Buying fleets just got better

The business of fleet procurement just got easier, faster, and cheaper. The Directorate of Support Vehicles Program Management (DSVPM) at the Department of National Defence (DND) extended their revolutionary, cost-effective Long Term Standing Offer (LTSO) solution to involve other government departments and the acquisition of complex military vehicles.

The standing offer itself is not new. Government departments have been awarding exclusive contracts for years in such areas as business supplies and staff cars. The LTSO takes the customary standing offer and lengthens it, applying the idea to large vehicles and bundling equipment with service and parts.

The largest LTSO award went to Sterling and Western Star for heavy trucks, a 5-year deal worth $50 million.

The new idea is paying off for DSVPM the department saved millions last year on 613 pieces of equipment through LTSOs and achieves, on average, a five percent discount on equipment, parts and servicing through bulk buys. LTSOs reduce costs by limiting paperwork to one initial contract award. By dealing with one winning company, LTSOs homogenize fleets, allowing for easier training and maintenance. For greater flexibility, the LTSO is optional for customers (unlike in a single sourcing solution), may be accessed by the customer directly, and allows the customer to anticipate need and order in advance.

The LTSO substantially speeds up delivery on fleet vehicles. Under a typical contract, a truck takes 38 weeks to be delivered; under the LTSO system, the process takes 15 weeks, and often only two to four weeks. This rapid, efficient delivery and shorter contractual process allows supply managers to order and acquire what they need in the limited time they have to spend devolved funds.

Customers are impressed. "When they wanted something, a global contract was already there," says Lynn Fonger, senior capital procurement officer at DSVPM. "They could feed into that what they wanted and get it delivered in a couple of months rather than a year." DSVPM recently diversified their longterm agreements to include re-life projects, custom military vehicles, and other machinery such as backhoes, forklifts, and graders.

Many complex vehicles, such as the state-ofthe-art Multi-Purpose Engineering Vehicle (MPEV), a militarized backhoe that travels 100 km/hr, could not have been acquired under the previous system due to time and funding constraints.

DSVPM hopes to expand the LTSO project to the Internet and to agreements with municipalities, and aims to increase volume discounts and the number of custom vehicles in DND's fleet. , -Bindu Suresh

Copyright Summit Group Sep 2002
Provided by ProQuest Information and Learning Company. All rights Reserved