1. Commercial Activities
SECTION I. Identify the Commercial Activities Program
ADMINISTRATIVE DATA
All Courses Including This Lesson
Course Number Version Course Title
01 Planning Programming Budget & Execution Course (PPBE)
Task(s) Task Number Individual
Taught (*) or
Academic Hours
The academic hours required to teach this lesson are as follows:
Resident
Hours/Methods
Academic Hours/Method
0.2 hrs Introduction/Conference Discussion
5.1 hrs Conference Discussion
0.1 hrs Summary
5.4 hrs Total Time
Test Lesson Number
Testing (to include test review)
Hours -0 hrs
Lesson Number -
Prerequisite Lesson(s)
Lesson Number
Lesson Title
Identify the Commercial Activities Program
Clearance Access
Security Level: Unclassified
Requirements: There are no clearance or access requirements for the lesson.
Foreign Disclosure Restrictions
FD5. This product/publication has been reviewed by the product developers in coordination with the Fort Jackson Soldier Support Institute foreign disclosure authority. This product is releasable to students from all requesting foreign countries without restrictions.
Instructor Requirements
Must meet physical qualifications IAW AR
Materials Required
Instructor Materials:
Lesson plan slides, DA Pam 5-20 and AR 5-20
Student Materials:
Commercial Activities Summery Sheet, and Handout- A76 study affects 300 DLE workers
Classroom, Training Area, and Range Requirements
General Purpose Classroom - 25 Seats
Instructional Guidance
Note: Before presenting this lesson, instructors must thoroughly prepare by studying this lesson and identified reference material.
Also, provide the students with situational awareness of the Operational Environment (OE) variables and actors.
Proponent Lesson Plan Approvals
Name Rank Position Date
Harris, Norman CTR Writer/Developer xx-xxx-xxxx
Bonig, Reid GS-12 Chief - FMITD xx-xxx-xxxx
Davis, Bobby LTC FM-DOT xx-xxx-xxxx
Zellars, Eric COL Commandant xx-xxx-xxxx
Motivator: During the previous lessons, you were exposed to the various phases of the PPBE process.
Now we will discuss commercial activities which are part of the execution phase. Why do we care about Commercial Activities? Because we have limited resources.
What are some examples of Commercial Activities - A76, contracting, privatization.- The Army’s term for all this stuff is Commercial Activities.
What about the big debate right now? Discussion going on right now on the bill the House is debating on airline security measures. The crux of the debate is over whether employees should be government employees or private citizens (i.e., contractors).
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

2. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Commercial Activities Program.
Given a summary sheet containing DA Pam 5-20 and AR 5-20.
With 80% accuracy:
Analyze the policy; review inventory process, personnel responsibilities, cost studies, performance work statement (PWS), most efficient organization (MEO) and the advantages and disadvantages of the commercial activities program.
SHOW SLIDE 2: TERMINAL LEARNING OBJECTIVE
Note: State the TLO
Safety Requirements:  In a training environment, leaders must perform a risk assessment in accordance with FM 5-19, Composite Risk Management. Leaders will complete a DA Form 7566 COMPOSITE RISK MANAGEMENT WORKSHEET during the planning and completion of each task and sub-task by assessing mission, enemy, terrain and weather, troops and support available-time available and civil considerations, (METT-TC).
No food or drink is allowed near or around electrical equipment (CPU, file servers, printers, projectors, etc.) due to possible electrical shock or damage to equipment.  Exercise care in personal movement in and through such areas.  Avoid all electrical cords and associated wiring.  In event of electrical storm, you will be instructed to power down equipment. Everyone is responsible for safety.
Risk Assessment Level: Low
Environmental Considerations: Environmental protection is not just the law but the right thing to do. It is a continual process and starts with deliberate planning. Always be alert to ways to protect our environment during training and missions. In doing so, you will contribute to the sustainment of our training resources while protecting people and the environment from harmful effects. Refer to FM Environmental Considerations and GTA ENVIRONMENTAL-RELATED RISK ASSESSMENT.
Evaluation: You will be given an exam which will cover Commercial Activities. A passing score on this examination is 80% and for International Students (70%).
INSTRUCTIONAL LEAD-IN. Your responsibility is for understanding Commercial Activities. Commercial Activities is a method to allocate cost to different processes both in the private sector and in the government.
As usual we’ll discuss the key players, concepts, processes.
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

