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Trends In Contracting Gregory L. Davies ACC-APG, Chief of Staff

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

2 Look Back ( in Order to Look Forward) Future Budgets CPARS
Overview Look Back ( in Order to Look Forward) Recent NDAA Acquisition Impacts & Other Contracting Policies Future Budgets CPARS Service Contracting EO 13495 OSD Better Buying Power Summary/Way Ahead


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

5 2008 National Defense Authorization Act
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

6 Gansler Recommendations ... Catalyst for change, blue print for action
UNCLASSIFIED Gansler Recommendations Increase the stature, quantity, and career development of the Army’s contracting personnel Restructure organization and restore responsibility Provide training and tools for contracting workforce Obtain legislative, regulatory, and policy assistance “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

7 2009-10 National Defense Authorization Act
M National Defense Authorization Act 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 2009

8 2011 National Defense Authorization Act
M 2011 National Defense Authorization Act 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)

9 2012 National Defense Authorization Act
M 2012 National Defense Authorization Act 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)

10 Budget Overview UNCLASSIFIED

11 Budgets: Deficits Do Matter
Sequestration: Everyone agrees it’s 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 don’t think there is the stomach over there to stop the sequester.” Sen. Harry Reid (D-NV) The Outcome is Uncertainty Unclassified

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 add’l $1.2 Trillion over next 10 yrs Sequestration Plan would saddle DoD w/ add’l $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


14 ACC-APG Actions/Obligations Approx. 48.5K Actions & >$18B Obligated
UNCLASSIFIED ACC-APG Actions/Obligations ACC-APG RDECOM/SCRT Actions $Obligated FY05 14,500 $3.4B FY06 15,100 $4B FY07 16,500 $6.1B FY08 23,500 $6.3B FY09 23,000 $6.9B FY10 22,000 $7.2B ACC-APG CECOM/C4ISR Actions $Obligated FY05 14,000 $8B FY06 16,000 $11.5B FY07 17,000 $12B FY08 25,000 $14.5B FY09 24,000 $15B FY10 22,000 $14B FY11 Combined Totals Approx. 48.5K Actions & >$18B Obligated 74% of Actions Competed 22% Awarded to Small Businesses (=$2.9B)


16 CPARS Contractor Performance Assessment Reporting System

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) Acquisition Regulation Supplements CPARS Shall be Used to Prepare Contractor Performance Evaluations PPIRS Shall be Used as a Source of Past Performance Information in Source Selections UNCLASSIFIED

18 Past Performance Process Overview
Gov’t Source Selection Officials Gov’t Program Manager /Contracting Officer CPARS PPIRS Contractor Senior Management Contractor Representative **NOTES** CPARS = Workflow System PPIRS = Report Card – pulls from many databases ?’s

19 Treated as Source Selection Information
CPAR Assessments Treated as Source Selection Information IAW FAR 3.104 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 **NOTES** Pre-Decisional = used as a reference for future contracts Protected by the Privay Act (FOIA – Freedom of Information Act)

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

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

22 Service Contracting UNCLASSIFIED

23 DoD’s 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 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 Task Orders (TOs) Under IDIQs
TOs Under IDIQs Designed to be Faster Method of Awarding Orders ECBC MSC $485M Cap/20 Contractors R2-3G $16.4B cap/ Managed by a Program Office in Bldg. 6001/18 Contractors S3 $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)

28 Ashton Carter OSD Better Buying Power Initiatives

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

30 UNCLASSIFIED 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

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

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

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

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