AF aims to save $2B, improve lethality with new acquisition approach
By Debbie Aragon, Air Force Installation and Mission Support Center Public Affairs
/ Published April 26, 2018
JOINT BASE SAN ANTONIO-LACKLAND, Texas (AFNS) -- A new acquisition program has the potential to help the Air Force save $2 billion and make it a more lethal fighting force, Air Force acquisition leaders believe.
The aim of category management is to find efficiencies in large goods and services contracts, said Rich Lombardi, Air Force deputy under secretary for management and deputy chief management officer, during a visit to the Air Force Installation and Mission Support Center at Joint Base San Antonio-Lackland, April 23, 2018.
“With the publishing of the National Defense Strategy, we have a clear understanding of where the department is going and category management clearly is a good fit with the line of effort to reform the department,” Lombardi said. “Which in turn provides the potential to realign resources to increase the lethality and readiness of the joint force.”
Category management is being fielded across the federal government and provides a new acquisition standard by analyzing and managing costs in 10 categories.
Until recently, the Air Force had a goal of saving $1 billion over five years. Thanks to progress already made in category management, that goal has doubled, explained Brig. Gen. Cameron Holt, Air Force Installation Contracting Agency commander, whose AFIMSC-subordinate organization executes the program.
“Category management is all about innovation and affordability, and it’s one means to help achieve the secretary of defense’s vision,” he added.
The Air Force’s adoption of the approach began about four years ago.
“(Brig. Gen.) Casey Blake, commander of AFICA at the time, directed his staff to take lessons learned from strategic sourcing and improve and expand upon the successes,” Holt said.
The staff developed a plan that led to the category management concept, which was expanded after Holt approached Lombardi with the idea of implementing it across the Air Force.
“There had been a lot of really great work done, particularly here in (AFIMSC), from the standpoint of facilities, construction and security systems,” said Lombardi, whose office manages business operations across the force.
To build on that momentum, Lombardi discussed the idea to the under secretary of the Air Force, and it wasn’t long before she appointed him as the service’s lead for the initiative.
To date, category managers have been appointed in six of the 10 category areas, which comprise 94 percent of the Air Force’s operational spending.
After appointing category managers for facilities and construction, and security and protection - already in place at AFIMSC – the Air Force appointed information technology, professional services, industrial products and services, and transportation and logistics category managers.
The category management approach is a cultural change for the Air Force, Lombardi said.
“The Air Force is driving a paradigm shift from budget execution to strategic cost management in an effort to obtain maximum value for each precious taxpayer dollar spent,” Holt said.
Strategic cost management is based on data – the Air Force’s ability to gather data and analyze it to then identify the appropriate actions to drive down cost while achieving mission performance.
The Air Force is bringing people together who understand “what the data is telling us and how best to buy certain types of commodities,” Lombardi added, citing enterprise office furniture purchasing as a recent example.
Experts in the facility and construction area first looked at the furniture requirements and determined what a common office configuration should look like. They then started working with commercial equipment managers and furniture manufacturers to negotiate a price rate.
After the Air Force negotiated a lower price with the manufacturers, it required them to pass on that lower price to small businesses that contracted with the Air Force for furniture installation, Lombardi said.
Because of the Air Force’s approach, the service was able to get an economy of scale for pricing.
This business deal resulted in a 29 percent reduction in price, 100 percent of systems and modular furniture contracts being awarded to small businesses, and a $15.3 million savings for the Air Force.
“It was an ingenious way of being able to not only be more efficient and effective in our buy but also ensure we were focusing on our small business partners along the way,” Lombardi said.
Although Air Force category management has come a long way since the idea was born in AFICA, there is still much to do, Lombardi said.
“(AFICA has) been the backbone of category management from the very beginning,” Lombardi said. “(They) help organizations and category managers understand (the concept) and provide tools and training for them to accomplish the mission.
“This is a journey and it’s going to continue to be a journey,” Lombardi said, adding that teams are getting smarter and leaning on some of the more mature category managers at AFIMSC for guidance.
“They’ve learned a lot over the last few years. They’ve (done) a lot of great work so now we’re (applying lessons learned) to the other category managers,” he said.
Holt said his long-term goal is transforming operational acquisition experts into business leaders with an enterprise perspective who are “always trying to obtain the best deals for the Air Force and ensuring taxpayer dollars are well spent.”