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Gregory L. Davies ACC-APG, Chief of Staff 27 June 2012 NCMA Luncheon Trends In Contracting UNCLASSIFIED.

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Presentation on theme: "Gregory L. Davies ACC-APG, Chief of Staff 27 June 2012 NCMA Luncheon Trends In Contracting UNCLASSIFIED."— Presentation transcript:

1 Gregory L. Davies ACC-APG, Chief of Staff 27 June 2012 NCMA Luncheon Trends In Contracting UNCLASSIFIED

2 Overview Look Back ( in Order to Look Forward) Recent NDAA Acquisition Impacts & Other Contracting Policies Future Budgets CPARS Service Contracting EO OSD Better Buying Power Summary/Way Ahead 2

3 Background UNCLASSIFIED 3

4 Executive Director/PARC Mr. Bryon J. Young Chief of Staff Gregory L. Davies Associate Director C4ISR Associate Director SCRT Civilian Deputy to the Executive Director Mr. Steven R. Bryant UNCLASSIFIED Contracting Operations Division Enterprise Resources Division Technology, Logistics, and Security Division Legal Sm Bus Comp Adv Sm Bus Legal Comp Adv HCA C4ISR MG Ferrell HCA SCRT Mr. Ormond ACC-APG Strategic Initiatives HCA ACC (Former NCR-CC) Dr. Lowman DIVISIONS (APG A, B, C, E, Ft. Belvoir, Tobyhanna, Ft. Huachuca) DIVISIONS (APG D, Installation, Edgewood, Adelphi, Durham, Natick, Denver) ACC-APG PARC Authority - TAO Military Deputy to the Executive Director TBD 4

5 Addresses Gansler Findings: Changed the way DOD drafts requirements definition Contingency program management contingency contracting Training for personnel outside the acquisition workforce (CORs) Joint training for acquisition professionals Also: Rewrite of DODI National Defense Authorization Act 5

6 Increase the stature, quantity, and career development of the Armys contracting personnel Restructure organization and restore responsibility Provide training and tools for contracting workforce Obtain legislative, regulatory, and policy assistance Gansler Recommendations 6 Contracting, from requirements definition to contract management, is not an Army Core Competence. The Army has excellent, dedicated people; but they are understaffed, overworked, under-trained, under-supported and, most important, under-valued. Jacques S. Gansler... Catalyst for change, blue print for action UNCLASSIFIED

7 M Allowed protests on task orders >$10M under IDIQ contracts Required KOs to post sole source J&As on FBO OMB contract reviews: (1) Maximizing the use of competition (2) Improving practices for selecting contract types (3) Strengthening the acquisition workforce (4) Clarifying when functions should be performed by federal employees and when contractors may be appropriately considered. Also: Weapon System Acquisition Reform Act National Defense Authorization Act 7

8 M Required an assessment on service contracts Continued the Commission on Wartime Contracting Extended Protests of TO/DOs >$10M to 2016 Requested a way to Improve Contractor Business Systems Acct, Estimating, Purchasing, EVM, Property Results in new DFARS Clause (Feb 2012) 2011 National Defense Authorization Act 8

9 M Requires contractor past performance info available on databases for source selections CPARS Attempts to hold labor rates & OHs for Contracts >$10M to FY10 levels For both FY12 & 13 Caps spending on services contracts at FY10 levels Holds compensation expense to senior executives (To $693,951) 2012 National Defense Authorization Act 9

10 Budget Overview UNCLASSIFIED 10

11 Budgets: Deficits Do Matter Sequestration: Everyone agrees its a bad idea! Budget Control Act 2011 cuts $1 Trillion over next 10 yrs and Created the Super Committee (Aug 2011) DoD will trim $450B in next 10 years Sequestration Plan would saddle DoD with additional $500B in cuts Entire sequestration plan is $1.2 Trillion …defense is going to have to bear their share of the burden and I dont think there is the stomach over there to stop the sequester. Sen. Harry Reid (D-NV) The Outcome is Uncertainty Unclassified 11

