Mr. Dennis Dudek Deputy Director C&T Defense Supply Center Philadelphia

1. Contract Management Issues Mr. Dennis DudekDeputy Director C&TDefense Supply Center Philadelphia

2. OVERVIEW • BACKGROUND • TELECONFERENCE • SURVEY and DOMESTIC SOURCING CONFERENCE • SURVEY RESULTS • INITIATIVES • FOLLOW-UP

3. BACKGROUND • Issues with Current System • Length of Initial Procurements • Delivery Order Period Too Short • Length of Contract Hard to Price • Economic Price Adjustments • Min/Max Quantities • Unknown Future Orders

4. TELECONFERENCE • Teleconference Held on 15 Feb 05 to Address the Issues • AAFA Govt Contracts Committee Sponsored • Good participation by Members (over 20) • Good Discussions on Topics • Teleconference lasted over 1 ½ hours • Many issues were debated • Results: Conduct a Member Survey

5. SURVEY and CONFERENCE • Survey Issued Mar 05 and closed Apr 05 • 49 AAFA GCC Members Participated • (28 Mfgs / 20 Suppliers) • Good Cross Section of Industry Segments • 14 Page Report Issued to DSCP • Report Evaluated for Potential Actions • Domestic Sourcing Conference • Held 4 May 05 • Reiterated a lot of the survey comments

6. SURVEY SUMMARIES • 15 Survey Questions • Can Be Split Into 5 Major Elements: • Contract Length • Solicitation Improvements • Min / Max • Information Sharing • Technology Issues

7. CONTRACT LENGTH • AAFA GCC Issue: • 3 or 5 Year Contracts (1 Year Plus Option Years) Is the Norm • Pros: 30% • Beneficial to Health of Value Chain • Not a Problem If Price Adjustments Allowed • Allows Recovery of Start-up / Training • Cons: 70% • Unanticipated Cost Increases (renegotiate options?) • Material Cost Increases Cannot be Passed Through • Go to 3 Year Contracts • DSCP Response: • Evaluating possibility of EPA • Where independent index is available • 3 Year Contracts ?? • Renegotiate Option Years cannot be done

8. SOLICITATION IMPROVEMENTS • AAFA GCC Issue: • Takes Too Long For DSCP To Come To Initial Award • Extension requests need to be more realistic • Solicitations Should Expire After a Set Time • (21 – 3 Months / 18 – 6 Months / 9 – 12 Months) • No standard Industry conclusion • Not realistic to implement • Posting Of Awards Not Timely (67%) • DSCP Response: • Will Work to Achieve Time Schedule • Solicitation (6 months to award) + PLT 1st Del • Will Monitor Award Postings to FedBizOps

9. MIN / MAX • AAFA GCC Issue: • Too Wide a Variation Between the Two • Half the Respondents Were Requested to Voluntarily Reduce Minimums • A Uniform Percentage Range? • Evenly Divided Between 4 Categories • If Range Were Narrowed, Most Respondents Agreed It Would Be OK If DSCP Bought Exigency • DSCP Response: • Min/Max must be developed to best utilize funding stream • It will be determined at the level of first order (25%) • It is only a flexibility tool • Will Post Past 12 Months Demand Usage on Solicitation • More accurate depiction of forecast

10. INFORMATION SHARING • AAFA GCC Issue: • Hard To Predict Orders and Quantities • 87% Indicated That They Would Like to See More Info Sharing • How? • 63% - Web / 36% - Individual Contact • DSCP Response: • Web Site for Item Demand History and • Semi-Annual Forecast of Item by Contract • Planned execution of delivery orders and options

11. TECHNOLOGY ISSUES • AAFA GCC Issue: • Changes Are Happening Now In Specs / RFID / VIM – ASAP • Specs: • Pros / Cons of Spec VS Performance • All Agreed Industry Segment Groups Would Help (71%) • RFID: 78% Not Prepared; Rqmts Not Set • VIM – ASAP: 19 Using It Now (Of 28 Mfgs) • Most Like It and Have No Problems • Some Start Up Issues • DSCP Response: • Will Support Technical Groups • Will Work With Firms on RFID • We encourage the use of VIM - ASAP

12. BOTTOM LINE • DSCP Will Strive To Make Improvements As Noted • However, we are bound by regulatory limitations • Need the Help / Understanding of AAFA • Working Together to Improve the System