Defense Agency Will Use Sequester, Other Cuts to Make Big Changes

The Defense Logistics Agency is using the current budget environment to its advantage, leveraging the culture of cuts into transformative changes at the Pentagon’s logistics arm.

Vice Adm. Mark Harnitchek, the DLA director, told attendees of Government Executive’s Excellence in Government conference Monday that cuts at the Defense Department have led to increased pressure to institute a culture of change.

“It definitely helps,” Harnitchek said of the culture. “We’re standing on a burning bridge here.”

DLA will meet its planned budget cuts -- $10 billion over the next five years -- by doing more with less, Harnitchek said.

“How do you bake more bread with less flour?” Harnitchek asked. “Well, this isn’t baking. I’m convinced we’re not as organized as we need to be.”

To reach its goals, DLA plans to right size its inventory and decrease material costs. It has already decreased operating costs by no longer keeping an inventory of goods for military personnel such as food and pharmaceuticals, instead relying on private industry to make those deliveries.

“Instead of managing the supply, we’re managing the supplier,” Harnitchek said. “If that’s out there in the commercial industry, why do I need to do it?”

The DLA director also has instituted a practice known as a “reverse auction,” in which potential contractors go online and bid to offer the lowest price to the logistics agency. DLA has recently offered more long-term contracts, forcing commercial partners to improve their offers or be “out of the business for 10 years.”

Ultimately, achieving the necessary results at DLA will not come from trimming fat, but from big ideas and substantive changes.

“We’re a big, big organization,” Harnitchek said. “We’re not focused on the edges here. We’re going for the big movements that make the dials move.”

Harnitchek will not wait for direction from his superiors at the Pentagon, adding: “They really expect me to do this without being told…No one knows it like we do so go figure it out.”