NNSA’s Supply Chain Management Center Saves $109 Million in FY 2010

Press Release
Oct 27, 2010

WASHINGTON, DC – The National Nuclear Security Administration (NNSA) today announced that its Supply Chain Management Center (SCMC) saved the taxpayers $109 million in Fiscal Year 2010. Created by Administrator D’Agostino in 2006, the SCMC has generated more than $213 million in savings since it began operations in 2007. 

“At NNSA, we are committed to being responsible stewards of tax dollars,” said NNSA Principal Deputy Administrator Neile Miller.  “We cannot expect Congress and the American people to support large increases in NNSA’s budget unless we do everything possible to steer those resources directly to mission work.  The Supply Chain Management Center is an excellent example of our effort to apply sensible, common sense approaches to saving the taxpayers money across our enterprise.”

Managed by the Kansas City Plant’s operator, Honeywell FM&T, the Supply Chain Management Center uses new technologies and pooled purchasing power to drive efficiencies across the enterprise.  The result has been a dramatic reduction in costs. Since NNSA’s Management and Operating (M&O) contractors spend approximately 80 percent of NNSA’s acquisition dollars, the Agency determined that aligning the contractors’ purchasing systems and buying power through strategic sourcing would result in significant savings. 

The majority of these savings have been generated through eSourcing which allows NNSA to put a contract online for a so-called “reverse auction,” in which the government seeks to drive prices down for a purchase.  Suppliers enter prices until the bid “auction” ends with the contract going to the lowest-price supplier. Just as eBay allows buyers to enter a higher price for an item if they are outbid, eSourcing allows a supplier to reduce its price if another supplier has offered a lower price. 

Through eSourcing NNSA is realizing an average cost savings of 8.6% per contract, and as much as 29% in some cases.

Using basic strategic sourcing tools, the NNSA’s seven M&O contractors have also analyzed their acquisition spending to identify common commodities, then used their combined purchasing power to achieve savings by negotiating multi-site commodity contracts with vendors.  These commodity contracts are then placed in the eStore, an online catalogue from which all the M&O contractors may place orders.  Examples of commodities have included commercial software, travel services, laboratory supplies, ammunition and safety glasses.

The principle underlying SCMC’s creation was simple.  Strategic sourcing makes an enterprise’s purchasing systems more strategically integrated, gaining significant pricing and process efficiencies.

For a fact sheet on NNSA’s Supply Chain Management Center, click here.

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Established by Congress in 2000, NNSA is a semi-autonomous agency within the U.S. Department of Energy responsible for enhancing national security through the military application of nuclear science in the nation’s national security enterprise. NNSA maintains and enhances the safety, security, reliability, and performance of the U.S. nuclear weapons stockpile without nuclear testing; reduces the global danger from weapons of mass destruction; provides the U.S. Navy with safe and effective nuclear propulsion; and responds to nuclear and radiological emergencies in the U.S. and abroad.