Description
Organization: NAVSUP, NRCC Naples
Team Name: NRCC Naples Contracting Team
Related Acquisition Topic(s): Acquisition Practices Streamlining, Commercial Practices, Cycle Time Reduction (CTR), Financial Management, Paperless Program Office, Strategic Sourcing
Description: Making the Acquisition System More Efficient, Responsive and Timely.
The Regional Mediterranean-wide Husbanding Services contract, awarded to Mediterranean Logistics Services (MLS) for approximately $200M on 1 April 1999, consolidated the requirements historically awarded under 43 contracts, which significantly reduced acquisition lead-time for the customer and provided a single industry point of contact for the Mediterranean.
The basis for award was best value, considering price and capability, which included the evaluation of past performance. Requiring offerors to demonstrate their understanding of the Government's requirements in an oral presentation also significantly reduced the Government's evaluation of this factor to one week. In its first six months of operation, the actual costs under the contract were compared to the costs which would have been incurred under the previous contracts, and a savings of approximately $1.9 million was achieved. Extrapolating that savings over the 10-year life of the contract would result in savings of $19M, equating to 10% of the total contract cost.
This contract provides coverage for every port in the Mediterranean, greatly increasing the flexibility for the fleet to visit any port that mission demands, at any time, with minimum notice, and with a consistently high quality level of service. While this incorporates some cost risk (as not all line items in all ports are pre-priced), the definitions and level of service are established, as are basic fees. Additionally, the contract allows for negotiation of prices for specific services that may be provided in one port and not another. This flexibility was demonstrated during the war in Kosovo, when US Navy ships visited ports in the Balkan area that had traditionally not been visited, and the contractor provided outstanding operational support.
In planning the contract and in its administration, change was anticipated and planned for. The team recognized that there could be situations in which other military components might need husbanding and Operations Other Than War (OOTW) services; thus the contract also provides for services for all US and NATO armed forces. Again, during Kosovo this was a major factor in the success of the US Army, as their LSVs made continual use of the contract in both Italy (Bari/Brindisi) and in Albania (Duress).
When developing this acquisition, the team concentrated on making logistics easier for the fleet. By including the same units of issue in all ports, the ships deployed in the Sixth Fleet know how they will be charged for all services. This allows each ship to establish the same, non-intrusive monitoring plan that ensures it only pays for services received. Also, when necessary, bills can be paid at the next port of call, because the same contractor covers all ports. This significantly reduces each ship's administrative burden by eliminating the requirement to coordinate payments with another shore-based office.
This contract also includes coverage for peacekeeping and emerging DoD missions in a unique way. Specifically, in every country that borders the Mediterranean, the contract includes line items for OOTW. Under these line items, the customer can order an individual contractor employee from the local area to act as translator, political facilitator and expert in the local market. This facet of the contract enables US personnel to arrive on the ground and to immediately become operational, reducing the learning curve and thereby reducing the time to establish an effective presence in a contingency region. During Kosovo, with only about 24 hours' notice, it was MLS, the contractor, that arranged for 40 specialized vehicles at Thessaloniki, Greece, to bring the USMC's 26 MEU into Macedonia/Kosovo. At that time, there was a significant amount of international competition for resources in Thessaloniki, but due to the effective local presence of MLS, the United States was the first to receive the necessary vehicles. Having MLS as the single contractor for husbanding services for the entire Mediterranean has had a significant impact on meeting the seamless logistics goal of the operating forces.
Integrating Defense with the Commercial Base and Practices.
The Mediterranean-wide regional contract has significantly advanced the level of commercially available technology used in providing logistics support to the fleet. The husbanding services contractor must communicate with the ships and shore activities using e-mail. This opens a line of communication directly between the ship and the husbanding services contractor. Not only is this less expensive than INMARSAT and similar systems, it permits short lead-time reaction to changes such as cancellations, diversions, delays, etc. The contract also requires the contractor's systems to be Year 2000 compliant. During this year, the contractor tested its own systems and obtained certificates from over 30 ports indicating their level of readiness for potential problems in January 2000.
The Team focused on incorporating commercial best practices in the contract, such as requiring the contractor to provide port visit cost estimates via e-mail to a ship within 48 hours of receipt of its logistics requirements message. This requirement mirrors a standard commercial practice in which commercial husbanding agents provide "pro forma" costs to a ship's owner prior to the ship's arrival. This estimate allows the ship and the supporting logistical infrastructure to scrutinize anticipated services and to make educated decisions on whether to visit a particular port, how long to stay, whether to use specific services or to avoid them, whether to anchor out or go pierside, etc.
In commercial practice, it is also common for the ship's owner to assess how close the cost estimate was to the actual costs. This is also built into the contract. The contractor is required to provide actual costs within 3 days of the ship's departure via another NRCC initiative, a commercially developed system called CRAFT (Cost Reporting, Analysis and Forecasting Tool). The system then compares the estimates with the final charges and allows an analysis of the accuracy of the estimates. This accuracy measure is one of the elements used in the evaluation of the contractor's performance under the Contractor Performance Assessment Reporting System.
This contract represents successful partnerships within DoD and with industry. The Team coordinated with other Government activities to ensure there would be no duplication of effort and to ascertain their requirements. As a primary example, NRCC worked with the Morale, Welfare and Recreation (MWR) offices to identify ports where they would provide primary MWR types of support and those where it would be provided by the contractor. NRCC also coordinated with the Military Sealift Command to include its Navy Fleet Auxiliary Force ships in the contract. Perhaps of greater significance , this contract established a true partnership between the Navy and MLS. This ten-year contract (base year plus nine one-year options) serves as an inducement for the contractor to make long-term investments in equipment to provide better and less expensive service. To ensure the Government/industry partnership remains successful over the contract term, the Team included the requirement for quarterly meetings to address issues of mutual interest and concern.
Accomplishing Specific Goals Associated with Acquisition Reform Initiatives.
The Regional Mediterranean-wide Husbanding Services contract is the first awarded by NRCC Naples that requires the contractor to accept payment via the Government Commercial Purchase Card. It also allows for payment via Electronic Funds Transfer (EFT) once the Navy Commercial Bill Paying offices overseas are capable of effecting the EFT. NRCC is working aggressively with the contractor, with Master Card, and with the various paying offices to improve the payment process and to make EFT a reality in the challenging overseas environment. The NRCC Team is now focusing on its business and logistics role by solidifying partnerships with the ships in reviewing their logistical needs and suggesting alternatives to reduce their overall port costs.
