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i 

54–552 2010

[H.A.S.C. No. 111–95] 

DOD SUPPLY CHAIN MANAGEMENT: CAN 

THE DEPARTMENT IDENTIFY AND MEET 

ITS SUPPLY NEEDS EFFICIENTLY? 

HEARING 

BEFORE THE

PANEL ON DEFENSE ACQUISITION REFORM 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 24, 2009 
(II) 

PANEL ON DEFENSE ACQUISITION REFORM 

ROBERT ANDREWS, New Jersey, Chairman 

JIM COOPER, Tennessee 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DUNCAN HUNTER, California 

MIKE COFFMAN, Colorado 

CATHY GARMAN, Professional Staff Member 

JOHN WASON, Professional Staff Member 

ALICIA HALEY, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2009 

Page 

HEARING: 

Thursday, September 24, 2009, DOD Supply Chain Management: Can the 

Department Identify and Meet Its Supply Needs Efficiently? ......................... 1 

APPENDIX: 

Thursday, September 24, 2009 ............................................................................... 21 

THURSDAY, SEPTEMBER 24, 2009 

DOD SUPPLY CHAIN MANAGEMENT: CAN THE DEPARTMENT 

IDENTIFY AND MEET ITS SUPPLY NEEDS EFFICIENTLY? 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Andrews, Hon. Robert, a Representative from New Jersey, Chairman, Panel 

on Defense Acquisition Reform ........................................................................... 1 

Conaway, Hon. K. Michael, a Representative from Texas, Ranking Member, 

Panel on Defense Acquisition Reform ................................................................ 2 

WITNESSES 

Heimbaugh, Nancy, Senior Procurement Executive and Director of Acquisition 

Management, Defense Logistics Agency ............................................................ 8 

McCoy, Maj. Gen. Gary T., USAF, Commander, Air Force Global Logistics 

Support Center ..................................................................................................... 6 

Solis, William M., Director, Defense Capabilities and Management, U.S. Government Accountability Office ............................................................................. 5 

APPENDIX 

PREPARED STATEMENTS: 

Heimbaugh, Nancy ........................................................................................... 52 

McCoy, Maj. Gen. Gary T. ............................................................................... 42 

Solis, William M. .............................................................................................. 25 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Andrews ..................................................................................................... 69 

Mr. Coffman ...................................................................................................... 69 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

[There were no Questions submitted post hearing.] 

(1) 

DOD SUPPLY CHAIN MANAGEMENT: CAN THE DEPARTMENT IDENTIFY AND MEET ITS SUPPLY NEEDS EFFICIENTLY? 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, PANEL ON DEFENSE ACQUISITION REFORM, Washington, DC, Thursday, September 24, 2009. 

The panel met, pursuant to call, at 9:38 a.m., in room 2175, Rayburn House Office Building, Hon. Robert Andrews (chairman of the 

panel) presiding. 

OPENING STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM NEW JERSEY, CHAIRMAN, PANEL ON 

DEFENSE ACQUISITION REFORM 

Mr. ANDREWS. Good morning. Please be seated, ladies and gentlemen. Welcome. We thank our witnesses, thank our colleagues on 

the panel and thank our guests for being with us this morning for 

today’s hearing. Any large organization has a responsibility for acquiring goods and getting the amount of goods that they need to 

the place that they are needed in the time they are needed in the 

most efficient and productive way. There are a few organizations 

in the world, perhaps no other organization in the world with the 

responsibility as large as that as the United States Department of 

Defense (DOD). The best approximation I have read of the total 

amount to do that in any given year is about $42 billion a year. 

That is a lot of items. Whether it is food, ‘‘Meals Ready to Eat’’ 

(MRE), whether it is fuel cells, it is a lot of items that have to be 

moved, and I would say from the outset that we are grateful for 

the men and women in the federal service, both uniformed and 

non-uniformed who have taken on that responsibility. We thank 

them for it. We know it is a very difficult job. 

So I want to preface all of our questions and remarks this morning by acknowledging that the men and women in that field have 

taken on a very hefty responsibility that has huge consequences. 

The chairman of the full committee is fond of giving committee 

members reading assignments. And a few years ago, I was given 

the reading assignment of reading about Guadalcanal. There is a 

famous book about Guadalcanal that is very voluminous. And the 

lesson that I learned from reading the book—two lessons. One was 

that if the chairman gives you a book to read, read it. And the second was that in many ways, the battle of Guadalcanal was won obviously through the incredible heroism and performance of American warfighters, Marines and others. 

The second was logistics really won that battle, that the Americans were better prepared logistically than the Japanese enemy 
2 

and were able to withstand huge assaults by many, many more 

warfighters, because they could outlast them, because they had the 

logistics to do it. Happily, there aren’t as many of those dramatic 

circumstances very often. We don’t want those kind of circumstances if we can avoid them. But every day there is the challenge of accounting for and moving around, taking proper care of 

$42 million worth of items. Now, we come to this morning’s discussion frankly in a context of some challenges and difficulties that 

have been raised in that context. The Government Accountability 

Office (GAO) has looked at this issue over a number of years and 

identified some of those challenges. 

Some of the more difficult examples that have come up in the 

past I want to stress, in the past really jump out at you. Between 

2004 and 2007, it was concluded that the Army had $3.6 billion 

more of spare parts than it needed. In the same fiscal year as the 

conclusion was that the Navy had $7.5 billion more of various parts 

than needed, which was 40 percent of its inventory. At the other 

end of the spectrum, around the time of the Iraq buildup—fully understanding that this was a very stressful time for everyone involved in the Department of Defense—for example, the demand for 

lithium batteries was 18 times greater than the supply that we had 

of lithium batteries. So for every 18 lithium batteries that we needed to accomplish a task in the field, we only had one. There are 

other sort of eye-catching facts that come out of some of the work 

the GAO has done. In March of 2002, the price of a refrigerator 

which would go on an aircraft was about $13,800. But in September of 2004, not much later than that, the price jumped to 

$32,600 for the same product. 

This indicates that the challenges are substantial. The purpose 

of our hearing this morning is to hear about the progress that has 

been made in meeting those challenges. There have been efforts to 

reorder the way our relevant DOD agencies work to identify these 

challenges and work with them. We are interested in hearing this 

morning about the progress of that work. Suffice it to say that it 

is easy to Monday morning quarterback this, to say ‘‘my goodness,’’ 

you paid $32,000 for a refrigerator you paid $13,000 for a few 

months earlier. 

That is not our intention. We understand the monstrous scale of 

the job that our agencies have here in purchasing $42 billion a year 

worth of items. But we do want to take a serious look at how we 

can improve the way we look at that, so we can get better value 

for those who serve our country and better value for those who pay 

the bills for our taxpayers. That is our approach this morning and 

we look forward to the witnesses. And at this time, I would ask the 

senior Republican on the panel, my friend, Mr. Conaway for his 

statement. 

STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE FROM TEXAS, RANKING MEMBER, PANEL ON DEFENSE 

ACQUISITION REFORM 

Mr. CONAWAY. Thank you, Mr. Chairman. And witnesses, welcome. Thank you for setting aside time in your schedules to come 

visit with us this morning. Last week’s panel looked at the DOD’s 

role in tackling the challenges facing the industrial base in the 
3 

global market. Today we are here to receive expert testimony about 

another major component in the acquisition process, which is the 

purchase of commodities, the suppliers of those commodities which 

are a significant part of the industrial base. There is no question 

that our Nation’s ability to project and sustain military power depends on effective logistics. 