12 Budgets: Deficit Do Matter (cont) Presidential Budget (PB) request for FY13 = $525.5B FY 12 was $554B, so FY 13 is a 5% decrease Sequestration would cut addl $1.2 Trillion over next 10 yrs Sequestration Plan would saddle DoD w/ addl $500B in cuts Sequestration will cut $55B of discretionary DOD money in Jan 13 ! Approx $54.7B per year for DOD next ten years "Our national debt is our biggest national security threat Admiral Mike Mullen Unclassified 12

13 13

14 ACC-APG RDECOM/SCRT Actions$Obligated FY0514,500$3.4B FY0615,100$4B FY0716,500$6.1B FY0823,500$6.3B FY0923,000$6.9B FY1022,000$7.2B ACC-APG CECOM/C4ISR Actions$Obligated FY0514,000$8B FY0616,000$11.5B FY0717,000$12B FY0825,000$14.5B FY0924,000$15B FY1022,000$14B 14 ACC-APG Actions/Obligations FY11 Combined Totals Approx. 48.5K Actions & >$18B Obligated 22% Awarded to Small Businesses (=$2.9B) 74% of Actions Competed UNCLASSIFIED


16 CPARS Contractor Performance Assessment Reporting System UNCLASSIFIED 16

17 UNCLASSIFIED 17 Regulatory Requirements FAR & : Agencies Shall Prepare an Evaluation of Contractor Performance and Submit to Past Performance Information Retrieval System (PPIRS) FAR : Past Performance Shall be Evaluated in All Source Selections for Negotiated Competitive Acquisitions Federal Acquisition Regulation (FAR) CPARS Shall be Used to Prepare Contractor Performance Evaluations PPIRS Shall be Used as a Source of Past Performance Information in Source Selections Acquisition Regulation Supplements

18 17 Govt Source Selection Officials Past Performance Process Overview Contractor Representative Govt Program Manager /Contracting Officer Contractor Senior Management PPIRSCPARS

19 Pre-Decisional in Nature Protected Throughout Life Cycle Accessible By: Government Personnel with Need to Know Contractor who is Subject of Evaluation May Not Be Transmitted Via Retained for 3 Years After Contract Completion in PPIRS Treated as Source Selection Information IAW FAR CPAR Assessments 18

20 UNCLASSIFIED 20 Reporting Frequency Contract Year 1 Interim Report Contract Year 2 Interim Report Contract Year 3 Final ReportAddendum Report Contract Year 3.5 Perform Accuracy Check

21 UNCLASSIFIED 21 CPARS Workflow Contract Registration Enter Proposed Ratings Validate Proposed Ratings Review Contractor Comments Reviewing Official Comments Automated: Focal Point Manual: Focal Point Contract Data Entry Assessing Official Assessing Official Rep Contractor Comments 1. Focal Point Assigns Users 2. Contract is registered

22 Service Contracting UNCLASSIFIED 22

23 DoDs procurement Spend is $400B 51% of contracts are for services Exponential growth in service contracts last ten years

24 Optimization of Army Services Implementation Plan Secretary of Army Signed off on Svcs Plan September 2011 Commands should treat services as programs, not contracts. Mandates DA savings on service contracts of $11.4B over POM Savings Breakdown: OCO = $6.75B and Base = $4.65B Establishes a Portfolio Management Approach to service contracts Est MFIPTs ( Multi Functional IPTs) like a JPM for Service Contracts RA = Requiring Activity Portfolio Managers CA = Contracting Agency PEOs must establish a Command Services Executive (CSE) CSE must be designated in writing and must be a SES or GO Established DASA(S) to monitor and manage Army service spend DASA(S) will review & approve Service Acq Strategies >$250M <$500M Courtesy copies of all other SAS (>$10M) are to be sent to DASA(S)


