Defense Logistics Agency Director Vice Adm. Mark Harnitchek is preparing for his agency to shrink as operations in Afghanistan wind down. (MC1 Mark O'Donald/DoD Photo)
WASHINGTON — The organization that oversees the Pentagon’s vast supply chain and logistics empire is planning to shrink its yearly business as the US military prepares to exit Afghanistan.
The Defense Logistics Agency (DLA) is preparing to cut $13 billion out of its materiel and operations costs between 2014 and 2019, Vice Adm. Mark Harnitchek, the agency’s director, said Thursday.
“We’re going to be a lot smaller in terms of our people, our infrastructure, our inventory and our financial footprint by virtue of the fact that we’re a service organization,” Harnitchek said at a Defense Writers Group breakfast. “If the department’s budget is less by 30 percent, I have to be less by 30 percent because they have 30 percent less money to buy stuff from me.”
The agency spends about $40 billion per year on military items, such as food, fuel, uniforms, medical supplies and construction equipment. The military calls this type of equipment and supplies materiel.
DLA is looking to use reverse auctions, long-term contracts and performance-based contracts as a way of reducing its costs for these types of items, Harnitchek said.
“We have to be ready to significantly improve support at a whole lot less cost,” he said.
DLA is also decreasing its operations costs, which total about $5 billion annually, Harnitchek said. The agency plans to shrink its inventory and infrastructure. It has already reduced its warehouse space by the equivalent of 45 American football fields.
“We have taken probably over the past two years about $5 [billion] of our $15 billion in inventory out of the system,” he said.
Prior to Sept. 11, 2001, DLA did about $18 billion to $20 billion in sales. That rose to about $46 billion in the 2011 to 2012 time frame, Harnitchek said, noting the agency added missions over that period. In 2013, DLA did about $41 billion in sales and this year is expected to total between $35 billion and $37 billion.
“As you’d expect, as the demand goes up, the funding goes up, so goes up our business,” Harnitchek said. “On the tail end here, the slope has gone from up to down.”
The agency is also responsible for removing military components from equipment that is left behind in Afghanistan. DLA is also selling tens-of-millions-of-dollars of commercial equipment — including vehicles, construction material, utensils and other items used to run a base — to Afghanistan. The first sales of this type of material is expected as soon as next week.■