Business Operations Center NDIA Discussion Andrew Obermeyer Director, Business Operations Center October 11, 2016

Business Operations Center Ensure that suppliers’ have purchasing systems in place that contribute to effective subcontract management. Evaluation of the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting. The CPSR Group’s recent focus has been on improving supplier sourcing practices and promoting intelligent pricing decisions. Set to conduct over 130 reviews in FY16. Ensure that contractors’ property management systems control, use, preserve, protect, repair and maintain the Government property (GP) in their possession. Perform Property Management System Analysis (PMSA) and investigate Property Loss to determine liability PMSAs performed FY15 – 1025 Total acquisition cost of GP - $138,121,543,421 CONTRACTOR PURCHASING SYSTEM REVIEW (CPSR) GROUP PROPERTY GROUP DCMA employs 244 of the 368 1103s in DoD Total Personnel Authorized: 394 Negotiate settlements for Contracts terminated for the convenience of the Government. Provide technical assistance and guidance to Buying Activities by facilitating policy and procedures and technical support Conduct post-termination briefings. Approve contractors’ settlements with subcontractors. Approve interim payments prior to final settlement. Currently have over 700 actions valued at $26.6B in process. Provide timely, cost effective disposal of excess government property in the possession of contractors.  TERMINATIONS GROUP PLANT CLEARANCE GROUP Facilitate the reutilization of Government Property saving time and money that might otherwise be expended in re-procurements. Assure Government Property is disposed of properly and demilitarized when required. Selling surplus Government Property returning proceeds from sales to the Government Clearing Plant Clearance cases while maintaining data integrity in our case files and PCARSS. FY15 cleared 17K cases; Acquisition Cost - $5.9B CPSR Group – travel cost savings of $56k in FY15 as a result of remote access to contractor records Benefits to DOD Customers Property Administrators investigate losses of Government property, and when contractually appropriate, recommend that the contractor be held liable. In FY15, this resulted in the recoupment of $2,982,624. Terminations had negotiated savings of $78.1M in FY15 and has saved $11.8M to date in FY16. Plant Clearance reutilized $500M in Gov’t Property and returned $6.8M to the U.S. Treasury through sales of Surplus Gov’t Property in FY15. FY16 YTD reutilized $185M and sales $2.3M.

Business Operations Center DCMA-AQB Andrew C. Obermeyer Director Business Operations Center Ft. Lee, VA Samuel Davis Deputy Director AQB ROLLUP AUTH: 394 ASSIGN: 318 DCMA-AQBC Elizabeth Alicea Director CPSR Group Boston, MA DCMA-AQBP Karen Sagaribay Director Plant Clearance Group Philadelphia, PA DCMA-AQBY Teresa Lardaro Director, Property Group Ft. Lee, VA David Ryan, Deputy Philadelphia, PA DCMA-AQBT Paul Slemons Director Terminations Group Smyrna, GA Hub Sites Northeast Team (Boston, MA) Southeast Team (Smyrna, GA) Northwest Team (Phoenix AZ) Central Team (Dallas, TX) Hub Sites Ops Team A (Carson, CA) Ops Team B (St. Louis, MO/Dayton, OH) Ops Team C (Boston, MA/Philadelphia, PA) Ops Team D (Dallas, TX/Phoenix, AZ) OCONUS Team (Ft. Lee, VA/Orlando, FL) No Designated Hub Sites 16 Property Group Teams 231 Property Group Personnel located throughout the world supporting DCMA CONUS and OCONUS Operations Hub Sites East Team (Boston, MA/Smyrna, GA) West Team (Dallas, TX/Carson, CA)

DCMA Atlanta (Smyrna, GA) CPSR Team Map WA ID MT NORTHEAST Boston ME OR ND MN WI VT NY SD MI Boston NH MA WY CA Boston CT NV RI UT NE IA PA CENTRAL Dallas IL OH IN NJ CO WV MO VA DE MD KS WEST Phoenix AZ KY NC NM OK TN TX AR SC Phoenix GA MS AL DCMA Atlanta (Smyrna, GA) Atlanta LA Eastern Region Dallas FL Southeast Atlanta