3. Commercial Activity Goals
Rely on private sector
Implement national policy
Cost effective Cost Analysis (CA) by competition
SHOW SLIDE 3: Commercial Activity Goals
Rely on the private sector for products and services when cost effective and consistent with the Army's readiness requirements - This is the goal of commercial activities
While at the same time - Implement national policy defined in OMB Circular A‑76.
Obtain the most cost effective commercial services through competition
Cost drives this but quality is important
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

4. Commercial Activity Criteria
A function must meet the following tests:
Operated and managed by a federal agency
Obtainable from private sector
Separable from other functions, suitable for performance in house or by contract
Needed, recurring service
SHOW SLIDE 4: Commercial Activity Criteria
To be considered as commercial activity it needs to meet the following criteria:
owned by Federal Government – doesn’t mean run by us – just managed by us
Obtainable form private sector – How obtainable is an Armored Division in the Private Sector? Not readily - some things that are though are Logistics
Separable from other functions – clearly defined function
Needed - going to be around for a while - a time analysis is done on it - life span of two years or more - Too short won’t be considered – takes too long
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

5. Commercial Activity Policy
The Army will not perform a CA unless:
Review and approval by the ASA (IE&E)
Cost comparison shows Army’s performance less costly than a contractor
Government products or services are preferred
The Army's CA Policy is to rely on commercial sources for products and services.
Burden of proof is on the Army – ideology is contract it out unless the Army proves its better to do itself.
So allow the Private sector to do it unless:
1) the CA has been reviewed and approved by the Assistant Secretary of the Army (Installations, Logistics, and Environment) - So you can send a request up saying I know this could be outsourced - but we want to do it ourselves - ok approved.
2) Cheaper for the Army to do it.
3) Government products or services are preferred - needs to be exempted
Is it the Army mission to build houses? How about manage houses?
Used to have a MOS that was Club management - taught in the AG school here. - Mission of the Army? No - potential for outsourced
Why would like to outsource? Save money / Shortage of personnel - right now they are outsourcing ROTC. Many place already have retired personnel do it. – Anyone run into it? Can be a hostile environment / disgruntled employees.
So to sum up the slide - allow the Private sector to do it unless: 1) its been exempted or 2) cheaper for the Army to do it (1 and 3 - can’t do one without the other)
SHOW SLIDE 4: Commercial Activity Policy
The Army’s CA policy is to rely on commercial sources for products and services.
Burden of proof is on the Army – ideology is contract it out unless the Army proves its better to do itself.
So allow the Private sector to do it unless:
The CA has been reviewed and approved by the Assistant Secretary of the Army (Installation and Environment) – So you can send a request up saying I know this could by outsourced – but we want to do it ourselves – ok approved.
Cheaper for the Army to do it.
Government products or services are preferred – needs to be exempted
Is it the Army mission to build houses? How about manage houses?
Used to have a MOS that was Club management – taught in the AG school here. Mission of the Army? No – potential for outsource.
Why would we like to outsource? Save money / shortage of personnel – right now they are outsourcing ROTC. Many places already have retired personnel do it.
Anyone run into it? Can be a hostile environment / disgruntle employees.
So to sum up the slide – allow the private sector to do it unless: 1) its be exempted or 2) cheaper for the Arm to do it.
1 and 3 – can’t do one without the other.
POLICY
OMB Circular A - 76, AR 5-20
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

