1. AFLCMC… Providing the Warfighter’s Edge Think Differently…. When Will We Get Serious About BBP and Speed with Discipline? 23 July 2013 AF Life Cycle Management Center Colonel Cameron Holt Director of Contracting AFLCMC/PK-OL Eglin “Speed with Discipline”

2. AFLCMC… Providing the Warfighter’s Edge Agenda Challenge We Face Assessment of Current Approaches to BBP Current AFLCMC PK-OL Initiatives Snapshot Highlighted Opportunities –Speed w/Discipline: Cycle Time Reduction w/BBP –Acquisition Innovations & Strategic Sourcing Barriers to Acquisition Innovation at Eglin 2

3. AFLCMC… Providing the Warfighter’s Edge AF PEO/WP Thoughts Briefed at RPDS March2012 Declining Budgets Will Present Significant Opportunities Rapidly Changing Defense Landscape Programs That Can’t Keep Up Will Not Survive The Defense Team Needs to Innovate –Not just on technology, but how we maximize procurement funds 3 96ABW-2012-0013 New Environment Demands New Thinking Challenges We Face

4. AFLCMC… Providing the Warfighter’s Edge Unstable buys cause the closure of production lines and the laying-off of skilled full-time workers. Specialized manufacturing capacity and human capital cannot be regenerated without great cost and significant time. (USA007065-11, pg1) Quantity, Quality, and Price 4 Quantity Quality Price EOQMin Quantities Current Practice

5. AFLCMC… Providing the Warfighter’s Edge A-A Enterprise Look 5 Missed opportunity to leverage buying efficiencies AMRAAMNGM 96ABW-2012-0013

6. AFLCMC… Providing the Warfighter’s Edge 6 Comprehensive reviews of Indirect Costs with focus to increase buying power Maximizing efficiencies through competition and business strategies Identifying cost drivers and developing should costs for production programs Analyzing benefit/need of weapons warranties Better Buying Power Initiatives D- B C B+B+

7. AFLCMC… Providing the Warfighter’s Edge Current Initiatives Snapshot Business Leadership Contracting Excellence Organizational Credibility Support to AFLCMC Objective 1 Team -Deliver Cost Effective Acq Solutions Analyze/Improve Cycle Time-- Current data source inaccurate Manning Risk Mitigation -Focus on hiring -Intern graduations -Rotate critical skills vs. needs Support to AFLCMC Objective 3 Team -Launch High Confidence Sustainable Programs Cycle Time Reduction Initiatives: -Audit Timeliness/“Intelligent Requestors of Data” -Improve Contractor Proposal Process/Coordination Re-imagine Battle Rhythm and Reporting Processes -Revamp suspense/workflow -Support LCMC 100-Day TF look -Compliance with AFMCI 64-116 Mature Rapid Acquisition -Fast and Right -Develop RA procedures -Evaluate “Big Safari” approach Enhance Source Selections -New SSAC roles/training -Implement course w/DAU -Standardize low dollar process Formalize CRB Process Across Centers Divestiture: Offloading rocks from the rucksack (Dreamworkz) Reexamine Service Contracting Processes -Implement CORT Tool -Enable COR Checklists Recommend, Implement New Metrics for AFLCMC, AFTC and local BL, CE interest items Pursue Acquisition Innovations: -Portfolio Best Value Competition -ASPUD Implement AFTC/PK Purchase Request Tracking Database Tool - Examine for usefulness to All Centers PR tracking Automate Whatever Possible -Complete C&A Certification -Evaluate Automation Opportunity

8. Planned vs Actual Cycle Times PEO-WP AFLCMC...Providing the Warfighter’s Edge! Process

9. PEO/WP Pricing ActionQualityScheduleAward Date AMRAAM Lot 2730 March 13 JASSM Lot 1130 March 13 SDB II Modification30 April 12 PEO/WL Program NameQualityScheduleAward Date Program 130 April 13 Program 230 May 13 Program 330 January 13 Pricing Risk Assessment ACTIVE AFLCMC PRICING ACTIONS OVER $50M AFLCMC...Providing the Warfighter’s Edge! NOTIONAL-Top Level

10. AMRAAM Lot 27 EVENTQualityComments Proposal Rec’d inadequate proposal. All PCAs not included in proposal. PCAs rec’d 2 weeks after proposal due date. Rates FPRA in place Actuals - Prime Rec’d 100% of actuals. Data was useable. Note: Prime cost represents only 20% of buy. Actuals - Subs Rec’d 20% of actuals on major subs. 10% not useable. Audit Audit utilized tech-eval for 80% of the exceptions Tech - Eval Evaluation of IWAs overlooked. Revised technical eval submitted 2 weeks later. BBP* Pricing Inputs Assessment Inputs Quality-AMRAAM Lot 27 * Better Buying Power AFLCMC...Providing the Warfighter’s Edge!

