Strategic Sourcing and the Department of Defense

As the largest purchasing organization in the world, Department of Defense (DoD) senior leadership has determined the acquisition function is strategic in nature and vital to the success of the Department's efforts to provide reliable, responsive and cost-effective support to our soldiers, sailors, airmen and marines worldwide. Strategic Sourcing is a critical path to this success.

Strategic Sourcing has been defined as the collaborative and structured process of analyzing an organization's spend and using the information to make business decisions about acquisition commodities and services more effectively and efficiently.   Through strategic sourcing, we will fundamentally change the way the Department of Defense does business.  Through the data we will generate, there will be more transparency and accountability of the way we do business.  Our processes will have greater visibility.  We will develop organizational efficiencies, building a solid foundation to support strategic sourcing into the future.

Report to Office of Management and Budget – Implementation of Strategic Sourcing Initiatives (PDF).

For more information about Strategic Sourcing and the Department of Defense:

• Leadership
• Policy
• Current DoD Activities
• Acquisition Workforce Training

Leadership

Established in May 2003, the Department of Defense Wide Strategic Sourcing (DWSS) Program has expanded from a spend analysis and opportunity assessment study to an operational model for delivering enterprise strategic sourcing. In January 2006, Mr. Mark E. Krzysko was named the Assistant Deputy Under Secretary of Defense for Strategic Sourcing & Acquisition Processes (ADUSD (SS&AP)) and charged to lead this initiative.

Under Mr. Krzysko’s direction, Strategic Sourcing has moved to a Department-wide focus. Among his other responsibilities, he chairs the Strategic Souring Directors Board and represents the Department for all federal government strategic sourcing initiatives.

Led by the ADUSD (SS&AP), Strategic Sourcing & Acquisition Processes, the Strategic Sourcing Directors Board (SSDB) manages the Defense-Wide Strategic Sourcing initiatives. This structure enables strategic decision-making and oversight of the Strategic Sourcing program across the Department. The Services and several Defense Agencies are represented on the Board. 

Policy

Several initiatives have a direct effect on the role of Strategic Sourcing across the Department.  Those include:

• National Defense Authorization Act (NDAA 2006)
• Defense Federal Acquisition Regulations (DFAR)
• Services Acquisition Reform Act (SARA)
• Defense Acquisition Performance Assessment (DAPA)

AT&L Goals

Under Secretary of Defense Ken Krieg has outlined specific goals for Acquisition, Technology & Logistics.  Strategic Sourcing and Acquisition Processes directly support several of those goals, including:

• High Performing, Agile and Ethical Workforce
• Strategic and Tactical Acquisition Excellence
• Reliable and Cost-effective Industrial Capabilities Sufficient to Meet Strategic Objectives

Current DoD Activities

Several strategic sourcing activities have been initiated.  Those include:

• Wireless Services
  After an extensive spend analysis of the Department's buying habits for wireless hand-held services, the best rates to date for the Department were negotiated with two wireless suppliers, Verizon and Sprint.  Two additional suppliers are currently in negotiations.  Led by the Army, the highlights of this program include the following:
  • This program combines over 350 multiple agreements with suppliers to one agreement per major supplier
  • Terms, conditions and pricing are on par with commercial organizations of similar size and scope
  • A common set of key performance metrics have been identified to ensure consistent performance across suppliers
  To take advantage of the best rates available for wireless services, visit http://www.itec4.army.mil.
• DoD Enterprise Software Initiative (ESI)
  Through a joint project begun in June 1988 by DoD CIO community, the DoD Enterprise Software Initiative was born.  All software buyers in the Department now have access to advantageous agreements with over 30 software and service providers including Symantec, Novell, Microsoft, SAP, Sun Microsystems and many others.  These Enterprise Software Agreements (ESA) are open to all DoD members, U.S. Coast Guard, the Intelligence Community, NATO, and authorized Defense contractors.
  Benefits of the DoD ESI include:
  • A streamlined acquisition process
  • Standard terms and conditions
  • Fixed price services tied to proven methodology (for the 5 systems integration BPAs)
  • Reduced risk
  Under Defense Federal Acquisition Regulations part 208 Final Rule, published October 2002, the DoD ESI was given Regulatory Status and the regulation established policy and procedures for the acquisition of commercial software and software maintenance when acquired.
  
  The federal SmartBUY program is implemented in the DoD through the DoD ESI.  To learn more about the ESI initiative, visit their Web site at http://www.esi.mil.
• Clerical Support Services
  Led by the Navy, in cooperation with representatives from other military services and agencies, this program will offer.
  • Clerical Support Services include such administrative and clerical functions as word processing, secretarial and administrative duties, data entry, operation of telephone and switchboards, document preparation, basic accounting, and other miscellaneous office activities.
  • While enabling fair market prices for the Department, this program also achieves the Departments' socio-economic goals by establishing a 100% set aside for 8(a), HUBZone and Service Disabled Veteran Owned small business.
  This program will be piloted in the Philadelphia, Washington, DC and Norfolk regions later this year.  To learn more about how you can participate in this program, visit the Navy Web site at http://strategicsourcing.navy.mil/.
  

Technologies

• Federal Procurement Data System – Next Generation (FPDS-NG) - An e-Gov initiative within the Integrated Acquisition Environment (IAE). The primary purpose of FPDS-NG is to provide Congress with data on all federal contracts. This web-based system offers both the public and federal government a self-service, near real-time, searchable repository for information about unclassified government contracts with third party vendors.
• Acquisition Spend Analysis Service (ASAS) – Provides insight to buying patterns in order to support the most efficient sourcing strategies for the Warfighter.  ASAS also provides a management tool to identify issues related to data quality, accuracy, and completeness.  It provides the ability to compare workload across the enterprise to look for opportunities to leverage purchasing across the Services and Agencies.
• DoD EMALL - Allows DoD and other federal customers to find and acquire off-the-shelf, finished good items from the commercial marketplace. The DoD EMALL offers cross catalog shopping for the purpose of comparison pricing and best value decision-making.  It also provides the benefits of reduced logistics response time and improved visibility of both government and commercial sources of supply, as well as facilitates the use of the government purchase card.

Acquisition Workforce Training

In collaboration with the Defense Acquisition University (DAU), two Continuous Learning Modules (CLMs) focused on strategic sourcing and spend analysis have been created.  DAU is also incorporating the tenets of strategic sourcing into other curriculum. Both CON 100 and CON 353 have been updated to reflect the emphasis senior leadership places on this initiative.

Strategic Sourcing Overview (CLC 108) details the steps in the process to successful sourcing.

Spend Analysis Strategies (CLC 110) provides an enhanced understanding of the spend analysis that is required to assess strategic sourcing opportunities and offers a review of various spend analysis techniques.