Feature Article

Remarks prepared for

DSCR Commander Mark Heinrich

in speech to the Chesterfield Chamber of Commerce

I’m pleased that DSCR is a member of the Chamber. As one of the largest businesses in this area, it’s important for us to partner with the community. After all, Bellwood would not be what it is today without the support of the local community and the talented workforce that we have.            

The Chamber is important to our community, and I appreciate the role you have in advocating for businesses in this county. You’ve got an important mission locally, just as DSCR has an important mission that affects our men and women in uniform.

I want to talk to you today about DSCR--give you some background information about what we do-- and share some information that will help you understand how you can possibly do business with us.

We’re a part of the Defense Logistics Agency, also known as DLA, which is headquartered at Fort Belvoir in Alexandria, Virginia. Our agency provides nearly every consumable item our troops will need. Our agency’s FY 05 sales and services totaled $31.8 billion dollars, which also included $800 million in sales to more than 120 of our allied nations.

DLA also supports federal and state agencies. DLA’s Law Enforcement Support Office provides supplies and equipment to law enforcement agencies around the country. This program allows DLA to redistribute excess equipment and provide useful tools to police departments. That may be a program some of you in law enforcement may be interested in learning more about.

DSCR is the home of the aviation supply and demand chain. We supply the majority of the parts and supplies needed to maintain military aircraft across the services. In addition to the Richmond site, we also have detachments in Columbus, Ohio, and Philadelphia.

We supply products that support over 1,300 major weapon systems. The next time you see a military aircraft in the air, remember us because we manage the majority of the parts that keep those aircraft flying.

We’re located on Jefferson Davis Highway near the Bensley Community Center on 600 acres of land. Our site is rich in history, and most locals refer to as “Bellwood.” We’re committed to being good neighbors, and our employees are active in the community.

DSCR is a big business and we have a major impact on the local community. It costs over $255 million a year to operate DSCR, with the largest portion being wages, and the remainder being a variety of expenses such as operation supplies, educational services, and utilities.

The Crater Planning District Commission economic impact study done in FY04 estimated the impact of the center on Chesterfield, Dinwiddie, and Prince George counties, as well as Colonial Heights, Hopewell, and Petersburg. According to the study, DSCR contributed almost $211 million dollars to the local area. State and local governments collected approximately $22 million in tax revenue from DSCR and companies that do business with us.

About 2,500 employees support our nation’s warfighters around the globe by procuring the parts they need from our contractors. Our contractors are small, medium, and large-sized companies. Some of the parts we buy for our customers include engine, air frame and landing gear components, flight safety equipment, and propeller systems.

The longer a customer in the field has to wait for a part, the longer an aircraft may be grounded, compromising or delaying a mission by days or weeks, which isn’t good.   We’ve worked with the Army to adapt a NASCAR windshield technology for use on Army helicopters being used in Iraq and Afghanistan. Our Aviation Engineering Directorate worked with the Army, and contractors, to create a tear-off windshield laminate for use on UH-60 Black Hawk helicopters. The laminate is important because it extends the life of the windshield, which costs about $15,000, and saves the Army—and the taxpayers—money on costly repairs and manpower.

Another initiative that we’re involved in is extending the engine life of the Air Force’s F-16 Falcons. This is a $220 million dollar project. The Kitting section from our Aviation Supplier Operations Directorate partnered with General Electric and the Oklahoma City Air Logistics Center at Tinker Air Force Base to develop kits, including carbon seals and HPG nozzle kits, to support the Service Life Extension program.

Our Aviation Supply and Demand Chain annual sales for fiscal year 2005 were about $4 billion--that figure represents a huge procurement effort. A big part of our procurement process is supporting small businesses. Each year, we spend about $1 billion in small business. That number includes contracts to a variety of small business owners, including small disadvantaged, women-owned, and service disabled-veteran owned businesses.

For those of you interested in doing business with us, I brought copies of the book, Doing Business With Defense Supply Center Richmond, which describes the process for potential contractors wanting to provide services or manufactured parts to DSCR. You can call the people listed in the book to ask questions and you can also make an appointment to meet with a representative on center. The main person to contact is Mr. John Henley, who is the associate director of small business.

The book also lists the websites that you can go to view current solicitations. We post all solicitations over $25,000 on the Procurement Gateway website. Pre-solicitation notices for more than $25,000 are posted to the Federal Business Opportunities website.

DSCR is located in the only HubZone designated area in Chesterfield County, but Richmond and other cities in Virginia have designated HubZone areas. Our HubZone area stretches from Chester Road on the Bellwood side of Jefferson Davis Highway to Chippenham Parkway. If you’re a business located in a HubZone area and 35 percent of your employees live in the area, then you could qualify for certification as a HubZone small business provider. Once certified, you could be eligible for HubZone set aside contracts. HubZone designations are based on census figures. Part of my goal here today is to drum up business and encourage you to partner with us. We need more HubZone business.