It was General Eisenhower who said you will not find it difficult 

to prove that battles, campaigns and even wars have been won or 

lost primarily because of logistics. The challenge, of course, is how 

does the government—how does the Department manage the supply chain more effectively and efficiently. Clearly the Defense Logistics Agency (DLA), which, by the way, supplies almost every 

consumable item America’s military services need to operate, has 

learned a lot in the last eight years. DLA has made many improvements in the last eight years such as placing senior executives at 

each of the four major buying activities to serve as the head of the 

contracting activity which ensures the efficacy and the integrity of 

the acquisition process. When you get it right, a scant thank you 

is offered up. When you get it wrong, people get hurt and die and 

it is a wreck. 

So thank you for all the good things that you do do unnoticed. 

Because like I say when you get it right, they just keep going. 

When you get it wrong, then things get out of whack. I look forward to hearing our testimony from our witnesses today. And with 

that I yield back, Mr. Chairman. 

Mr. ANDREWS. Thank you very much. The staff has assembled an 

outstanding panel of witnesses this morning. We are very glad 

these three individuals are with us. I want to take a few minutes 

to read their respective biographies. I think all three of you are experienced Capitol Hill witnesses, so you know without objection 

your written testimony will be entered into the record of the hearing in its entirety. And we will ask you to provide a five-minute 

or so oral synopsis of your testimony. When each of you has done 

that, we will turn to the panel for questioning so that we can maximize the amount of time that we can interact with the witnesses. 

Mr. William Solis is on his second appearance before our panel, I 

believe. He serves as the Director of the Defense Capabilities and 

Management team at the GAO. 

Prior to this appointment, he worked in a variety of engagements 

that covered topics such as military readiness, training, weapon 

system effectiveness, housing and military doctrine. Much of his 

work involves close interaction with Congress and key national security experts. For example, he works with the congressional authorization as we know, appropriation oversight committees that 

have jurisdiction over DOD agencies. 

Throughout his over 30 years at the GAO, Mr. Solis has served 

in a wide variety of positions and has become the recipient of numerous honors and awards. Most recently he was selected to receive the 2008 GAO Award for Distinguished Service. And we so 

much appreciate your work. The work that you and your colleagues 

did on the Weapons Systems Acquisition Reform Act of 2009 

(WASTE–TKO) bill that was signed by the President in May was 

invaluable. You continue to demonstrate each time you are here 
4 

the professionalism and quality of the GAO’s work. We thank you 

very much for it. 

Nancy M. Heimbaugh. Did I pronounce your name correctly, Ms. 

Heimbaugh? Okay. Currently serves as the Director of Acquisition 

Management, the Defense Logistics Agency at Fort Belvoir. In this 

capacity, she is responsible for the development, application and 

oversight of DLA acquisition policies, plans, programs, functional 

systems and operations. Her past assignments include Executive 

Director for Contracting and Acquisition Management at the Defense Supply Center in Philadelphia. Did you live in New Jersey 

or Philadelphia when you had that job? 

Ms. HEIMBAUGH. Philadelphia. 

Mr. ANDREWS. That is the wrong answer. But a lot of my constituents work there and it was a pleasure to have you there. The 

Director of Field Contracting Management, Director for Naval Supply Systems Command and frankly a long list. She then served as 

Chief of Contracting Operations in the Acquisition Directorate at 

DLA where she was responsible for overseeing procurement operations at all DLA field contracting activities in support of the DLA 

Senior Procurement Executive Component Acquisition Executive. 

She has a Bachelor’s of Science, magna cum laude from Strayer 

University, a Master’s in National Resource Strategy from the National Defense University, a Certificate of Completion from the Defense Acquisition University Senior Acquisition Course. In 1996, 

Ms. Heimbaugh received Vice President Gore’s National Performance Review’s Heroes of Reinvention Hammer Award for electronic 

commerce. Congratulations on that and welcome to the committee, 

Ms. Heimbaugh. 

Major General Gary T. McCoy is the commander of the Air Force 

Global Logistics Support Center (AFGLSC), located at Scott Air 

Base in Illinois, an Air Force Materiel Command Sustainment Center. The AFGLSC executes the Air Force supply chain by integrating enterprise-wide planning and strategy with global command and control serving as the single focal point for the 

warfighter. The command manages an $8.5 billion budget. It has 

over 4,200 personnel. 

General McCoy is a South Carolina native, was commissioned 

through Officer Training School in July 1976. He has his Bachelor 

of Arts degree from Culver-Stockton College in Missouri, as the 

chairman instructed us to pronounce it that way. His military career has been very distinguished. Prior to his current assignment, 

General McCoy was the Director of Logistics Readiness Office of 

the Deputy Chief of Staff for Logistics Installations and Mission 

Support Headquarters, U.S. Air Force, Washington, DC. 

Thank you, General, for your service and welcome to the panel. 

Mr. Solis, we are going to start with you this morning. As I say, 

we would ask you to summarize orally in about five minutes. We 

will not rigidly hold to that rule. We had a chance to review the 

written testimony of each of you. It is very well prepared and you 

are on. 
5 

STATEMENT OF WILLIAM M. SOLIS, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. SOLIS. Thank you. And good morning again. Chairman Andrews, Ranking Member Conaway and members of the panel, I am 

pleased to be here today to discuss DOD supply chain management 

and more specifically the challenges DLA faces in ensuring it provides good value and adequate oversight for goods and services 

bought from contractors with taxpayer dollars. Effective and efficient supply chain management is important because the availability of spare parts, commodities and other critical supply items 

affects the readiness and operational capabilities of U.S. military 

forces. 

Moreover, the investment of resources in the supply chain is sub- stantial, amounting to approximately $178 billion in Fiscal Year 

2007 according to DOD. As a result of weaknesses in DOD’s management of supply inventories and responsiveness to warfighter requirements, supply chain management has been on our list of high 

risk government programs and operations since 1990. To execute 

its support missions and supply troops with the goods and services 

they need, DOD relies to a great extent on contractors; however, 

the Department faces many long-standing contracting challenges 

which are especially important to address as the Department’s use 

of contractors has grown. As DOD’s largest combat support agency, DLA provides over $42 

billion in goods and services to our military serving domestically 

and around the world, including the ongoing campaigns in Iraq and 

Afghanistan in Fiscal Year 2008. This crucial logistical support to 

our military makes it vital that DLA along with the rest of DOD 

employ sound contracting practices in order to ensure that goods 

and services are attained in a cost efficient and effective manner. 

As we have continued to report, however, the Department struggles to implement sound contracting policies such as clearly defining requirements using appropriate contract type and exercising effective contract management. In absence of these, DOD exposes 

itself to unnecessary risk and may not be able to ensure that tax 

dollars are spent on goods and services that provide the best value. 

There are several contracting practices we continue to review as 

most vital in order to mitigate this risk. First, when making a contract decision, a prerequisite to good outcomes is a match between 

well-defined requirements and available resources. This requires 

accurate demand and supply forecasting and realistic timeframes 

among other things. Our previous reports and testimonies have 

highlighted several cases where poorly defined and changing requirements have contributed to increased costs as well as services 

that did not meet DOD’s needs. 

