U.S. Department of State adopts collaborative contracting in logistics

DOS is seeking a new approach to a single source contract that, at its core, is doing what 3PLs do best: providing customized, reliable services through multiple modes of transportation.

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There’s a federal bid opportunity that every medium to large ($15 million) third-party logistics provider (3PL) should read and consider responding to.

This $2 billion dollar, long-term contract is to provide extensive supply chain management services to the U.S. Department of State (DOS) Bureau of Diplomatic Security (DS), including supplying U.S. embassies, consulates and other domestic and overseas locations with security-related equipment and supplies.

Reference the Government’s Federal Business Opportunities portal , Solicitation No. SAQMMA17R0168 for additional information. And as your reading through the request for proposal (RFP), keep in mind that, for shippers and 3PLs, this is a “heads up” on changes coming to logistics contracting.

DOS is seeking a new approach to a single source contract that, at its core, is doing what 3PLs do best: providing customized, reliable services through multiple modes of transportation. However, in addition to these operations, DOS is adding such functions as an engineering front-end and the management of items requiring return or replacement.

The solicitation states: “The sites that are supported by the SCM program vary from over 350 domestic and overseas locations housing U.S. embassies, consulates and missions, to other domestic U.S. government-operated facilities.”

This is an opportunity for 3PLs with a global reach to use their resources to aid the DOS. And what a great project to work on—supporting the security needs of our embassies and consulates across the world, keeping U.S. personnel, facilities and information secure. But best of all, this is coming up immediately.

There is an industry day on April 3, with draft and a final RFP to follow. The targeted contract award date will be the first quarter of 2018. Keep in mind that this is significant because the DOS has committed to embarking toward a collaborative relationship with a key commercial supply chain management partner after many years of using the transactional model followed by government and civilian shippers for many years.

“There are numerous examples now in federal and state agencies in the United States and Canada as well as several EU countries moving to collaborative contracting such as ‘vested’,” says Dr. Karl Manrodt Ph.D., a professor at Georgia College and co-author of four vested outsourcing books. “This is great news for 3PLs that have been fighting the commoditization of their services and are now being recognized and rewarded for bringing real value for their clients.”

Most changes in contracting take leadership from large pioneering organizations, and these leaders can then create interest in markets for many types of service contracts. On the commercial side there are published cases (see vestedway.com) such as Microsoft, Dell, Proctor & Gamble and others that are adopting collaborative contract methods.  

“When I see very large logistics buyers such as DOS adopt such an innovative approach to 3PL service contracts, I’m excited for the future for shippers and providers as they both gain from utilizing new pricing and service models.”

— Peter Moore

On the government side, the Department of State is joining the U.S. Air Force, the State of Tennessee, two Canadian provinces and others in focusing on innovation as the path to improving service and cost metrics. Shipper buyers and 3PL sellers are adopting business models that include incentives for both sides to originate and support greater creativity and productivity increases.

This trend toward collaborative contracting is something that smart shipper and buyers are finding out about to their benefit. In this shift, shippers will notice that they’re focusing more on service outcomes and spending less time telling providers how to do their job by describing processes, technologies and even particular people that must be used to get the job done.

When I see very large logistics buyers such as DOS adopt such an innovative approach to 3PL service contracts, I’m excited for the future for shippers and providers as they both gain from utilizing new pricing and service models.


About the Author

Peter Moore
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [email protected]

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