Navigating the Department of Defense Acquisition Process Research Paper

secondary literature and a survey of practitioners concerning the fact that Defense Logistics Agency (DLA) acquisition costs are often excessive because first article testing (FAT) requirements are often misapplied to DLA contracts. This study was guided by three objectives: (a) to determine the frequency of misapplication of First Article Testing requirements to Defense Logistic Agency contracts; (b) to determine Engineering Support Agency and Defense Logistics Agency employee interpretations of First Article Testing requirements; and, (c) to provide Engineering Support and Defense Logistics Agency employees with First Article test requirement discriminators that will assist with appropriate First Article Test requirement application to Defense Logistics Agency contracts. This study was also guided by the following research questions: (a) what major factors do Engineers and Defense Logistics Agency employees consider prior to applying First Article Test requirements to contracts?, and (b) what specific discriminators can be applied to First Article Test requirement decision making process? A summary of the research and important findings, answers to the guiding research questions and future directions for research are presented in the study's concluding chapter.

First Article Testing Costs for Defense Logistics Agency Contracts

Course

October 17, 2014

Table of Contents

Chapter 1: Definition of the Problem

Problem Statement

Research Objectives

Research Hypothesis/Research Questions

Assumptions

Definitions of Terms

Limitations and Delimitations

Chapter 2: Literature Review

Chapter 3: Methodology

Chapter 4: Data Analysis

Chapter 5: Summary, Conclusions and Recommendations

Chapter 1: Definition of the Problem

Problem Statement

The Defense Logistics Agency Acquisition (J7) Directorate is tasked with the management of the establishment and operations of overall procurement policy and oversight for DLA's 5.2 million managed items (DLA mission, 2014). According to the DLA's Web site, "With nearly $35 billion in annual sales, DLA buys, stores and distributes food, fuel, uniform apparel, pharmaceutical, medical and surgical products and equipment and weapons system repair parts for the military services and other customers worldwide" (DLA mission, 2014, para. 3). The Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD (AT&L)'s Guide for Performance-Based Service Acquisition and the Seven Step Process (ACQ 265) (2009) describes the first article testing regimen requirements for the DLA: "Production testing is planned, conducted, and monitored by the materiel developer. FAT includes preproduction and initial production testing conducted to ensure that the contractor can furnish a product that meets the established technical criteria" (p. 120).

In sum, first article testing and approval ensures that the contractor can furnish a product that conforms to all contract requirements for acceptance (First article testing and approval, 2014). Defense Logistics Agency (DLA) acquisition costs, though, are often excessive because First Article Testing (FAT) requirements are often misapplied to DLA contracts, a problem that is investigated further through a systematic review of the secondary peer-reviewed, scholarly and governmental literature based on the research objectives and hypothesis outlined below.

Research Objective

The overarching objectives of this study were three-fold as follows:

1. To determine the frequency of misapplication of First Article Testing requirements to Defense Logistic Agency contracts;

2. To determine Engineering Support Agency and Defense Logistics Agency employee interpretations of First Article Testing requirements; and,

3. To provide Engineering Support and Defense Logistics Agency employees with First Article test requirement discriminators that will assist with appropriate First Article Test requirement application to Defense Logistics Agency contracts

Research Hypothesis/Research Questions

This study's hypothesis was that first article test requirements are not appropriately applied to Defense Logistics Agency contracts. The corresponding null hypothesis was that first article test requirements are appropriately applied to Defense Logistics Agency contracts. This study was also guided by the following research questions:

1. What major factors do Engineers and Defense Logistics Agency employees consider prior to applying First Article Test requirements to contracts?

2. What specific discriminators can be applied to First Article Test requirement decision making process?

Assumptions

For the purposes of this study, it was assumed that the surveys completed by the respondents were truthful, that the secondary data reviewed was accurate and that the findings that emerged from the literature review were sufficient to confirm or refute the study's guiding hypothesis.

Definitions of Terms

DoD:

This acronym means refers to the U.S. Department of Defense (DLA at a glance, 2014).

DLA:

This acronym stands for "Defense Logistics Agency" (DLA at a glance, 2014).

DLAD: This acronym stands for "Defense Logistics Acquisition Directive" (DLA at a glance, 2014).

