An in-depth report by business executives found Defense Logistics Agency Energy operations already implementing many of the efficiency opportunities recommended by their consultants.
Business Executives for National Security is a nonprofit organization of senior executives who volunteer their time, expertise and resources to assist defense leaders on a variety of national security challenges.
The BENS report was initiated in 2012 at the request of DLA Director Navy Vice Adm. Mark Harnitchek to identify measures that will reduce DLA’s fuel operational cost as well as improve DLA Energy’s fuel procurement operations and distribution system.
The study lasted for six months and in February 2013, BENS presented DLA with an extensive report aimed at improving the fuel procurement process.
The Executive Agent Office Director Regina Gray said the BENS report is one of several efforts for the agency to cut costs by $10 billion over five years.
“The BENS report represents an independent assessment of DLA Energy's mission by industry experts and provides recommendations for achieving additional cost savings (efficiencies) in how we conduct business,” Gray said.
As the DLA Energy lead for this effort, Gray coordinated the study with the senior leadership for acquisition, DFSP management, financial and legal matters affecting DLA Energy’s mission.
“It was important to us that BENS fully understood how and why we do business the way we do,” Gray said. “This is why we had quite a number of meetings and email exchanges with them over the last six months and provided them a lot of information on how we do business, including historical cost and sales data.”
The BENS executives found DLA Energy to be “a proficient and effective fuel purchaser” already pursuing multiple efficiency opportunities to further improve its market engagement strategies.
The BENS task force recommended DLA Energy pursue other avenues outside of direct procurement reform if the agency in order to make significant budget reductions in the next five years. According to the report, the greatest savings potential lies in the Agency’s interactions with its customer base. Its recommendation is for DLA take a more active role in monitoring, assessing and guiding customer use of its fuel distribution network.
The Deputy Director of Acquisition, Supplier Operations Bruce Blank said as part of its tasking, the BENS task force analyzed several prior recommendations aimed at improving DLA’s fuel procurement operations. The task force found that the ongoing conversion to commercial jet fuel in the United States offered the most significant cost benefits.
“Fuel procurement, primarily jet fuel which accounts for approximately 75 to 80 percent of DLA Energy’s fuel purchases, represents the largest portion of expenditures,” Blank said. “The benefits of using commercial grade fuels over their military specification counterparts include greater availability of fuel in the market, the ability to share commercial storage facilities, opportunity to reduce inventory levels and a general reduction in overall fuel cost.”
Other suggestions from the BENS study encourages the revision of “Standard Price” to develop more accurate budgeting and supplier relationship management, which could lead to further savings.
“Their efforts to assist us in finding more ways to cut costs were most appreciated,” DLA Energy Deputy Commander Mike Scott said. “With the task force members representing large fuel buyers, refinery owners, and petroleum industry analysts, we found the dialogue with them over the past several months of review interesting and informative. We greatly appreciate the willingness of these industry experts to take the timeout of their demanding schedules to share their experience with us.”
The BENS report commended Harnitchek and his senior staff for their full support, which was critical in providing a full and accurate assessment of DLA Energy’s business operations.
The BENS report’s authors acknowledged that these austere times will require innovation, not only in technology, but also process changes to reduce costs.