6. FINANCIAL MANAGEMENT SCHOOL
Review Exceptions
Sensitive weapons
Law enforcement
Confinement
MTO&E positions
RDT&E
Mandatory/ exempted
SHOW SLIDE 6: Review Exceptions
These are currently exempted from having some review done – we’ll talk review process in a few slides
Exemptions must be approved at DA.
Who approves the exemptions - ASA IE&E
Some exceptions to the exceptions are occurring - i.e. - they may allow for gate guards to be civilians in Germany because they don’t have the military personnel - doesn’t mean - its automatically privatized
MTOE Positions – Infantry / Armor soldiers – not outsourced
RDTE – who evaluates the product – is it smart to have contractors evaluate what they need or who they need it from?
Sensitive weapons – nuke – bio / chem
Law enforcement – Ft. Leavenworth - Last fed penitentiary that allows inmates to use fee weights – why? can control them
Another one is - Care of remains / Grave guarding - when was the last time you saw a civilian walking past the Tomb of the Unknown Soldier?
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

7. FINANCIAL MANAGEMENT SCHOOL
Responsibilities
ASA (IE&E) and ASA (M&RA)
ACSIM
Commanders
DRM
CPO
Contract ADMIN personnel
SHOW SLIDE 7: Responsibilities
ASA I&E – Assistant Secretary of the Army (Installations Energy and Environment) / Over responsibility / develops policies for DA / is the exception authority / verifies that we are in compliance with DOD and Fed Gov
ASA M&RA - Assistant Secretary of the Army (Manpower and Reserve Affairs) – At DA – not responsible for managing the program but care because of they manage civilians – they wan tot know when you are going to start firing civilians or getting rid of jobs
ACSIM - Assistant Chief of Staff for Installation Management / 2 Star – Gen Antwerp / On the Army Staff side – not secretary side / makes sure we are following the program / publishes a website that has lessons learned and lists all the studies being done
Commanders – make sure that everything that is considered a Ca is reviewed every 5 years – not easy job – he may be getting rid of his own folks – painful process
DRM – Provides business advice to those on Gov side through this process
CPO - Civilian Personnel Office – assists in managing civilians
Contract – director of contracting – works with contractors
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

8. Commercial Activity Inventory
Lists all commercial activities
Updated annually
Includes description of each commercial activity
SHOW SLIDE 8: Commercial Activity Inventory
This is a listing of all CAs performed by or for the Army at installation, ACOM, or HQDA levels.
All CAs will be entered in the inventory. To include exempted ones.
The inventory provides the information necessary for annual reports to the Congress, as required by law.
This inventory list is updated annually and submitted to higher annually
Posted on a website for all to get at - basic information
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

9. Commercial Activity Tools
Commercial Activities Inventory
Army Commercial Activities Management Information System (ACAMIS)
Commercial Activities Proposed Action Summary (CPAS)
SHOW SLIDE 9: Commercial Activity Tools
Different tools used with Commercial Activities
Inventory – talked about
ACAMIS - data base - provides detailed information on all Commercial Activities - restricted access – not everybody can have access to it like the Inventory – contain companies bids, what they can do, what the Army can do - why restricted - if you were a public company bidding - wouldn’t you like to know what your competitors can and cannot do – also includes costs
A public notification when something is going up for review – through congress – why so they could notify someone in their district / state
You go through a notification process
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

10. Commercial Activity Reviews
Existing in-house
Expansions
Existing contracts
New requirements
Direct Conversions or Streamlined Cost Studies
SHOW SLIDE 10: Commercial Activity Reviews
Minimum every 5 years
Ask “Is this something we should still do In House / “Contract Out”
Conduct a review when considering Expansions / New requirements
Something could be fully contracted out – but are they doing what we want – maybe change the requirements
Direct conversions – CDRS can do this – automatically contracted out – but there are specific rules – must be an area with under 10 people and all the people must have another job before accepted)
Once we decide to contract out – we need to develop a PWS
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

11. Performance Work Statement
(PWS)
Function of work
Location of work
Quantity of work
Quality and timeliness of work
Quality Surveillance Assurance Plan (QSAP)
PWS/QSAP
SHOW SLIDE 11: Performance Work Statement (PWS)
4 Primary things contained in PWS
What we want done, location, quantity, quality – but not how
Why not how? Maybe someone else can do something cheaper or do better their way
Very important – this PWS – need to include everything you want done- every little function – if you want the grass cut – need to include that – this applies to both the gov and contractor
Quality Surveillance – Plan on how we are going to ensure that the standards that we outline will get done
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

