# Cost savings through contract consolidation

/ Published Oct. 11, 2016
COLUMBUS, Ohio, 
Agency-wide, DLA’s procurement professionals are being encouraged to look for innovative ways to make the agency’s purchasing activities more efficient. A collaborative team effort at DLA Warren embraced that challenge by securing savings of more than $1.6 million in a recent contracting action with Honeywell International, Inc. 

Those savings were sparked by DLA Warren Contracting Specialist Ashley Kuwik’s initial idea to combine related procurement requirements supporting the Army’s M1 Abrams Tank. Working with fellow contracting specialist Gretchen Perry, they nursed the idea, transforming it into a full-fledged, collaborative project that included a cross section of procurement professionals who enthusiastically contributed their expertise to make it happen. 

“This imaginative and collaborative procurement effort in Warren is exactly the kind of activity DLA Director Lt. Gen. Andy Busch was referring to during his recent visit to Columbus where he reviewed our business operations,” said Land and Maritime Acquisition Executive Milton Lewis. “Incentivizing businesses to improve procurement process efficiencies is a win-win proposition for them and DLA.”

The contract involved replacing the Digital Engine Control Unit (DECU) in the M1 Abrams tank. The DECU functions as the computer that runs the Abrams’ gas turbine engine; the tank can’t move without it. The potential for having part of the M1 Abrams tank inventory operationally unavailable for service made the success of DLA’s procurement actions a high priority for the Army Tank Command’s senior leadership. 

Working individual solicitations Perry identified procurement actions for 572 DECU units; while Kuwik was simultaneously involved in procurement efforts involving 434 circuit cards that were a critical component in the DECU.

“We combined both solicitations so they could be acquired at the same time,” said Perry. We just thought it made more sense and was a more efficient way of ordering once we identified the compatibility of the requests.  The results were very positive, we were able to save money on both the circuit card and the DECU.”

Savings through their determined acquisition efforts totaled more than $1.6 million. They also exercised option quantities at the time of award which reduced the overall contract by more than $100,000. Additional language in the contract incentivized Honeywell’s production capabilities by requiring production quotas that provide even more efficiencies during the contract’s execution.

Another contributor to the team’s success was Abrams Team Leader Blake Padilla. Honeywell initially proposed higher individual pricing on both items. The team worked with Honeywell for more than a year to hammer out a final proposal and Padilla’s inputs helped accelerate their commitment to the project. Throughout the negotiations Padilla coordinated monthly meetings involving everyone sharing requirements associated with the DECU’s acquisition. There were 23 non price items negotiated  before finalizing the contract award.

“We had a hard target date to get this done,” Perry explained “and by looking at both of our pricing information we were able to negotiate them (Honeywell) down.

“This whole procurement story is about the teamwork achieved – it was great! The length that people went through to make sure we met our target date and secured cost savings was amazing. The customer relationships, actions by the Integrated Logistics Support Center (ILSC) and the support from the small business administration office were essential factors in the success of the negotiation efforts.”

“Warren has been looking for opportunities to collaborate with industry and other outside organizations as we’ve worked numerous acquisition requirements. When we see similar requirements like what happened with the Abrams requisition we believe it’s an opportunity to achieve a better deal because of the possible economies of scale and the benefits of combining the requirements. It puts us in a more positive negotiating posture and helps us provide more timely warfighter support.”

According to the Abrams team feedback from Honeywell about the process was positive. Honeywell representatives said they truly appreciated the ongoing collaboration from DLA and felt it really made the process go much faster.