Marine  Magnet Dispatch Service Centre
  • Drone Fleet Readiness Office
  • Status Updates
  • Marine Corps Integration
  • Submit Comments
  • Download Reports
  • Building Drone Swarms

Top 10 Block Buy Multi-Year Contract Implementation Questions for Equipment/Service Supplier Provisions

12/19/2016

13 Comments

 
Switching from traditional year-to-year contracts with suppliers to bulk purchases or multiyear procurements can reduce DoD costs by allowing contractors to improve long-term planning. Multiyear procurement and block buy contracting are special contracting mechanisms used for limited number of DoD acquisition programs, at congressional direction. In planning for future acquisitions, Congress must weigh the potential cost savings and advantages of new capacities in Supplier Base from multiyear procurements and block buy contracting against the flexibility of contracts with option years.

Using Multiyear procurement and block buy contracting more frequently would further reduce flexibility of Congress and DoD for making changes to future years military equipment procurement programmes years in response to changing strategic or budget scenarios. But multiyear procurements, which usually authorise 2-5 years worth of purchases without requiring  DoD to exercise contract options for later years, can save an estimated 5-10 percent on contract costs, or even more in some instances.

Under multiyear agreements, DoD can front-load its purchases of components with long lead times, such as aircraft engines, rather than buying each engine with each plane over a number of years. This allows component suppliers to maximise economies of scale associated with batch orders.

Multiyear deals also reduce uncertainty for suppliers, providing more incentive to invest in process improvements at the start of contracts, because DoD must certify at the start that its minimum need for the product won't change over the course of the procurement.

This confidence can permit the contractor to make investments in training workers, or for building, expanding or modernise/optimise capacity of site operations facilities for production of items being procured by DoD under the contract.

Here we outline the main changes proposed for multi-year contracting and advanced procurement together with establishment of new DoD rules. Several advantages result from improved production scheduling, productivity increasing front end investments and economies of scale could be achieved if the restrictions on multi-year contracts were relaxed. Proponents of expanded multi-year contracting have sought a number of advantages including 1) Reduced procurement quotes values 2) Increased supplier productivity 3) Broadening of supplier base.

Advanced procurement has been limited in principle to small quantities of long lead time components for the purpose of shortening the time required to finish assembly of the complete end item. In other words, advanced procurement originally utilised by DoD initially aimed at schedule projection rather than cost savings. Now, however, advanced procurement is perceived as method for achieving both these objectives, and others as well.

We have proposed DoD consider authorised advanced procurement contracts to: 1) Be used for multi-year advanced procurements with sequential funding, 2) Include raw materiel and parts as well as components, 3) Buy in economic order quantities, 4) Encourage subcontractors to produce at more efficient rates, 5) Empower subcontractors to enter and continue in defence markets in order to strengthen supplier base and improve opportunities to buy competitively.

It appears, therefore, that advance procurement contracts can used by DoD widely in the future, in both the annual and multi-year form. Advanced procurement contracts in the multi-year form may also be used to either to support multi-year, complete end item contracts or partly to substitute for them as means for as means of achieving production efficiencies and cost savings.

In other words, procurement of complete end items could continue to be handled in the normal way by means of annually funded annual contracts, while multi-year advance contracts could be used to exploit opportunities for production capacity/efficiency and cost savings in purchasing selected inputs to production of the complete end item. Thus, it may be possible for DoD to achieve substantial savings through multi-year advance procurement while continuing to enjoy the advantages of annual contracting for the bulk of a procurement programme.

There is, however always some risk to DoD bottom line that programmed number of complete end items will not be produced, and therefore the inputs contracted for in advance procurement will turn out to be excess for production needs. The consequences are generally not serious when the advance procurement contract is limited to single year requirements of inputs that are themselves end items, or can be used as spare parts or like some raw materiel, can find a commercial market.

But the risk to DoD of overbuying potentially increases as advance procurement contracts are expanded to provide for additional future years of requirements. And the consequences of overbuying can become more serious as the contract is extended to include “bits and pieces” for which, apart from their role as inputs to end item production there is neither military use or potential to be successful in commercial markets. The achievement of net savings through expanded use of advance procurement will require a careful weighing of these risks and their consequences.

DoD will now able to pursue richer set of procurement objectives and in doing so to use greater variety of funding/contract modes. Annual contracts would probably be used somewhat less frequently, being partly replaced by contracts for multiyear procurement sometimes full front funded but usually funded consecutively to sometimes be used for purchase of major weapons systems.

Advanced procurements will be multiyear as well as annual. Many different combinations of advanced procurement contracts will be possible. These opportunities will probably lead to a period of experimentation by DoD acquisition professionals.

Today, DoD procurement obligations are characterised by a high percentage of full funding and partial but increasing element of advanced procurement; ie, procurement of items other than complete end items. In the future, unfunded liabilities and liabilities for non-end item can be expected to increase, perhaps only modestly, but possibly dramatically. Careful risk assessments will be required.

