pressure on pricing should be realized near term.” Shay Assad, director of defense procurement and acquisition policy, told contractors at the conference that the cost-cutting drive is not aimed at shrinking their profits. “I fully expect that what you’ll see as we go down the road is that those contractors who can demonstrate they’ve reduced their costs of operations will be rewarded,” he said.