Original Date: 06/23/1997
Revision Date: 01/18/2007

In 1995, Letterkenny Army Depot (LEAD) established a Shop Stores Contract with a local vendor to handle the purchase of common material and supplies used by the Directorate of Public Works (DPW). Prior to this, material purchases were handled through the Installation Supply Account and the Directorate of Contracting for procurement actions, then shipped to the Defense Logistic Agency for distribution. These purchases required formal procurement actions which added time and cost. For example, typical issue/receipt charges by the Defense Logistics Agency (DLA), even for very low cost items, could be as much as $70 per transaction and often amounted to more than the cost of the item.

The Shop Stores Contract is a firm, fixed-price indefinite quantity service contract awarded to a single vendor who maintains a supply facility within a 15-mile radius of LEAD. The contractor provides supervision, management personnel, equipment, and supplies to operate and maintain the supply facility. The contractor is authorized to purchase, receive, store, handle, and issue all types of materials. Under the contract, the contractor maintains catalogs and price lists for all items carried. This information, and commercial stock numbers, full descriptions, units of issue, consumption data, and cumulative amounts the government has received are also provided to the government electronically using commercially available software. Orders are placed on a daily basis. The government provides a required delivery date, and the contractor has a required time frame within which to accept or reject the order. In most cases, the contractor delivers the materials, but small orders can be picked up by authorized government personnel. Items available under the contract include plumbing supplies; heating and air conditioning parts; electrical supplies; paint and painting supplies; hardware items; and building materials.

The contract was issued for a base year and four option years with a guaranteed purchase amount of $400 thousand per year. In the first year, the actual purchase amount was $851,600; the actual amount for the second year was $428 thousand.

The Shop Stores Contract has streamlined the process for obtaining materials and supplies. As a result, customer service and satisfaction have greatly improved. The shop stores contract eliminated the cumbersome requirements for sole source procurement and substantially reduced the costs of acquiring and handling material. Inventories of materials have been reduced 50%, and deliveries have been nearly 100% on time. The number of full-time buyers has been reduced from nine to one, and layers of management and paperwork have been eliminated.

For more information see the Point of Contact for this survey.