CPSR Performance Overview FY11 FY12 FY13 FY14 FY15 FY16 Risk Assessments 85 226 219 145 166 232 Eligible 66 100 105 107 126 129 Scheduled 70 118 134 133 Completed 40 43 57 103 101 133 (est) Carried Over 16 27 32 23 33 15 (est) Authorized/Onboard 44/24 44/31 44/35 46/32 45/41 50/44

Continuous Process Improvement Cycle Time Metric – report issued in 30 days Closed the system gap between review completion, report issued, and initial determination Aligned CPSR universe categories to the FAR January 2016, required updates in place Improved report template and Guidebook revisions New report format- reduced elements from 43 to 34 Further streamlining and combining of associated review elements is in the works Development of an Excel DATA workbook versus Access database for compiling review data DCMA Strategic Plan Initiative to improve CPSR effectiveness and efficiency Champion assigned to each of the 34 CPSR review elements Job Aids developed, 20 of the 34 complete Training provided on completed Job Aids

Priorities As We Look Ahead In support of Better Buying Power, the Agency Director is evaluating the merits of raising the CPSR threshold A DCMA Internal Review Team to perform a review of the CPSR group’s processes and procedures regarding TINA and Cost/Price Analysis, June 2016 DCMA CAR Policy Compliance, January 2016 Remote access to Contractor records has resulted in travel cost savings of $56k in FY15 CPSR Annual Tasker – reducing the burden on the ACO and increasing our reliance on the data available in the DCMA Contractor Business System Analysis Repository (CBAR) e-tool system Evaluating the advantages and disadvantages of changing the DCMA requirement from annual to every three years that the ACOs conduct contractor purchasing system surveillance

Property Team Map 1 PA Canada 1 PA Pacific 3 PAs Europe 8

# of Government Property (GP) Systems Property Workload Trend Indicator Data as of October 1, 2016 There was a fiscal year (FY) 12 to 13 inecrease in Government Property Systems due to the DCMA system change from DPADS (MOCAS) to the Contract Property Administration System (CPAS) eTool. The contractors that did not have Government Property and/or no Government Property contracts were not brought into the CPAS eTool. The Property Group shows a steady increase in Systems/workload over the past 5 years. The increase is due to better oversight of property contracts coming into DCMA. Newer systems such as Contract Property Administration System (CPAS) and Integrated Workload Management System (IWMS) have given Property Administrator’s better oversight of their workload and contracts associated. The continual use of the DCMA systems will assist in identify new workload in the future. FY 2012 2013 2014 2015 2016 # of Government Property (GP) Systems 1,850 2,130 2,131 2,415 2,599 GP Value $ 147.7 B $ 139.8 B $ 129.7 B $128.9 B $139.0 B GP Line Items 41.0 M 43.7 M 65.6 M 78.9 M 61.0 M Onboard/Authorized 183/185 182/197 174/201 170/199 187/231 Audits Performed 917 1026 1090 1025 980 Audit Target 984 1121 1145 1066 1022 Complete % 93% 92% 95% 96% 9 9

Continuous Process Improvement Develop Standard Operating Procedures for outcomes as identified in FAR 52.245-1(f) Improving PMSA performance via training and consistent monitoring Hiring four Performance Analyst to monitor and improve data integrity FAR 52.245-1(f) Standard Operating Procedures – of 22 elements, four have published SOPs and associated work paper templates. 10

