Defense Logistics Agency to Shift Warehouse Management to Commercial Software

The Defense Department’s central agency for managing the military’s supply chain is modernizing its warehouse management technology and plans to move from government-built systems to commercial software.

The Defense Logistics Agency issued a draft request for proposals for software and hardware integration services as part of a wholesale replacement of its warehouse management systems.

The agency has already begun modernizing its Distribution Standards System with a transition to a commercial cloud-based system developed by SAP. That effort is on track to be completed by September 2025. But a full modernization will also include transitioning from the government-built Equipment Control System to a commercial Warehouse Control System, also expected to wrap by the end of fiscal 2025.

Under the current plan, DLA will award multiple spots on an indefinite-delivery, indefinite-quantity contract, from which each of the 34 regional warehouses can purchase approved management software through task orders.

According to the RFP, DLA distribution centers manage some 2.4 million items totaling $105 billion in inventory. The agency’s 10,000 warehouse personnel process “approximately 15 million transactions annually for over 243,000 customers” in locations worldwide. But the IT systems are aging and the agency believes it would be better served with a replacement rather than just an upgrade.

“Advancements in emerging goods-to-person technologies such as robotics and worker enhancement tools—voice/augmented reality, Real Time Locating Services, etc.—provide DLA an opportunity to better support the 21st Century Warfighter,” the RFP states.

While these technologies have great potential, DLA’s current 20-year-old, government-built software isn’t able to integrate with many of the latest software and tools.

“The existing DLA legacy government off-the-shelf IT software currently serving as a critical mission enabler for DLA distribution operational capabilities is in dire need of replacement due to age, design, inefficiencies, unsustainability and lack of cybersecurity,” DLA officials added.

While the contract will be open to multiple offerors, DLA officials have already determined that commercial materials management company Dematic will be the base software system, with contract holders acting as integrators for each task order.

“DLA has determined it necessary to require procurement of a single enterprise platform WES IT software solution comprised of ‘Dematic’ brand name iQ suite of products,” according to the draft performance work statement. “The awardee would be expected to acquire the Dematic iQ suite of software products and complete each ECS technology refresh by providing a completely functional and modern WES solution within timeframes negotiated between the government and contractor for each” task order.

All together, task orders off the contract are capped at $35 million over four years—a one-year base period and three one-year optional add-ons. Every offeror awarded a spot on the contract will be guaranteed at least $500.