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DLA BUNDLING STRATEGY HURTS SMALL BUSINESSES
There is no greater threat to our companies than losing contracts and contracting opportunities that have traditionally been offered to small businesses. Thousands of small businesses that do DOD work directly or through DLA are impacted by this purchasing strategy. These suppliers are unique and critical within our national defense supply chain. They represent manufacturing’s surge capacity, irreplaceable technical expertise, and competitive pricing due to their company’s size and efficiency.
Millions of dollars in contracts have already been lost, and billions more are soon to be rerouted to new contractors. Many companies have already closed due to the loss of their traditional source of government contracts. As a result, taxpayers are paying inflated prices because of large contractor overhead rates. In every category, this is a clear and present threat to America’s supplier base and our national defense readiness.
Background on the Bundling Campaign:
1. Spare Parts Breakout Program - For many decades now, and at least since 1984-5 when Congress passed legislation for the Spare Parts Breakout Program for the USDOD, non-OEM approved manufacturers (mostly all small businesses) have been supplying aerospace spare parts and assemblies to the USDOD through the Defense Logistics Agencies (DLA's) with competitively priced and quality products. And they did it in a timely manner. The DLA contracts directly with these approved USDOD suppliers using a public competitive bids process on (DLA Internet Billboard System) DIBBS. This works extremely well for USDOD approved suppliers with a CAGE code and an approved Quality System accreditation, as it allows all small businesses direct access to USDOD solicitations in an open competitive marketplace. Typically, OEM approved suppliers do not bid directly to the DLA but do so through the OEM.
2. DLA assigned AMSE and AMC codes - All spare parts procured under the Spare Parts Breakout Program are assigned an Acquisition Method Suffix Code - referred to as AMSC or AMC codes- which determine whether parts are procured non-competitively from prime manufacturers or competitively from the open market in DIBBS. The codes are assigned after a screening process that is to be completed by the Engineering Support Agencies within each Military Service. There is unquestionably audit evidence to suggest a failure to adequately and correctly assign correct AMC codes, and that of codes being manipulated, to the detriment of small businesses who are non-OEM approved suppliers. This is the cause of serious concern for all non-OEM approved small businesses operating in and dependent on the DLA DIBBS orbit.
3. This critical Spare Parts Breakout Program is now under threat due to the growing bundling of long-term contracts by the DLA with the Prime Manufacturers and major OEMs and is discussed further under the Talking Points tab on this web site. Our objective is to make the case that congressional intent for Small Business set-aside is being circumvented within the DOD’s goal of reforming purchasing and the bundling strategy is damaging DOD’s supply chain.
BROADENING OUR AGENDA
SBAIC understands there are several key areas that are inefficient, costly, and a threat to our profits and efficiencies. We are building a broad-based Aerospace and Defense coalition with Metal Processors, Material Testing Facilities, Heat Treaters, Non-Destructive Testing, Raw Material Suppliers, and Painting Processors to support reforms that drive up costs across the supply chain.
The OEMs and Prime Manufacturers are making it increasingly more difficult for all suppliers. We are identifying common areas of inefficiencies, excessive costs, and flow down requirements that need visibility and dialogue to create changes. The following are areas where we are seeking stories, ideas, and measurement of how common these (and other) problems are.
CURRENT FACT GATHERING FOR DEVELOPING CAMPAIGNS:
NADCAP Monopoly on standards, fees, and audits
ITARS registration and administration
Costs associated with environmental equipment and permits
Impact from redundant audits for NADCAP approved processors
Costs and processes associated with root cause and corrective actions
Cost/Benefit when forcing suppliers to assume additional administration tasks
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How can you help?
Respond to this call to action.
Work with SBAIC to find your area of participation by either a. Local actions, making financial contributions and or taking a leadership roles by volunteering.
Follow SBAIC leaders as we communicate to legislators, DOD, and aerospace representatives
Provide feedback as we develop new campaigns.
Additionally, if you are interested in supporting the fight to be better represented to either the DLA or OEMs going forward, please contact the SBAIC without delay.
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