For instance, because DLA could not produce an accurate demand forecast for ‘‘Meals Ready to Eat’’ in Iraq in early 2003, some 

combat units came within a day of running out of MREs. Also the 

difficulty of military services had with forecasting demand for 

spare parts is among several reasons we have placed DOD supply 

chain management on our high-risk list. 

Second, when the correct contract type is selected, the government’s risk is minimized. Due to the volume and value of con-
6 

tracting arrangements made by DLA, it is critical that the agency 

choose the most appropriate contract vehicle. DLA has taken steps 

to mitigate the risk of choosing the wrong contract type for the situation, such as reexamining programs to decide whether a prime 

vendor, for example, is the best acquisition strategy. Third, DOD 

has long had significant issues providing adequate management 

and assessment of contractor performance, making it difficult for 

DOD to identify and correct poor contractor performance in a timely manner. Proper contract management requires an adequate 

number of personnel who are suitably trained or in place to perform oversight. We have previously reported DLA officials had not 

conducted the required price reviews for prime vendor contracts for 

food and service equipment and construction equipment and commodities. DLA officials acknowledge that part of what led to the 

problem was poorly trained contracting personnel and the agency 

has since implemented additional training for its contracting officers and managers. 

Over the last several years, we have made numerous recommendations for DOD to improve contract management and the 

use of contractors to support deployed forces and Congress has enacted legislation requiring DOD to improve its management and 

oversight of contracts. To improve outcomes on a whole, DOD and 

its components, such as DLA, must ensure that these changes and 

other efforts are consistently put into practice and reflected in decisions made on individual acquisitions. This will take sustained 

commitment by senior DOD leadership to translate policy into 

practice and to hold decisionmakers accountable. 

Finally, the recent surge of forces in Afghanistan make it critical 

that contract oversight is adequately performed to minimize the 

risk of fraud, waste and abuse experienced in Iraq. To better ensure that DLA has minimized the risk for government in fulfilling 

its combat support mission in the most effective and efficient manner, DLA will need continued vigilance with regard to its contract 

administration and oversight. Mr. Chairman, this concludes my 

oral statement. I would be happy to take any questions. 

[The prepared statement of Mr. Solis can be found in the Appendix on page 25.] 

Mr. ANDREWS. Thank you very much. I want to apologize, General, for my breach of protocol in not recognizing you first. This 

hearing is so much later in the day than we usually start. We are 

usually a 7:30, 8:00 a.m. deal. I apologize for the breach of protocol. 

And, Ms. Heimbaugh, if it is okay with you, I am going to recognize 

the General next for his testimony. 

STATEMENT OF MAJ. GEN. GARY T. MCCOY, USAF, COMMANDER, AIR FORCE GLOBAL LOGISTICS SUPPORT CENTER 

General MCCOY. Chairman Andrews, Congressman Conaway and 

distinguished members of the Defense Acquisition Reform Panel, I 

thank you for this opportunity to address the mission of the Air 

Force Global Logistics Support Center which I will refer to as the 

AFGLSC and how it links with the Defense Logistics Agency. The 

AFGLSC has rapidly evolved since the standup in March of 2008 

at Scott Air Force Base, Illinois, as a new center in Air Force Materiel Command. The AFGLSC was born out of a compelling need for 
7 

change in the 2005 and 2006 timeframe. The Air Force was challenged with increased operational tempo, manpower cuts, increased 

deployments, aging aircraft and budget constraints. In addition to 

these pressures, we were transforming into a highly expeditionary 

Air Force. A more efficient, streamlined and effective supply chain 

was required to sustain and improve our performance in such challenging times. 

I took command of the Air Force GLSC in November of 2008 and 

I am honored and delighted to lead this great organization as we 

transform supply chain management in the Air Force to improve 

our combat capability. As a career logistician, I look forward to discussing how the professional men and women of the AFGLSC are 

executing our challenging global mission, how we are improving 

our enterprise operations through the implementation of a comprehensive and forward thinking strategic campaign plan and how 

we are working closer with DLA to ensure we can successfully support our Air Force and other worldwide customers. 

To execute the service function of organize, train and equipment 

and provide forces to combatant commanders, we are heavily reliant on our logistics and supply chain capabilities. The formation of 

the AFGLSC enabled the establishment of a one supply chain process owner who provides a single point of entry and contact for our 

Air Force warfighters and customers throughout the supply chain. 

Employing lessons learned from commercial industry, from academia and government, we are eliminating duplication and focusing on standardization of our critical processes. We are just getting 

started and are extremely proud of our progress to date. 

As a total force organization consisting of active duty, Guard, Reserve and civilian personnel, the AFGLSC has three primary functions. Enterprise supply chain planning execution, operations and 

strategy and integration. Our total team simplifies the complexities 

of the Air Force supply chain for our warfighters, providing the 

most logical, expedient and cost effective solution. Our warfighters 

and other worldwide customers don’t have to worry anymore about 

chasing information or chasing parts because AFGLSC assumes 

that role for them. 

Now, I would like to turn your attention to our partnership and 

collaboration with DLA to improve and drive improvements to the 

Air Force supply chain. We have three primary initiatives at work. 

First, we are developing a set of joint customer metrics with the 

intent of presenting one picture of the supply chain health to the 

warfighter. 

Secondly, the AFGLSC has established an organization devoted 

to the consolidation and submittal of the Air Force requirements to 

DLA. This initiative is called Planning for DLA Managed 

Consumables or PDMC and is a means for the Air Force to more 

accurately project supply plans to DLA that are based on information that would not otherwise be anticipated through historically 

based forecasting techniques. And third, we are working closer 

with DLA to improve the support we provide to Air Force depot 

maintenance operations. We have created a depot supply chain 

management team that uses predictive analysis and identifies and 

solves supply chain constraints well ahead of the need for the item 

to support that operation. 
8 

The AFGLSC and DLA have also been working on a number of 

joint sourcing initiatives to commit resources for joint collaboration 

opportunities for long-term strategic contracts. The purpose is to 

apply our combined buying power where appropriate to leverage 

tactical and strategic relationships with our commercial buyers, the 

collaborative sourcing opportunities that govern through a joint 

service board that meets quarterly. 

In closing our mission, our role, our responsibilities and vision 

are clearly defined for the Air Force Global Logistics Support Center. We are a relatively new organization that has stepped out 

quickly to achieve the results the Air Force envisioned when they 

established the center in March of 2008. Our early success has motivated us to bring even better support to the warfighter. I am 

equally proud and pleased with our strong relationship with DLA 

and I am encouraged by the collaborative initiatives we have developed together. Global logistics with a warfighter focus, that is what 

the Air Force Global Logistics Support Center is all about. I look 

forward to your questions. 

Mr. ANDREWS. General, thank you very much. 

[The prepared statement of General McCoy can be found in the 

Appendix on page 42.] 

Mr. ANDREWS. And, Ms. Heimbaugh, it is my understanding it is 

your first time testifying on the Hill. We are honored that we 

would be your maiden voyage here. This is a very aggressive, hard 

edge committee here, so you should be on guard. No. You are very 

welcome. We appreciate your service to your country and look forward to your testimony this morning. Welcome. 