DoD may consider pursuit of new/multiple objectives in purchasing major weapon systems and even smaller items like spare parts. As we have highlighted, advanced procurement was authorised only as means of shortening period required to obtain complete end items. Now this method of contracting can be used for objectives as diverse as cost increase avoidance in procuring raw materiel, establishing efficient production rates, and strengthening lower tiers of supplier base.

We have highlighted results of innovative contracting advances in DoD processes designed to open up many new choices for Site Visit Executive in presenting appearance and exercising solutions for future challenging procurement questions:

1.  How will existing process direction be revised to implement new broad guidelines we have presented, promoting use of multiyear and advanced procurement contracting?

2.  How will critical specifics be used in determination of risk distribution between stakeholders in acquisition process so suppliers are motivated to make required front end adjustments?

3.  Will Site Visit Executive utilise discretionary authorities to remove or modify existing requirements that sequentially funded multiyear contracts must address fixed/level prices?

4.  If level pricing is no longer required, what kinds of quote profiles can be substituted, and how will they relate to expected cost/quantity models?

5.  To what extent should advance procurement substitute for multiyear contracting for complete end items?

6.  How should funding options be evaluated for multiyear advance procurement contract models?

7.  How will multiyear contracts affect price competition between suppliers in production of items contracted for?

8.  How can effective supplier competition be best achieved in multiyear procurement?

9.  How will suitable procurements be selected for multiyear contracting, prescribed criteria applied and risks identified of assessing expected cost/benefit tradeoffs?

10. To what extent should multiyear contracting be used to enhance programme stability, as well as to exploit inherent stability?
13 Comments
best essay writing companies link
12/24/2016 06:31:02 pm

Your site give opportunity to the worker to supplier to purchase block through it. According to me it is good approach and we need this. It is also helpful for supplier how to reduce your budgets. The article really good and helpful.

Reply
MegaBox HD apk download link
12/30/2016 07:34:58 pm

nice

Reply
bestdissertations.com link
2/3/2017 08:55:22 pm

I must say top 10 posts are pretty popular. This is how you can reach to the top.

Reply
mobdro kodi link
5/22/2017 03:35:16 pm

Mobdro on Kodi is a free app. It will let you see TV serials online for absolutely zero cost, and one can also download and keep it

Reply
Fildo for PC link
8/30/2017 10:23:47 pm


nice post
<a href="https://fildoappdownload.com/">Fildo for Windows</a>

Reply
aptoide for ios link
8/30/2017 10:24:27 pm


rather than paying for it through Google store. We have Download Aptoide APK produced a terrific alternative app which serves the iOS users
<a href="http://aptoideappdownload.com/2016/06/aptoid-apk-download-for-ios-and-mac.html">aptoide for ios</a>

Reply
TEATV APP link
9/21/2017 01:40:12 am

NICE SITE TO GET..............<a href="https://teatvappdownload.com/">teatv app</a>

Reply
Escorts in Kolkata link
10/5/2017 11:05:40 am

Beauti Queen amazing kolkata escorts agency alwyas ready for you at your doorstep. Beauti Queen provide you high profile independent girl in kolkata, escorts service in kolkata, kolkata escorts. If you are looking for the ultimate encounter in Kolkata then I am your sophisticated young Kolkata escorts that provides upscale companionship for making your night becomes true.

Reply
UKTVNOW FOR KODI
10/10/2017 07:40:58 pm

LOVE THE SITE...............<a href="https://uktvnowapks.com/uktvnow-for-kodi/">Uktvnow for Kodi</a>

Reply
Gurgaon Escorts link
10/13/2017 02:10:20 am

Jiya Roy is a high class luxury and premium independent escorts agency in Gurgaon offering sexy independent escort Girls, models and cheap rate call girls for incalls and outcalls and travel arrangements. Female companions available 24/7 for business events, tour guide and much more.

Reply
Gurgaon Escorts link
10/13/2017 10:26:12 am

Gurgaonfemales.in offers highly educated model from Gurgaon and best Escorts service in Gurgaon through some of its sizzling Independent escorts in Gurgaon Call Girls who are available to customers 24*7.

Reply
Independent Escorts in Kolkata link
10/14/2017 12:43:28 pm

Renu Das Kolkata Escorts Services has gorgeous females provides Independent Escorts Service in Kolkata call girls at 100% satisfaction with VIP models. Provided Kolkata escorts at our agency are professional in nature and are eager to serve you at your place.

Reply
cotomovies FireStick link
7/28/2019 09:52:22 am

nice post....<a href="https://cotomovies.co/">cotomovies FireStick</a>

Reply



Leave a Reply.

    Site Visit Executive

    Provides Periodic Updates Operation Status

    Archives

    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    February 2015
    January 2015
    December 2014
    April 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    June 2013
    May 2013
    April 2013
    March 2013

    Categories

    All

    RSS Feed

Web Hosting by Dotster