FORT BELVOIR, Va. — The military services are undergoing an intense transformation that requires the Defense Logistics Agency and industry to think, act and operate differently, DLA’s director told leaders of 14 industry associations at a meeting last week.
“Every service, every combatant command, and every regional command is reevaluating themselves — their equipment, warfighting concepts, organizational structure, etc. — and how they intend to accomplish wartime objectives,” Army Lt. Gen. Mark Simerly said in his first meeting of DLA Industry Association leaders at DLA headquarters.
The semiannual meeting allows the agency to build a shared understanding of current challenges and develop strategies to meet them with supply partners in industry associations, like the Aerospace Industries Association, National Institutes for the Blind, and Professional Services Council.
The changing nature of war and threats from China, Russia, Iran and North Korea are driving the need for transformation across the Defense Department, Simerly said.
“It’s not a question of whether we have to change. It’s how we change and when we change, and we should all have a sense of urgency about the pace. DLA cannot afford — our nation cannot afford — for DLA to simply be in response mode,” Simerly said. “In some cases, we need to lead change.”
Challenges in contested logistics
“Logistics is being targeted and will continue to be targeted in different ways than it ever has been in any other conflict previously,” Simerly said. “We will be contested in every domain — air, sea, space, land and in the homeland. We’ll also be contested at every level of war, from tactical to strategic.”
Cyberthreats are already disrupting supply operations around the world and need collaborative focus. The agency’s digital-business transformation is one example of how DLA is leading change for the department as it adopts new technology and improves data integration among military services and suppliers.
Industry partners are indispensable as DLA assesses its posture and ability to support warfighters with precision, Simerly said. As it adjusts resource models to increase flexibility, DLA must improve its ability to forecast military requirements that it shares with suppliers annually.
“What tools, mechanisms, procedures and relationships do we require to improve our forecasting model? We know we owe you the answers, and we’re laser-focused on that,” he said.
Simerly also said industry must share its perspectives on challenges unique to the defense industrial base, including the impacts of inflation, supply chain disruptions and fiscal pressures on the ability to produce the supplies warfighters need.
At the meeting, DLA Acquisition Director Matt Beebe provided data on DLA’s contract obligations. The agency hit a high point in fiscal 2023 at almost $50 billion, up from $48.2 billion in 2022. He attributed the growth more to inflation than an increase in items bought.
The agency’s industrial base shrank from 12,000 suppliers in 2016 to just 8,500 in 2023, but Beebe said the rate of decline is slowing. In 2023, DLA hired a consultant to study the trend and its likely causes.
“We didn’t find any indication that something about our acquisition strategies was causing the problem. In fact, we found our rate of decline, which was about 22-24% over those years, was half the rate of loss as the rest of the Defense Department and federal government,” Beebe said.
David Berteau, president and CEO of the Professional Services Council, noted that concerns over the declining defense industrial base might be better addressed by looking at whether company mergers contribute to smaller numbers.
“The real question you have to ask is: Can you still get what you want from those 8,500?” he said.
Beebe added that an Industry Engagement Plan with goals like helping American businesses compete in government contracts and creating process efficiencies may have tempered DLA’s decline.
Events like the recent DLA Supply Chain Alliance Conference and DLA Worldwide Energy Conference also give DLA unique opportunities to partner with industry.
“We’re looking at being involved in 30 industry events this year, either one that we hold or one that industry holds,” Beebe continued. “That’s very important to us as we further our understanding of industry capabilities and share opportunities.”
In fiscal 2024 demand projections, requirements are up for hardware and energy support and DLA items in the clothing and textiles; medical; subsistence; and construction and equipment supply chains. Overall sales for weapons support and troop support are projected at $26.4 billion, with $19.6 billion going toward weapons support.
“When we meet again in the fall, we’ll be able to talk about that with more precision,” said Tim Moorefield, chief of planning for DLA Logistics Operations.
Much of the growth in sales is due to increasing demands on foreign military sales, especially for Ukraine and Israel, he said.
The event also included a presentation on DOD’s Mentor-Protégé Program, which aims to increase small business participation in defense contracts, and a breakdown of action plans in response to the results from the 2022 Supplier Survey. The overall score dipped slightly from the 2020 survey with the largest decreases in timeliness and timely resolution.
The next survey will launch in the fall and measure DLA’s communication, growth and profit potential, the strength of DLA-supplier relationships, and effectiveness.
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