As part of NNSA's commitment to being a responsible steward of tax dollars, NNSA Administrator Thomas D'Agostino (then the head of Defense Programs) created the Supply Chain Management Center (SCMC) in 2006 and selected Honeywell, operator of the Kansas City Plant, as the lead contractor for managing the initiative.
Since Management and Operating (M&O) contractors spend approximately 80 percent of NNSA's acquisition dollars, we realized that the greatest savings could be realized by aligning the purchasing power of these seven contractors.
Under the Supply Chain Management Center, the M&O contractors' acquisition processes are becoming more strategically focused and integrated, gaining pricing and process efficiencies through an enterprise-wide approach which includes the following major features:
Using these tools, the SCMC saved over $25 million in its first two years of operation, accelerating to $73 million of savings in FY 2009 directly supporting the Administration’s emphasis on acquisition reform. The vast majority of savings have to date been achieved from eSourcing. Additional future savings are anticipated from Strategic Sourcing as the M&O contractors exercise their combined purchasing power while reducing duplicative transaction costs. Overall, the greatest savings are expected in the early years. The NNSA anticipates the savings will eventually level out to about $30 million per year on average.