STATEMENT OF NANCY HEIMBAUGH, SENIOR PROCUREMENT 

EXECUTIVE AND DIRECTOR OF ACQUISITION MANAGEMENT, 

DEFENSE LOGISTICS AGENCY 

Ms. HEIMBAUGH. Thank you. Chairman Andrews—— 

Mr. ANDREWS. Ma’am, would you turn your microphone on? It 

would be better if we could hear you that way. Okay. Thank you. 

Ms. HEIMBAUGH. Chairman Andrews, Congressman Conaway 

and distinguished panel members, thank you for the opportunity to 

appear today and discuss the Defense Logistics Agency’s mission as 

a supply chain manager responsible for providing the best available 

supplies and services to the warfighter at the best value to the taxpayer. The Defense Logistics Agency, or DLA, is the Department’s 

combat logistics support agency. It manages 4.8 million items and 

supports nearly 1,600 weapons systems. It is the end-to-end supply 

chain manager for 8 supply chains and it provides approximately 

84 percent of the repair parts and nearly all of the subsistence, 

fuels, medical, clothing and textiles and construction material required by the military services. 

DLA has a global distribution capability, including 26 distribution centers around the world. DLA is an integral part of the endto-end supply chain it works closely with the services to ensure 

support for their requirements. For example, DLA is partnering 

with the Air Force Global Logistics Support Center to execute the 

base realignment and closure decision to realign depot level reparable acquisition, as well as supply, storage and distribution responsibilities to DLA. DLA provides storage and warehouse man-
9 

agement for service required items and coordinates movement of 

items directly with vendors or with the U.S. Transportation Command to ensure on-time delivery. DLA’s responsibilities also include stock positioning at forward locations for faster delivery. 

DLA uses demand planning and forecasting to reflect usage factors accurately and leverages distribution to complete the supply 

chain. And DLA now uses the Northern Distribution Network to 

move supplies and equipment to the U.S. forces deployed in support of operations Enduring Freedom and Iraqi Freedom. DLA provides support to the warfighter no matter where located. 

Acquisition is a core DLA competency and essential to its success 

as a supply chain manager. As requirements are identified by the 

service, DLA develops the supporting acquisitions, drawing upon a 

portfolio of tailored acquisition solutions. For example, DLA’s prime 

vendors distribute commercial products to assigned customers in a 

designated region, accelerating deliveries, eliminating inventory 

and reducing costs. They provide the same high quality support to 

deployed warfighters as to military service members in the continental United States. DLA is aware of its responsibility to maintain its industrial base of which small businesses are a critical 

component. DLA invests approximately $50 million of congressional funding 

annually to maintain production capacity for go-to-war items such 

as nerve agent antidote auto-injectors. In addition, DLA supports 

the Department’s socioeconomic programs, having awarded approximately $7.9 billion to small businesses in Fiscal Year 2008. In 

executing its stewardship responsibilities, DLA has established a 

separate acquisition management directorate and has placed senior 

acquisition executives at its major activities to enhance management and oversight. 

DLA also has a sound oversight program in place to ensure effective stewardship. A performance-based agreement with the Defense 

Contract Management Agency (DCMA) emphasizes contract administration. In addition, a new Center of Excellence for Pricing identifies contract pricing issues and supports improved management decisions. And it has already generated significant savings. DLA’s 

workforce is a key to its mission. And DLA ensures that these professionals are fully trained and job ready. DLA is also planning for 

the future with 399 contracting interns in its 2-year intern program. DLA monitors acquisition performance using metrics that relate directly to success. 

Analyzing these metrics allows DLA to assess performance and 

identify effective solutions if performance lags, a key capability of 

DLA’s recently implemented Enterprise Resource Planning System. 

Given the size of its program, DLA is prepared to face major challenges. For example, the pending rollout of a single agency-wide 

contract writing system is a major undertaking; however, DLA is 

confident that it will meet its challenges and that it will continue 

to provide effective support to the warfighter while being an efficient steward of the taxpayer dollar. 

Mr. Chairman and distinguished members of the panel, this concludes my statement. I will be pleased to answer your questions. 

Mr. ANDREWS. Thank you very much, Ms. Heimbaugh, and welcome to the committee. We hope you are here many times. 
10 

[The prepared statement of Ms. Heimbaugh can be found in the 

Appendix on page 52.] 

Mr. ANDREWS. I thank all three of the witnesses. And we begin 

with Mr.—is it ‘‘Solis’’ or ‘‘Solees’’? I am sorry. Which do you prefer. 

Mr. SOLIS. ‘‘Solis’’ is fine. 

Mr. ANDREWS. Mr. Solis, I notice in your written testimony there 

was the discussion of one of the prior reports about this refrigeration unit and this is on page 10 of the written statement that—the 

price was $13,825 in March of 2002 and apparently in September 

of 2004, we paid $32,642. Was it the same unit? Was it the same 

product? 

Mr. SOLIS. That is my understanding. 

Mr. ANDREWS. And the report goes on to say that there was an 

acknowledgement by senior officials that there wasn’t proper supervision. But I would like to try to get into the weeds of that one a 

little bit more. How did the person who bought the second refrigerator not know that the price was so much higher than the one 

for the first? 

Mr. SOLIS. I think a couple of things in terms of the history. At 

the time when we went back—and this actually was at the behest 

of the Armed Services Committee that we did this work—some of 

these things had been occurring in terms of the lack of pricing reviews and the lack of emphasis on price going back several years 

prior to this even happening within DLA. This had been brought 

to senior management attention. We are not sure why things—I 

mean, within—the DLA internal review brought this up. There 

were other internal studies that were brought forward in terms of 

the problem. But there was not an emphasis as much as it could 

be on doing pricing reviews. The metrics were more towards how 

much sales volume do you have. So I think there was a disconnect 

between the emphasis on—— 

Mr. ANDREWS. So the person who was doing that job understood 

his or her responsibility, prime responsibility is buying ‘‘X’’ number 

of refrigerators by some deadline? 

Mr. SOLIS. That is correct. 

Mr. ANDREWS. And there wasn’t an emphasis on how much they 

cost? 

Mr. SOLIS. There wasn’t the emphasis on cost or pricing reviews 

at the time. 

Mr. ANDREWS. Do you recall under what kind of contract the refrigerator was purchased under? 

Mr. SOLIS. I am not sure. 

Mr. ANDREWS. If you could supplement for the record how that 

happened. How about the personnel involved? I don’t mean the specific people. Was it the same subunit of the DLA that made the two 

purchases or was it two different subunits? 

[The information referred to can be found in the Appendix on 

page 69.] 

Mr. SOLIS. It was the same unit. I don’t know if it was the same 

individual who made the decisions. 

Mr. ANDREWS. Did they have access at the time to a database 

that would show what had been paid in March of 2002? Or would 

they not have known that? 
11 

Mr. SOLIS. If it was, I don’t believe that they accessed that database. 

Mr. ANDREWS. What I hear you saying is it wouldn’t be a part 

of the sort of regular routine of the person doing the job. 

Mr. SOLIS. That is why I mentioned in my oral statement, I think 

as well as in testimony, there was a lack of emphasis on that kind 

of training to do the pricing reviews as we indicated. 