12. FINANCIAL MANAGEMENT SCHOOL
Management Plan
Most Efficient Organization (MEO)
In-house cost estimate (IHCE)
Technical Performance Plan (TPP)
SHOW SLIDE 12: Management Plan
PWS is used to develop the MEO
The PWs goes to the director of contractors for bids (requests for bids)
MEO is the Gov’s best way of doing something – look at the PWS and they decide that they can do something
Howe much it will cost to do it is the In-house cost estimate (IHCE)
Technical performance plan – is the plan on how your actually going to do it – The HOW – say we dropped from 500 people down to 200 – HOW are we going to do it – ensures that we really can do it
Transition Plan - what are you going to do with the left over buildings, equipment, etc Plan for letting someone else do the job – sell them something – give them something
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

13. Most Efficient Organization
Optimum in-house
Must match PWS
Becomes Government’s bid (IHCE)
Must be able to implement
SHOW SLIDE 13: Most Efficient Organization
Has to be able to do what we want to be done in the PWS
Best in house way of doing it – looks at both number of people and total costs - becomes the cost bid – In-house cost estimate
Stressful because if lose – people lose jobs
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

14. FINANCIAL MANAGEMENT SCHOOL
Cost Study Process
Independent Review
MEO
Implemented
Congress
MEO
Development
Management Plan
Appeal
CPAS
Cost
Comparison
PWS/QSAP OR
SHOW SLIDE 14: Cost Study Process
Up for review
Notify congress
PWS (what do we want them to do)
Splits off then – Gov side – MEO / review done by Army Audit
Contractor side – solicitation / bids
Cheapest contractor vs IHCE – must be able to perform PWS
Cheapest wins – (10% leeway to gov) – i.e. contractor must be 10% cheaper than Gov
Review
Present
Organization
Solicitation
Bids
Contractors
Award
Contract
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

15. FINANCIAL MANAGEMENT SCHOOL
Commercial Activity
Advantages
End strength vs. contractor
Dollar savings
Efficiency
SHOW SLIDE 15: Commercial Activity Advantages
Good and bad things about CA
Good
Endstrength – free up manpower – ROTC / aid in reducing Army size (congress dictates)
Dollar Savings – say we are saving money – but can anyone really show it? Can’t determine for real
Efficiency – most efficient way to do something by design
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

16. FINANCIAL MANAGEMENT SCHOOL
Commercial Activity
Disadvantages
Savings at HQDA
OMA appropriation
“Extras” lost
Morale
SHOW SLIDE 16: Commercial Activity Disadvantages
Bad things about CA
Savings – are we really saving? Rolled up at DA? Spent somewhere else?
OMA – all comes out of OMA – contracts etc..
Are we providing more or less flexibility for Installation CDRs’? Less – because we are tying their hands with their money – less money to “play with” – its all being tied up
Extras lost – “once a contractor has it – you can’t just say “we need you to also do this” – they will .. For more money
We have military teaching – we can pull them to go do gate guard – if civilian contractors are doing it can we just pull them and throw them on the gate or make them cut the grass.
Morale – when word is on the street that a review is going to happen – stress starts – people don’t want to lose their jobs
May start to take corners in the PWS / MEO to undercut and win – but then they must perform
11/14/2018
FINANCIAL MANAGEMENT SCHOOL

17. Check On Learning Q. What is the goal of a commercial activity?
True / False: Savings at HQDA is an advantage of a Commercial Activity?
What must be developed before we contract out?
Q. An in-house activity that can perform the quality and quantity of work in the PWS is? 17

18. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Commercial Activities Program.
Given a summary sheet containing DA Pam 5-20 and AR 5-20.
With 80% accuracy:
Analyze the policy; review inventory process, personnel responsibilities, cost studies, performance work statement (PWS), most efficient organization (MEO) and the advantages and disadvantages of the commercial activities program.
SHOW SLIDE 2: TERMINAL LEARNING OBJECTIVE
Note: Restate the TLO
11/14/2018
FINANCIAL MANAGEMENT SCHOOL