26 How to Achieve Savings on Service Contracts Reduce 1 bid contracts FY 11 ACC-APG policy encourages 30 days to maximize quotes If RFP out for less than 30 day and only receive one quote, it must be posted again for 30 days to maximize competition Reduce/eliminate Time & Materials (T&M) and Labor Hour Contracts Need a D&F signed by PARC for T&M/LH contracts o If T&M >$100M HCA must sign D&F Reduce Contracting Fees/Ask for Discounts Use Incentive Based Contracts Limit Periods of Performance (POP) ACC-APG policy limits service contracts to not more than 36 months Contractors: Propose lower hours and tell us how you will be efficient

27 TOs Under IDIQs Designed to be Faster Method of Awarding Orders ECBC MSC o $485M Cap/20 Contractors R2-3G o $16.4B cap/ Managed by a Program Office in Bldg. 6001/18 Contractors S3 o $19B Cap/7 Contractors/Obligated $13B to date/ 2500 to 3000 actions/year Multiple Award is Preferred Single Awards IDIQs Required AAE to sign/Approve a D&F over $103M Must Do Market Research Best Business Practice: Better to establish 5 year order periods instead of base and options Contractors: Above IDIQs will be consolidated & recompeted in FY 14 for a FY 15 award New MAC IDIQ for Chem/Bio is active W911QY-12-R-0020 (Due 7/20/12) ($495M) Task Orders (TOs) Under IDIQs

28 Ashton Carter OSD Better Buying Power Initiatives UNCLASSIFIED 28

29 29 OSD Better Buying Power Initiatives Five Key Initiatives Reduce Non-Productive Processes and Bureaucracy Target Affordability and Control Cost Growth Incentivize Productivity & Innovation in Industry Promote Real Competition Improve Tradecraft in Acquisition of Services OSDs Implementation Directive for Better Buying Power (3 Nov 10) UNCLASSIFIED

30 What This Means to You More frequent and more thorough market research will be conducted; We will be reaching out to the small business community on a more frequent basis, and our expectations of teaming with you will be greater; Cost-type contracts are increasing, requiring businesses to have approved purchasing systems that can track costs; suggest creating a relationship with DCMA and DCAA; What may have been business as usual is evolving into the need for greater efficiencies; highlight these in your proposals; Government scrutiny of indirect costs will be greater; Government oversight on service contracts will be enhanced. 30 UNCLASSIFIED 30

31 Trends in the Acquisition and Contracting Next 1-5 Years DOD Cuts on the Horizon Emphasis on Affordability and Productivity in Defense Spending – Driven by Dr. Carter Consolidate Common Items (Both Supplies and Services) Leverage Volume Discounts Multiple Award IDIQ Contracts Fair Opportunity/Best Value Awards A Two Step Competition Process Cut Service Contracts by 10% for each of the next three yrs Unclassified 36

32 Trends in DOD Acquisition & Contracting Next 1-5 Years Small Business Plans Will be a Weighted Part of the Evaluation for Award For Both Large and Small Businesses Expect More/Better Oversight Trying to Avoid Cost Over Runs Fewer Time and Material (T&M) Contracts More Firm-fixed Price, When They Make Sense Greater Consideration for using FPIF/CPIF More Emphasis On Performance Based Contracting You Will See More PWS vs. SOW Quality Assurance Surveillance Plans (QASPs) Incorporated Into PWS for Services 32

33 Trends in the Acquisition & Contracting Well be in a Post War Environment Soon Deficit Spending is Out of Favor No Appetite for Cost Growth Latest Mantra: Do More Without More Whats Needed From Industry in This Environment: 1.Lower Cost Systems, esp. in Production and Sustainment 2.Demonstrate Should Cost in your Proposals Share your cost lowering ideas with the PM Provide both Will Cost and Should Cost in Proposals 3.Be Lean, Stress Quality and Efficiencies Lower overheads 33

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