For transportation and logistics firms doing business with the Department of Defense and other U.S. government agencies in 2015, the completion of the drawdown of U.S. forces from Afghanistan and the uncertainty of conflict in other parts of the world will require increased flexibility in responding to requirements. Simply put, “ramp up” timelines will continue to compress as the need to respond quickly and then sustain the response to potential military and humanitarian needs continues to grow.
This is occurring against the backdrop of increasing operating costs and competitive pressures, particularly in the area of U.S.-flag deep-sea vessels and international air cargo carriers. Land-based rail and truck operators are challenged to remain responsive to U.S. government needs as they are operating at or near capacity.
Compounding these challenges is the risk to global transportation brought on by Ebola and other potential pan-epidemics. The spread of such diseases can be controlled with rigorous screening and limiting exposure to potential carriers, but mitigation measures cost money and impact effectiveness and efficiency.
A second important change we expect to see this year is the way the government does business with private industry. Assistant Secretary of Defense Frank Kendall’s acquisition directive “Better Buying Power 3.0,” which was issued in late 2014, will begin to be applied to a greater extent in 2015. BBP 3.0 moves beyond emphasis on firm fixed price contracts to a more flexible contracting structure where best value is the most desired attribute, and will, in theory, foster innovation. The industry has been anxious for more flexibility in government contracting for quite some time, so it will be interesting to see if government contracting officers get on board with the Office of the Secretary of Defense directive.
Mark Buzby, President and COO, National Defense Transportation Association