I’ll let you know that dealing with the federal government isn’t easy, so I encourage you to be patient and diligent because the contract process can be slow. But once you do business with us, it can lead to more opportunities for you, therefore creating a win-win situation for all of us.

Unfortunately, due to the nature of the manufactured items we buy, we have very few local area contractors. United Equipment in Richmond is a local company that provides aircraft window panels. We’re constantly looking at ways to improve working with our customers and contractors as we work to acquire manufactured parts. We’re currently involved in an internal assessment known as agile sustainment. This involves analyzing our oldest backorders and identifying systemic causes that can be addressed to decrease the nature and severity of the problem.

Last year, about 26 percent of the 100 oldest backorders were for parts manufactured by Northrop Grumman for the T-38, a jet trainer used in the Air Force, and the F-5, the fighter version of the T-38 used primarily by foreign countries we support. Once we identified the problem, we contacted Hill Air Force Base, Utah , who is our engineering support authority, to allow us to add Northrop Grumman’s licensed supplier so that we could get the parts faster.

As part of this assessment, we also found that the drawing files we were sending out had errors. We are looking at ways to prevent these errors and ensure prospective suppliers get adequate data.

Another important long-term consideration for our spare parts business is technology insertion. This allows us to obtain and improve parts by keeping up-to-date on changes and improvements in manufacturing technologies. This is an area where we need small businesses to be involved in the process by identifying these improvements and providing feedback on how we can continue to obtain the parts our customers need.

One of the major challenges we’re facing today is raw material shortages. These shortages, specifically in the specialty metals arena, are having a major impact on our business. The Defense Federal Acquisition Regulation Supplement clause, Preference for Domestic Specialty Metals, implements a portion of the Berry Amendment. It requires that certain “specialty metals” incorporated in articles delivered under DoD contracts be melted in the United States or a “qualifying country”, unless specific exceptions apply or a Secretarial exception of restrictions is granted.

The purpose of the amendment was, and is, to maintain and support the defense industrial base for those items it covers. In the case of specialty metals, the Berry Amendment recognizes the importance of maintaining a domestic smelting capability for certain important specialty metals. In practice, however, current market conditions have worsened to the point that many of our suppliers are no longer able to provide Berry Amendment-compliant products.

Recent market research indicates that both prices and lead times for aluminum, titanium, specialty steels, and other strategic metals have risen since 2002. The rising cost of fuel has also contributed to the increased costs of strategic metals. Producers have been caught in a price squeeze, with rising energy costs for smelting and refining of all metals, and rising raw ore prices for aluminum.

Demand has grown for aerospace metals due to China ’s growing industrial capacity and record demands for commercial aircraft. Metals identified as strategically crucial include stainless steel, nickel-based alloys and super-alloys, titanium and titanium alloys, zirconium, and niobium alloys.  Ready availability of these materials is crucial to our success in supporting our aviation customers and the war effort. Most of our business with local firms is in facilities maintenance, which includes roofing, minor construction, fencing, paving, and painting. This is limited to the smaller contracts because the Army Corp of Engineers in Norfolk handles the larger facilities maintenance contracts for us. I’ll mention a couple we currently work with.

Atlantic Industrial Services, owned by Sam Lloyd, located in Chester, is one of our contractors. Mr. Lloyd’s company provides several services for us, including the monthly maintenance for the carwash located on the installation.   We also have a partnership agreement with an interpreter service.

Robert Soderholm began working with us in 2002 as an on-call free-lance interpreter serving the deaf and hard of hearing community. When he first partnered with us, he provided services to support the deaf employees in our intern program. In September 2005, we awarded Mr. Soderholm a contract to provide three full-time interpreters to our center.

Our procurement and contract specialists, in addition to other employees who deal with small businesses, play a crucial role in identifying the businesses that best support our agency and our customers. We strive to support small businesses because we want to diversify our supplier base. We know that small businesses are vital to our local, state, and national economy by providing jobs and products and services that larger businesses may overlook.

Before I close, on a different subject, I’ve been asked how our installation will be impacted by the Base Realignment and Closure or BRAC list. Obviously, the good news is that we’re not closing, so our federal employees and contractors, many from this area, will continue to reside and be a part of this community.

Overall, BRAC will have a positive impact on the community. DSCR is expanding its mission through acquiring the procurement function for new aviation platform parts that can be repaired economically at depot level maintenance facilities and returned to the inventory for use by the military services.

We’ll acquire other new missions, but the bottom line is that BRAC will have a positive economic impact on Chesterfield County and DSCR.

I want to emphasize again just how vital DSCR is to our nation’s military. We want to continue to be good stewards of our customer’s and the taxpayer’s money. We’ve got an important mission, and I’m proud of the work we do in support our nation’s warfighters. If you think you can help us support our warfighter, please pick up a copy of the book I was telling you about.

Best wishes to the Chamber as you accomplish great things as a team. I hope you continue to thrive and make a worthwhile impact in the local business community.

-- published Sept. 28, 2006