Mr. ANDREWS. We certainly can’t fault the person if their job is 

to purchase quantity and not price. You follow orders. But I guess 

the question that I would raise is—this is more of a rhetorical 

question. Are we orienting people properly not to look at—let me 

put it to you this way. I would bet you anything that the person 

or the people responsible for making that decision, if they had 

bought a refrigerator for their home in March of 2002 and paid 

$900 for it, they would have been shocked to go pay $2,000 for one 

2 years later. They wouldn’t do that. They would say wait a 

minute, what is different about this refrigerator, why does it cost 

more. Does that not happen because we are not expecting people 

to think that way? Or does that not happen because they don’t 

have the information? Why do you think that happens? 

Mr. SOLIS. I think that happened before because there wasn’t an 

emphasis on it. Maybe Nancy can probably answer this better 

where they are at. 

Mr. ANDREWS. I was coming to that. Yeah, I want to ask Ms. 

Heimbaugh—— 

Mr. SOLIS. The orientation has changed. I know there is a unit 

that is doing that right now. 

Mr. ANDREWS. Let us ask it in terms of that specific example, 

Ms. Heimbaugh. Let us say that I work for you, I am part of the 

Agency and it is my job this morning to go buy a refrigeration unit. 

What would be different today than occurred in 2004? And let us 

say hypothetically that the unit that comes across my desk for approval is $40,000. What would be different today about the way I 

would approach that problem than when this situation arose the 

first time? 

Ms. HEIMBAUGH. I can assure you that there would be a big difference. A lot of corrective actions have been put in place since the 

time that that issue became identified. And actually folks, there 

were personnel that were either removed or specific action was 

taken because to answer your question, there was a need for more 

focus not only from a pricing standpoint, but from a training standpoint as well. 

Mr. ANDREWS. Let me ask you this way. If I signed off on the 

$40,000 refrigerator and we should be paying $17,000 for it, what 

would happen to me? 

Ms. HEIMBAUGH. Well, first of all, we have measures in place 

that precludes one individual from making that sole decision. 

Mr. ANDREWS. What if myself and my superiors had access to information that told us that it could be gotten for 17, and we signed 

off on it anyway for 40. What would happen to us? 

Ms. HEIMBAUGH. There would be specific action taken. We also 

have processes in place that monitor even after the awards are 

made to ensure through various internal reviews and external reviews to ensure that we are reviewing these actions very closely. 
12 

Mr. ANDREWS. How would I know—do I have access to the data 

that would tell me it would cost 17 instead of 40? Is there a database that would let me know that information? 

Ms. HEIMBAUGH. Yes, in some cases we have a database that 

every order is recorded in this database that has the item that was 

bought, how much it was bought for and the description. It also requires contracting officers to clearly document the source of the information that they receive—— 

Mr. ANDREWS. So I would know—I would have easy access to 

data that would tell me in March of 2002, we paid $13,000 for this 

refrigerator? 

Ms. HEIMBAUGH. I have a group of folks that are focused strictly 

on pricing. They go in and they have access to this database and 

they review the specific items in this database. And if they saw 

something questionable, they would bring that to our attention. 

Mr. ANDREWS. Would that be after it was purchased, though? 

Ms. HEIMBAUGH. It would be after it is purchased. 

Mr. ANDREWS. What about the person that makes the purchasing 

decision, are they expected to know this and do they have the 

availability of the information to know it? 

Ms. HEIMBAUGH. Yes, they are expected to know this. They are 

trained. They have been since this event. They have been put 

through numerous training programs and so they know how to 

properly determine a price is fair and reasonable. In addition to 

that, we have process reviews prior to making these types of 

awards. 

Mr. ANDREWS. Thank you very much. I appreciate it. I am going 

to turn to Mr. Conaway for his questions. 

Mr. CONAWAY. Thank you, Mr. Chairman. Witnesses, thank you 

very much for being here. I appreciate that. My professional background gives me a keen appreciation of how hard your job is. And 

it is mind boggling the reach that what you do—I think it is 

around the world. So I appreciate your efforts on—Mr. Solis, the— 

you said that you made numerous—GAO has made numerous recommendations. I would really rather focus not on the ones that 

have been done and implemented, but on the recommendations 

that have been made and not implemented. Where should the focus 

for purchasing be or acquisitions be in your mind? 

Mr. SOLIS. Well, a couple of things come to mind and this refers 

back to some of the inventory reports, for example, that we just did 

with the Army and the Navy and going back to the Air Force. I 

think one of the things that we would suggest is that there needs 

to be a better emphasis on demand forecasting. We understand the 

nature of the beast. Things are going to change in terms of what 

the services are going to need and DLA is going to order. We understand that. But we also understand that in terms of our reports, 

what you end up with is a lot of excess inventory on hand or on 

order. And we view that also as an opportunity cost, that better demand forecasting be used and you can also use that money elsewhere. 

Mr. CONAWAY. Are the just-in-time inventory management systems being used throughout the system in your mind where they 

are supposed to be used? 
13 

Mr. SOLIS. I am not sure that they are, just-in-time. I think—and 

if you go back, a lot of times it is a just-in-case scenario. Again, 

I understand that the military has to have the parts that they 

need. But at the other hand, there is $82 billion worth of inventory 

total that the Department has and yet we still have shortages as 

well. So again—— 

Mr. CONAWAY. Shortages of stuff that is in inventory or shortages of—— 

Mr. SOLIS. Of things that they need to order. Things that are— 

deficits, as they call them. 

Mr. CONAWAY. Nancy or General McCoy, do you want to visit 

with us about this idea? We have got obviously inventory management. If you are in the commercial business it is important, because there are carrying costs associated with that inventory and 

the less you have to spend on stuff in inventory, the better. But at 

the same time, you have got to have it available. Are there ways 

of knowing that you have got excess inventory in one part of the 

world or one part versus buying new stuff in another one when you 

can swap it around? How do you manage that inventory in your 

mind appropriately? 

General MCCOY. Yes, sir. In fact, one of the reasons we established the agency that I have the honor of commanding today is so 

that we could have a single face to the customer but also an agency 

whose responsibility is to look across the enterprise. You are absolutely right. In an expeditionary world in which we live, we have 

inventory scattered around the world. What we don’t want to do is 

buy more or place more in locations where the need is not there 

in that location. 

So we spend a tremendous amount of our analysis capability trying to make sure that we can identify where the need will occur 

and to put the right amount of inventory in those locations. In the 

event that a need arises greater than we anticipated at another location, then our first objective is to try to move that inventory rather than buying new inventory. The precious dollars that we have, 

we know that we have to spend them wisely. In fact, to your earlier 

question, one of the principles that we operate by is to treat resources as though they were our own. So if we are buying components to go on aircraft or buying refrigerators, we want to treat 

those as though they are our own resources and therefore not buy 

one more than we have to. 

In an expeditionary environment, however, we also want to make 

sure we can consider contingencies. But we also want to make sure 

that we don’t exceed that requirement even preparing for contingencies even with old airplanes that often break today and it becomes even more difficult to find those parts. But the answer is, 

yes, sir, we move resources around. We have visibility of those 

around the world. And we would rather move them rather than replace them with new inventory when they have that opportunity. 