11. AMRAAM Lot 27 EVENTScheduleComments Proposal Rec’d inadequate proposal. All PCAs not included in proposal. PCAs rec’d 2 weeks after proposal due date. Rates FPRA in place Actuals - Prime Rec’d 100% of actuals on time. Actuals - Subs Rec’d 20% of actuals on major subs. 10% not useable. Rec’d timely response to all requests. Audit Rec’d audit 2 weeks late. Tech - Eval Rec’d 2 months late due to late audit and revisions. Took the team 2.5 weeks to fold in audit recommendations. Evaluation of IWAs overlooked. Revised technical eval submitted 2 weeks later BBP* Pricing Inputs Assessment Inputs Timeliness-AMRAAM Lot 27 * Better Buying Power AFLCMC...Providing the Warfighter’s Edge!

12. AFLCMC… Providing the Warfighter’s Edge Current Big “A” Acquisition Process Converts Monopsony to Monopoly Requirements Process 1. Assess Gaps 2. Assess Capabilities 3. Identify Requirement 4. Prioritize Needs in POM process Budget Process 1. Set priorities for POM/APOM 2. Develop POM/APOM submission 3. Submit POM/APOM Acquisition Process 1. Receive Requirement & Budget 2. Determine Acquisition Strategy 3. Negotiate Procurement (sole source or competitive) or exercise options 4. Award contract Program Trade offs Capability Trade offs PEs by Program Sole Source No Trade Off Trade Offs Made When Quality of Data is Lowest (Unrealistic Expectations)

13. AFLCMC… Providing the Warfighter’s Edge Proposed Big “A” Acquisition Process Turning Monopoly back to Monopsony 1. Assess Gaps 2. Assess Capabilities 3. Establish Capability Mix Required 4. Set MPQs by Program Set Amount for Single Weapons PE ACC/AQP/PEO make final portfolio buy decision from Executable Proposals Capability Trade offs Program Trade offs Acquisition Trade offs RequirementsBudgetAcquisition Single Buyer Flexibility Maintained Throughout Integrated Process

14. AFLCMC… Providing the Warfighter’s Edge Portfolio Best Value Competition Turning Monopoly back to Monopsony 1. Assess Gaps 2. Assess Capabilities 3. Establish Capability Mix Required 4. Set MPQs by Program Set Amount for Single Weapons PE ACC/AQP/PEO make final portfolio buy decision from Executable Proposals Capability Trade offs Program Trade offs Acquisition Trade offs RequirementsBudgetAcquisition Single Buyer Flexibility Maintained Throughout Integrated Process

15. AFLCMC… Providing the Warfighter’s Edge Affordable, Sustainable, Producible, Universal Design (ASPUD) Benefits –Affordability Dial down requirements when not needed, change out components based on target set (allows limited use of high $ assets) Facilitates commonality across systems, decreases unit cost –Quick Reaction for Urgent Needs Flexible Interface allows for increased technology insertion Decreases Lead Times for Development of New Components Encourages Innovation –Aids Ability to Meet Competition & SB Goals Allows for increased competition at component level Resets Market Conditions to Monopsony from Monopoly May Allow for Greater SB Participation –Ex. Proliferation of SB Apple Apps –Changes the Business Model Potential for Decreased Development Costs DA Family of Weapons MK-84 (2000 lb) BLU-109 (2000 lb) MK-83 (1000 lb) MK-82 (500 lb) Tailkit SDB LJDAM Business Model Changes But Still Sustainable “Winner Take All” to “Market Share By Portfolio”

16. AFLCMC… Providing the Warfighter’s Edge Barriers to Acq Innovation at Eglin Inertia of C,S,P focus and PM-level incentives Strong defense contractors wed to “winner take all” Manning and talent mix off-limits Gerbil Cage Fear of failure 16