FAR:

This acronym stands for "federal acquisition regulation" (Gourley, 2009).

FAT:

This acronym stands for "first article testing" (Gourley, 2009).

First Article: This term includes preproduction models, initial production samples, test samples, first lots, pilot models, and pilot lots; and approval involves testing and evaluating the first article for conformance with specified contract requirements before or in the initial stage of production under a contract (Guide for performance-based acquisition, 2009).

Limitations and Delimitations

This study was limited by the fact that although the Department of Defense is mentioned frequently in the secondary literature, there remains a paucity of timely and relevant studies concerning first article testing requirements and their corresponding effects on the costs of DoD acquisitions. The findings that emerged from this study are delimited to DoD acquisitions.

Chapter 2: Literature Review

Chapter Introduction

This chapter reviews the secondary literature to provide an overview of the U.S. Defense Logistics Agency including its mission, customers and activities and the role of first article testing in Department of Defense acquisitions. A summary of the research and important findings concerning these issues are presented in the chapter's conclusion.

Overview of Defense Logistics Agency

Today, the Defense Logistics Agency (DLA) is the contracting agency that is responsible for the logistical supply of all basic supplies used by the U.S. military, ranging from "weapons to fuel, and everyday items such as silverware and sandbags" (Harnitchek, 2014, p. 11). Although relatively low-profile when compared to many other Department of Defense organizations, the DLA provides mission-critical logistics services to the nation's armed forces. In this regard, the agency's director, Vice Admiral Mark Harnitchek, reports that, "As America's combat logistics support agency, the Defense Logistics Agency provides the Army, Navy, Air Force, Marine Corps, other federal agencies, and combined and allied forces with the full spectrum of logistics, acquisition and technical services" (2014, p. 11).

In fact, the DLA is currently responsible for procuring and redistributing virtually all of the items that are consumed by the country's armed forces, including materiel such as construction and barrier equipment, medical supplies, food, uniforms, fuel and more than 85% of the spare parts that are required by the U.S. armed forces (Harnitchek, 2014). Beyond the foregoing, the DLA is also responsible for the administration of reused military equipment, provides document automation and production services as well as catalogs and other logistics information products (DLA at a glance, 2014). Although services are provided by the DLA in 48 states, the agency is tasked with the provision of logistics support to the U.S. military wherever forces may be deployed, making the DLA a truly global organization (DLA at a glance, 2014).

Some salient key facts concerning the DLA include the following:

No civilian company performs the same type of mission as DLA, so comparisons are not really possible. In simple terms, in fiscal 2013 DLA provided $39 billion in sales and revenue. This along with the dollar value of services provided would rank the agency in the top 15th percentile of the Fortune 500.

The DLA employs more than 25,500 civilian and military employees.

The DLA supports roughly 2,400 weapon systems.

The DLA currently manages nine supply chains and nearly 6 million items.

The DLAM administers the storage and disposal of strategic and critical materials to support national defense.

The DLA operates in 48 states and 28 countries.

The DLA processes on average 98,475 requisitions and more than 9,000 contract actions a day.

The DLA manages 25 distribution centers worldwide. Co-locating with warfighters puts supplies where they are most needed and drives DLA's warehousing strategy. Positioning material closer to the customer allows us to improve military readiness and decrease customer wait time and cost, providing effective, efficient and innovative distribution solutions for our customers.

The DLA is a leader in DoD's efforts to supply the military services with alternative fuel and renewable energy solutions.

The DLA supports humanitarian relief efforts at home and abroad, to include the 2011 Japanese earthquake, and hurricanes Isaac and Sandy in 2012. For Isaac, DLA provided 2,138,000 meals and 1,853 gallons of diesel fuel to the Federal Emergency Management Agency. Sandy support included 6 million meals, 48 pallets of bottled water, 171,000 blankets and more than 9 million gallons of fuel for first responders.

The DLA provides logistics support to other federal agencies and state and local governments.

Fiscal 2013 Foreign Military Sales totaled $2.1 billion, supporting the security of 113 of America's allied nations (DLA at a glance, 2014, para. 3).

The primary level field activities for the DLA are set forth in Table 1 below.

Table 1

Primary level field activities for the Defense Logistics Agency

Location

Responsibilities…