Mr. CONAWAY. Ms. Heimbaugh, we are doing the Defense Reauthorization Act right now. I am getting significant pushback on 

whether or not the Department of Defense should be audited or 

within what timeframe. And part of the issue is resource allocation 

to that deal. Back office work, which is a lot of what you do, is 

sometimes resource-starved to make sure you get the right re-
14 

sources on the front end of the deal. Do you have the right number 

of people to do the contract management? Do you have the right 

resources to train? Or are there gaps—General McCoy, you can 

pitch in on this one as well. What do you need to do your job better 

than you are currently able to do it? 

Ms. HEIMBAUGH. Yes. The way that we are—the way that DLA 

is established is that we are a working capital fund environment, 

and what that means is that we have the ability based upon the 

funds that generate our business through our sales is how we fund 

our resources. And today what we are looking at in the contracting 

arena is to ensure that the contracting resources that we have 

today is the right balance to meet the mission that we have. So 

what that means is that—although we have a very strong intern 

program, we also want to ensure that we have the right mix at the 

journeyman level as well as the senior level and so we are looking 

at recruiting plans, marketing and recruiting plans to ensure that 

as we hire new people into the workforce, that we have a sufficient 

level of experience in order to meet those requirements. 

Mr. CONAWAY. But are you constrained as to actually hiring 

those folks? It is one thing to know you need somebody, but to not 

have the resources to be able to hire those folks, you are telling me 

that you have got the resources you need if you could just find the 

right people to plug into the jobs you have got available? 

Ms. HEIMBAUGH. I would say right now our focus is being on very 

efficient. So we want to take a look at the resources that we have 

and focus on being more efficient and then determining after that 

if there is additional resources that are needed. But I would say 

we are not as concerned as perhaps the military services are in 

how they obtain their resources. 

Mr. CONAWAY. Okay. General McCoy, any thought? 

General MCCOY. Often when we look at our acquisition process 

or our supply chain, the first conclusion if you see problems is to 

simply assume that if I can just add more people to this, I can do 

it better. In many cases, that is not the answer. The first thing we 

try to look at is ‘‘what is the process?’’ And we find that in many 

cases that is where we find our greatest opportunity to make 

things better. We have antiquated processes that we need to 

change, we need to streamline, and we need to make sure that the 

people that are in that chain have the authority to make the decisions at the right level. 

I think the other thing is—and I will—is with DLA, we also need 

to make the right investment in our workforce, to make sure that 

they are properly trained and that we are acquiring the people 

with the right skill sets and that we are investing in the right kind 

of information technology (IT). You just cannot do this business at 

the dollar amount and the number of items we are talking about 

on the back of an envelope. 

So we want to make sure that we are continually looking at upgrading and bringing in the right IT. So the visibility is there. We 

have talked a little bit about pricing. So you have that information 

and you don’t have to search for it. It is there available to your 

buyers. It is there available to those in the supply chain. And it 

is there for those who want to challenge it if they see things not 

going properly in their mindset. 
15 

Mr. CONAWAY. One final thought. Ms. Heimbaugh, is the Air 

Force’s efforts with its Global Logistics Command, are there similar 

commands in each of the other services or is this the prototype that 

you are going to use to see whether or not to set these same processes up at other services? 

Ms. HEIMBAUGH. Well, I would say that the Global Logistics Support Center is something that we view as something very beneficial 

to DLA in supporting our supply chain management functions. Of 

course, we look across all of the services and having a particular 

or a specific service be able to look and standardize its processes 

within the supply chain really does make our job much better. 

Now, I certainly think that that is something that will reap benefits into the future and probably serve as a model. 

Mr. CONAWAY. So you are telling me that the Air Force is far 

enough along that you are going to recommend this to the Army 

and the Navy as well? 

Ms. HEIMBAUGH. No. I think right now in terms of working with 

the Air Force and their concept, I think we are just beginning to 

see the improvements. But I cannot really speak for the other services in how they choose to structure. 

Mr. CONAWAY. Okay. Thank you, Mr. Chairman. 

Mr. ANDREWS. The Chair recognizes Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. First, thanks to the 

Defense Logistic Agency. As a former consumer of those MREs, I 

want to say that they have improved over time. I can recall in the 

first Gulf War where my Marines referred to them as ‘‘Meals Rejected in Ethiopia,’’ to being in Iraq in 2005 and 2006 in some forward operating bases where we relied on those. They are much improved today. There was an article recently in The Army Times 

that talked about the camouflage pattern for the Army utility uniform that it was inadequate. And how does that—how does the 

Army interface with DLA to make decisions like that? Does DLA 

have input on those issues or was that strictly an Army decision? 

Ms. HEIMBAUGH. The requirements are developed by the services, 

and in this case, it would be the Army. They determined what the 

wear policy was, they determined what the design of the uniform 

is and then we do work closely with them to provide them with information in terms of the impact that that would have, for example, in the industrial base or from a logistics standpoint. So they 

really make those requirement decisions and then we take that and 

we develop an acquisition strategy. 

Mr. COFFMAN. What would be the cost of—or is there an estimate 

in what it would cost to correct that issue as it has been raised? 

Ms. HEIMBAUGH. I don’t have that number with me. I can get it 

for you if we have it. But I do know that any time that they develop a requirement, we do sit down and we take that into consideration. 

[The information referred to can be found in the Appendix beginning on page 69.] 

Mr. COFFMAN. Who makes—but it is the Army that ultimately 

makes the decision? 

Ms. HEIMBAUGH. Yes, sir. 

Mr. COFFMAN. For all of you, there has been talk in acquisition 

reform about the need to in-source expertise within your respective 
16 

agencies. To what extent have you all had to do that or have you 

had to do that, bring technical skills in house that were once contracted on for doing—for acquisition purposes? Anybody—can anybody respond to that? 

Ms. HEIMBAUGH. I can tell you that we are in the process of evaluating and developing an in-sourcing plan in accordance with the 

requirements. But in addition to that and aside from that, we have 

also, again, because we want to look for those efficiencies where we 

can, we are looking across the contractor support where we have 

contractor support to see where we can be more efficient. But from 

a very structured in-sourcing standpoint, we want to do what is 

best. And so we are looking at developing a business case analysis 

which will allow us to make those decisions because we do want 

to ensure that we are—that the positions that we are looking for 

will be the correct positions to either in-source or remain as contractor support. 

Mr. COFFMAN. So you have been given no requirements by the 

Department of Defense in terms of—it is basically on a case-by-case 

basis? There is no quantitative requirements on your agency then? 

Ms. HEIMBAUGH. What we have—what the Department has 

asked us to do is develop a plan, an in-sourcing plan and then we 

provide that plan and then as we start to go through our inventory 

of contracts, we will prepare a business case analysis and then determine whether or not that is the appropriate mix to either bring 

back or retain this contractor’s support. 

Mr. COFFMAN. Anyone else? Mr. Chairman, I yield back then. 

Mr. ANDREWS. I thank the gentleman. With the indulgence of my 

colleagues, I will go a second round. The difficulty of requirements 

seems to be a recurring theme in this panel’s deliberations. And 

the GAO testimony this morning reflects on that as one of the challenge areas. I would like to follow up on Mr. Coffman’s questions 

about the camouflage for the Army and ask you this hypothetical: 

Let us say that the Army comes up with a certain design of a camouflage and let us further say that there is a commercial design out 

there that looks almost exactly like it, with some minor modifications that that design could fit the Army’s requirements quite well. 

