How DLA transformed the OTA contracting process to spur the transformation of their enterprise.
February 5, 2021
Defense Logistics Agency (DLA) saw two major successes using the H4X® Innovation Pipeline in 2019: they transformed their contracting process and then used that new process to devise the largest known repository of 3D part files in the DoD. Both achievements will help DLA more rapidly and effectively manage the distribution of more than $37 billion in products and services annually to all of the Armed Services, 11 combatant commands, other federal agencies, and partner and allied nations.
In the past, DLA’s efforts to take advantage of new technologies were stymied by the rigid and onerous processes associated with traditional contracting mechanisms. DLA’s Information Operations (J6) Innovation Team took a different approach, designing a new contracting process that mirrors the H4X® Innovation Pipeline and uses Other Transaction Authorities (OTAs) – contracts that are exempt from the traditional Federal Acquisition Regulations – to quickly connect validated problems with solution providers, then collaboratively and iteratively design and deploy solutions. The new process uses flexible payment milestones, which allow the technology providers to refine their solutions and pivot as they receive feedback from end-users and learn about the problem they’re solving. It also inserts logic into the process, allowing DLA to remove unnecessary requirements that would be impossible or unduly expensive to meet. DLA’s OTA program isn’t simply about acquiring technology; it focuses on transitioning solutions into day-to-day operations and providing programmatic support for scaling the investments made by OTA.
With a new contracting process in place, DLA Distribution now had a way to solve another critical problem – the loss of 2% of mislabeled, mispackaged, defective, or counterfeit stock. These items, ranging from nuts and bolts to parachutes, are disposed of, sold for scrap, or end up in suspended stock, a sort of supply chain purgatory where items are stored and go unused, costing the US Government $305M in 2019 alone.
DLA identified two technology solution areas that, when combined, could address their suspended stock issues. First, 3D scanning can create authoritative records of items based on their geometry; then geometric search algorithms can be used to identify matches or similar objects. Armed with curated market research from BMNT, the Innovation Team solicited and awarded two OTA contracts to prototype automatic-scanning rigs and geometric search algorithms in less than a month. Within 15 days of signing their contracts, Direct Dimensions and Physna created the largest known repository of 3D part files in the DoD. Implementing these technologies will not only reduce the number of items in suspended stock but also eliminate incorrect or duplicate National Stock Numbers and help DLA’s customers ensure they are ordering correct parts.
With these successes in hand, the J6 Innovation Team is looking to execute up to three additional OTAs in 2020. The first of these was released in January 2020 to solicit technologies that can use on-demand manufacturing to create back-ordered parts. Transforming the OTA contracting process will pay dividends in addressing DLA’s critical global supply chain issues wherever the U.S. has a significant military presence to support.
The heart of innovating is about partnerships, finding opportunities and people to make good things happen quickly.