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Cost-saving initiative may promise increased readiness, lethality

A diverse group of senior leaders from all Department of Defense agencies met at Wright-Patterson Air Force Base Aug. 22 to learn more about progress the Air Force Installation Contracting Agency has made in reducing total cost of common items.

The initiative, known as Category Management, takes a disciplined, data-driven, strategic cost management approach to eliminate redundancies, increase efficacy and effectiveness and deliver more value and savings to the warfighter.

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“The overall reforms effort is to try to free up money for reinvestment in higher-level priorities, namely lethality and readiness, and Category Management is an area where we think there is a lot of money to be saved,” said Karl F. Schneider, who leads the Department of Defense reform team on contracting for goods and services.

This meeting was the second hosted by AFICA to demonstrate the progress the Air Force has made in Category Management.

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“The Air Force has really led the way, particularly in facilities and construction, and has been very generous in sharing their information,” Schneider said.

The diverse career specialties of the representatives from every defense service spoke to the broad reach of this initiative.

“This is not just an acquisition mission. This is a general management issue,” Schneider said. “My background is as a lawyer, but I can see from a management point that this is important.”

Where Strategic Sourcing showed the power of enterprise purchasing, Category Management focus is much broader in scope and addresses total cost of ownership, such as purchase costs, demand and usage costs and process costs, according to Roger Westermeyer, director of Enterprise Sourcing Support for AFICA.

“It’s really focusing on the requirement, understanding that and then doing some good business analytics,” Westermeyer said.

One example revealed how a team studied a contract for roofing services and found the data showed the Air Force was already getting a good deal on those services. However, the data also showed some roofs were being replaced years earlier than their expected service life. The solution presented by the team was a policy change to prevent early purchases, which resulted in a substantial cost avoidance to the Air Force.

“There are certain policies that cause us to buy inefficiently,” said Richard Lombardi, deputy under secretary of the Air Force, Management and deputy chief management officer. “Those are the types of things that all go into the equation that then should tell you here is the right contracting approach you should take.”

It goes back to the question of do you need to buy it in the first place, Westermeyer added. If you don’t buy what you don’t need, you can buy something that you do need and that’s an increase in mission capability.

AFICA has planned additional dialogues intended to promote a strategic cost management mindset and optimize overall mission performance across DOD.

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