Number one, is there a mechanism, Ms. Heimbaugh, where 

someone in your agency would ask that question in the first place, 

would say is there a clothing manufacturer making something that 

looks a lot like this now? And number two, if there were, how 

would he or she go about reporting that back to the Army’s requirement people so you could talk about this? In other words, the overall question I am asking is do we reinvent the wheel each time we 

go to buy a wheel? 

Ms. HEIMBAUGH. I would say that one of the things that we do 

is we do work very closely, for example, with the Army as they are 

beginning to design either a new item or a new design of an item. 

What we can bring to the table and I am sure the Army does this 

as well, is look at the market and determine what is available in 

the market. In addition to that, they prepare a package that provides us with the right information and we work together to ensure 

that at the point that requirement is finalized, that we then work 

with industry to ensure that there is a capability in industry and 

most times we find that it is something that the industry is looking 
17 

at in terms of having to manufacture a particular clothing item or 

uniform. 

Mr. ANDREWS. How about outside the clothing area? What if one 

of the services is looking for, I don’t know, a certain kind of copier 

machine that can handle a heavier load of copies? What is the process? Do you begin to look in the commercial sector and then only 

if the commercial sector doesn’t provide it, look to ask someone to 

manufacture it or how do you do that? 

Ms. HEIMBAUGH. As soon as we get the requirement, we conduct 

market research so that market research will lead us to whether 

that particular product is available on the commercial market or 

not. 

Mr. ANDREWS. If you had to guess and you can supplement the 

record later if you can, what percentage of the time does the market already supply the product that you need and what percentage 

of the time do you have to turn to a manufacturer to have it made 

for you? 

[The information referred to can be found in the Appendix on 

page 69.] 

Ms. HEIMBAUGH. I would have to—— 

Mr. ANDREWS. Okay. If you can supplement the record, we would 

be interested in that. General McCoy, I note with optimism on page 

three of your testimony, you say that in the very early days of your 

organization, you have been able to achieve, according to a memo 

from the Central Command area of responsibility, a reduction in 

daily aircraft grounding conditions from 150 groundings a year ago 

to about 30 today. Two questions. One is how much money does 

that save? Or how much economic value does that create, number 

one? And number two, how did you do it? 

General MCCOY. I would have to get the exact number in terms 

of dollars for the record, but I will tell you that when we are talking about expensive components that go in our airframes, that dollar amount is significant and I will get the exact amount. 

[The information referred to can be found in the Appendix on 

page 69.] 

Mr. ANDREWS. By the way, the savings I assume would be generated because there would be less wear and tear on the planes 

that could fly, you would fly them less frequently if—how does the 

savings occur there? 

General MCCOY. The savings would be, in many regards, one is 

if you need fewer parts because of increased reliability, for example, that lessens the amount of inventory you have to carry. The 

administrative overhead, the amount of people that have to manage the assets. And equally important are the amount of people you 

have got to have on the ground to maintain those systems. 

So the more you can keep a system operational, in other words 

not ground it for any problem, the less cost and manpower you 

need devoted to that system. To your second question on how do 

we do it. We focus what we call weapon system teams today in the 

AFGLSC on a specific weapon system. For example, I have a team 

that works the F–15. I have a team that works the B–52. I have 

a team that works the C–130 and on and on. And those teams are 

entrusted with the responsibility of looking at how they can ensure 
18 

that we don’t have grounded systems and when we do, we can respond very quickly. So the first point would be we are very focused. 

Mr. ANDREWS. So they diagnosed what used to cause the 

groundings and they fixed it? 

General MCCOY. We are proactive rather than reactive. And that 

has probably been one of the underpinnings of—— 

Mr. ANDREWS. Can you give us an example of one of the ways— 

what did they diagnose and start to do or stop doing? 

General MCCOY. What they look at is, first of all, is what is causing those grounding activities and then how do we put solutions in 

place. An example in the case of the Central Command area of responsibility (AOR), it is a matter of looking at demand patterns. If 

you are strictly looking at historical commands, that may give you 

a piece of the information. But what we want to get is day-to-day 

information on the ground. 

And we have our logisticians on the ground that are providing 

that information. Then we can look forward and see what changes 

can we make, and in some cases, even modifying the component 

that may be failing or bringing that airplane in for some form of 

modification or maintenance to get ahead of the problem. But the 

other point is to make sure that we have properly calculated and 

anticipated demand and have those parts on the ground so that 

you can reduce the number of airplanes that break and can’t fly the 

next day. 

Mr. ANDREWS. That is an answer which does not surprise me and 

sounds really very viable and valid, which leads to my final question for Mr. Solis. One hypothesis that I would offer is that the 

more data you have and the more you know how to manipulate it, 

the better job you are going to do at diagnosing problems and preventing them. I think I am paraphrasing what the general just 

said, but his teams got on the ground, analyzed what used to cause 

150 groundings a year ago, took some preventive measures and 

knocked it all the way back to 30. So they created a database. They 

understood it and they used it. How typical are such databases 

throughout our acquisition system? In other words, if I was responsible for buying bottles of water, how much data would be available 

for me about patterns of how much water we used, when, and how 

much we paid for? 

Mr. SOLIS. I will talk about in terms of the Army, in terms of 

some of the experience we have had. There are models that the 

Army can run for example, to look at war reserve requirements to 

look at higher operational tempo (optempo), particularly at the beginning or the outset of an operation. Some of the things that you 

mentioned in your opening statement with regards to some of the 

problems or shortfalls they had, there were war reserve models 

that I mentioned that are out there. Had they run those models 

prior to the operation, I believe that some of those shortfalls would 

have been alleviated. 

Mr. ANDREWS. Have you gone back and actually run the models? 

Let us take the lithium—or whatever kind of battery, but lithium 

battery, whatever it was. Let us use the battery example. Is there 

a model that would have forecast how many batteries would be 

needed for an operation the size of the one in Iraq? 
19 

Mr. SOLIS. It would have not only for that, but for things like 

tank tread, tires. I mean, you get into modeling what your potential—— 

Mr. ANDREWS. Did anybody use it before the operation? 

Mr. SOLIS. At the time when we looked at it, the answer was no. 

Mr. ANDREWS. Why not? Do you know? 

Mr. SOLIS. There were—one reason was that the information did 

not get to the logisticians, although there was some disagreement 

about that. It is not clear to us why that did not occur. 

Mr. ANDREWS. I say this coming full circle as I said at the beginning of the hearing. I would assume part of the answer to the question ‘‘why not’’ is because they had to move 160,000 people 5,000 

miles away in a hurry. And I understand that is a huge job. And 

sometimes you can’t do it as perfectly as you would like. But I 

would hope that one of our goals—and I see you moving in this direction—would be to institutionalize on a macro level what General 

McCoy just talked about on a micro level, that people responsible 

for those airplanes in Central Command had data in front of them 

about why we had 150 groundings a day, understood how to manipulate and use the data, drew some conclusions about why we had 

the situation and did something about it, right? And saved money. 

It increased our use of our resources, and I would hope that we 

could institutionalize that. That is the idea. Mr. Conaway, do you 

have any follow-up questions? 

Mr. CONAWAY. Just one. Using the refrigerator as an example, 

folks work better with incentives and rewards and is there any system within your system, are there ways to reward or incentivize 

people to do the kinds of things that you are talking about? It is 

music to my ears to hear you say you have a focus on spending 

money as if it were your own money, because we all make better 

decisions in that regard. Are there incentive programs or reward 

programs that reward folks who go a little bit beyond just the normal deal to save taxpayer money? Which leads to the other point, 

the other semantics issue, Ms. Heimbaugh. You mentioned congressional funding. Congress doesn’t have any money. We take it away 

from taxpayers. So it is taxpayer funding. But are there ways to 

reward it within your system that makes sense? Are there ways 

that you like to set up that are currently in place? 

Ms. HEIMBAUGH. Yes. From the acquisition standpoint, we do 

have and have recently established an award program that does 

recognize the acquisition folks that do step up and make different 

improvements and processes and also that do excel in some of the 

things that they are responsible for. So we have recently put in 

several acquisition programs and I think that is—will help address 

some of the issues. 

Mr. CONAWAY. General McCoy, are there dollar incentives or savings that result from doing things better than you were doing them 

before? 

General MCCOY. Absolutely, sir. Not only on the acquisition side, 

but the customer side. We encourage our customers, our airmen on 

the ground who receive the products and use the products to challenge particularly pricing. If for some reason they feel that an item 

is overpriced, we give them a challenge to bring that to the attention of their leadership. And we have had everything from zero 
20 

overpricing award systems to making sure through suggestion programs or what have you that we can even give some kind of cash 

incentive or some kind of award to people to do that. And trust me, 

that is one way to make sure that people are looking very carefully. 

Because they know that they can not only save the taxpayer dollars, but they can also be recognized for that kind of effort. And 

we applaud that and we encourage it. 

Mr. CONAWAY. Thank you, Mr. Chairman. Witnesses, thank you 

very much. Very informative today. 

Mr. ANDREWS. Could I just ask the general, does that apply to 

uniform personnel or civilian or simply uniform? 

General MCCOY. It applies to both, yes, sir. We have a tremendous number of civilian and military uniform at every point of our 

supply chain and so we do apply that. And then, in fact, many of 

the incentives and cash rewards that we can give are those that 

we give to civilians, in many cases decorations to our military if 

over a period of time, they have shown that as a part of their job 

they are saving money, make things more efficient and putting 

more capability in the hands of the warfighter. 

Mr. ANDREWS. Sound goods to us. Mr. Coffman, do you have any 

follow-up? 

Mr. COFFMAN. Mr. Chairman, I have no further questions. 

Mr. ANDREWS. I would like to thank my colleagues and this outstanding panel. You have prepared thoroughly and I think you enlightened the panel. Where we are going from here is that we will 

be considering your written testimony. And I would appreciate you 

supplementing the record with the requests we made this morning. 

In the first quarter of 2010, the panel is going to meet and discuss among ourselves recommendations that we think would respond to some of the issues raised in our hearings, we would certainly solicit your input as to those recommendations as to what 

you think could be done. The panel will be issuing a report in the 

first quarter of calendar 2010 with the goal of presenting to the 

chairman and the ranking member of the full committee some legislative ideas for inclusion in next year’s defense authorization bill. 

So we welcome your continued participation, not just in this 

morning’s hearing, we thank you for the job that you did. And the 

hearing is adjourned. 

[Whereupon, at 10:36 a.m., the panel was adjourned.] 
A P P E N D I X 

SEPTEMBER 24, 2009 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

SEPTEMBER 24, 2009 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

SEPTEMBER 24, 2009 

(69) 

RESPONSES TO QUESTIONS SUBMITTED BY MR. ANDREWS 

Mr. SOLIS. As noted in the testimony, GAO previously reported that DLA acquired 

an aircraft refrigerator under its prime vendor program that was almost twice the 

amount paid two years earlier. The type of contract used for this purchase was an 

Indefinite Delivery, Indefinite Quantity contract. It was purchased under a prime 

vendor contract for food service equipment under DLA’s Subsistence Directorate. 

The same contracting officer was responsible for both purchases. According to DLA, 

the problem occurred because the contracting officer was not conducting price reasonable determinations. In order to correct the problem, DLA now required that contracting officers conduct price reasonable determinations up-front. [See page 10.] 

Ms. HEIMBAUGH. Based on FY 08 data, we use market supplied products for 48 

percent of the Defense Logistics Agency’s total contract actions representing 40 percent of award dollars. Products for the remainder of our customers’ requirements 

are manufactured to meet those requirements. [See page 17.] 

General MCCOY. The primary goal of the AFGLSC is to streamline our supply 

chain management processes and improve support to the warfighters. A measurable 

outcome of our effort is increasing the number aircraft available to fly required missions each day. By reducing the grounded aircraft from 150 to 30, we are able to 

realize a reduction in the use of premium transportation to expedite parts shipments by approximately $252,000 per month for 1 year. 

The AFGLSC has implemented a number of initiatives that have resulted in the 

reduction in aircraft grounding incidents. Some examples include: 1) Implementation of a demand forecasting tool to measure forecast effectiveness; 2) Collaboration 

with maintenance organizations throughout the Air Force enterprise to improve 

component repairs; 3) Implementation of new and streamlined contracting strategies 

that have reduced purchasing lead times; and 4) Implementation of ‘‘proactive leveling’’, whereby likely critical stockouts are identified and stock levels are established to mitigate the risk. Using a global, enterprise approach to supply chain management, we have been able to improve aircraft availability while reducing operating cost. [See page 17.] 

RESPONSE TO QUESTION SUBMITTED BY MR. COFFMAN 

Ms. HEIMBAUGH. There would be a one-time cost for a cloth manufacturer to 

change the camouflage pattern of the existing Army Combat Uniform (ACU). That 

cost would be determined by the amount of work required by the cloth manufacturer 

to convert to the new cloth. In discussions with our cloth manufacturers, they are 

unable to quantify that exact cost without specifics on the fabric involved; however, 

at a minimum, for the same basic fabric, the cost to change a pattern would be between $400.00 and $1000.00 per loom. The cost to then field that uniform for the 

entire Army, Active, Guard and Reserve, would range from $360,498,600 to 

$699,383,160. This cost range is based on the new uniform being issued in an all 

Fire Resistant (FR) fabric with and without permethrin, half FR with and without 

permethrin and half non FR or all non FR fabric. 

The following assumptions were made in developing this cost. 

1. All soldiers would be issued four uniform coats and four trousers, one patrol 

cap and one sun hat. 

2. Every Active duty, Guard and Reserve Soldier would get the uniform. If the 

new uniform distribution is limited to those soldiers deploying to Afghanistan, 

the total cost would be considerably less. 

a. 562,000 authorized active duty 

b. 572,000 Guard and Reserve 

3. The only difference in the new uniform would be the camouflage pattern. No 

changes in material or construction from the current Army Combat Uniform 

(ACU). 

4. Prices used to determine this cost are based on the current Standard Prices 

for these items. 
70 

5. This estimate does not include the potential cost of issuing other equipment 

type items in a new pattern. This includes such items as the Extreme Cold 

Weather Clothing System (ECWCS), Improved Outer Tactical Vests (IOTV), 

Modular Lightweight Load bearing Equipment (MOLLE), various coveralls, 

and any other equipment item that may have the ACU camouflage pattern. 

6. This estimate does not include the cost of disposal for any residual items in 

the old camouflage pattern. 

[See page 15.] 

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