Priorities as We Look Ahead Low Risk Property Initiative Unit acquisition cost less than $5,000 DCMA Low Risk Guidance Practice dated 22 Aug 2016 identifies criteria that Contractors may apply to processes and procedures at their facilities, if they decide to do so. It is not a requirement to implement. Improving Data Integrity Focus Areas for FY17 PMSAs: Utilization Disposition Subcontractor Control “Low Risk Property” means assets that: Meet the definition of Equipment, Special Tooling, or Special Test Equipment, as defined at FAR 2.101, FAR 45.101 and FAR 52.245-1 (a). Have a unit acquisition cost less than $5,000. When low risk practices may be approved PAs shall make contractors aware of the criteria that will be applied to low risk property. Contractors are responsible for developing their own processes and procedures at their facilities. PAs shall not require contractors to implement low risk practices. 11

DCMA Atlanta (Smyrna, GA) Terminations Team Map WA ID MT East Boston ME OR ND MN WI NY VT SD MI Boston NH MA WY CA Boston CT NV RI UT IA PA West Dallas NE IL OH IN NJ CO WV MO VA DE MD KS AZ KY NM NC OK TN TX AR Carson SC AL GA MS DCMA Atlanta (Smyrna, GA) WEST Carson Atlanta LA Dallas FL East Atlanta

Terminations Performance Overview FY11 FY12 FY13 FY14 FY15 FY16 Totals # Settlements Completed 331 321 334 448 408 487 2,329 $ Negotiated Savings $68,529,533 $50,418,010 $28,119,182 $405,811,919 $78,078,426 $63,245,129 $694,202,199 $ Terminated Contract Value Closed $1,684,084,532 $6,379,153,079 $1,663,610,580 $6,454,940,063 $1,202,586,733 $957,123,910 $18,341,498,897 Authorized/Onboard 17.5/17.5 22.5/22.5 27.5/27.5 25.5/25.5 29/29 32/28

Continuous Process Improvement IWMS TAMS Moving the Terminations Automated Management System (TAMS) from a Microsoft Access program to an IWMS application New DAU Terminations Course Developed CMC 150 Introductions to Terminations, 18-hour online course to be release in January 2017 Raised DCAA Audit Threshold In support of Better Buying Power, raised the threshold for audit resulting in faster completion times and greater savings.

Priorities As We Look Ahead Complete the transition to IWMS TAMS Terminations Conference tentatively for March 2017 Process improvements for small businesses

Plant Clearance Team Map AK HI NY MA CT NJ DE MD PA VA WV NC SC OH AL GA KY TN FL MS IN MI WI IL ME VT NH MN IA MO AR LA ND SD NE KS OK TX MT WY CO NM ID WA OR UT 8 11 CA AQBPA CARSON NV AQBPB ST. LOUIS AQBPC BOSTON AQBPE FT. LEE AZ OCONUS AQBPE Dallas AQBYE UK & Germany AQBPD DALLAS

Plant Clearance Reutilization Useable property: property in condition that is acceptable for transfer within federal government; either as reutilization, sale, or donation. Reutlized by FY FY11 FY12 FY13 FY14 FY15 FY16 Useable Property in $Bil 1.45 1.86 2.5 3.1 2.31 1.5 Reutlized in $Bil 0.236 0.59 0.44 1.32 0.49 0.345 Reutilization % 16.28% 31.72% 17.60% 42.58% 21.21% 23.00% 17

Continuous Process Improvement Deviation approved to waive screening for termination inventory valued less than $5K Developed Plant Clearance Guide Book to improve PLCOs Training Directors Initiative to reduce overage Plant Clearance Case Closing the gap on overage cases between receipt, issuing disposition instructions, and closing the cases. DCMA Strategic Plan Initiative to improve Stewardship FLSR guidebook developed for First Line supervisors while conducting FLSR Workload review template to expedite the FLSR process 18

Priorities As We Look Ahead New DAU Plant Clearance Course Two new Plant Clearance courses under development. An online course CMC151 to provide the big picture and a resident course CMC251 for in depth training of Plant Clearance Personnel Enhancements to the Plant Clearance Automated Reutilization Screening System (PCARSS) to make the process more efficient for contractors, screeners and Plant Clearance Officers. Approved PCARSS suggestion to expedite the PCARSS process for PLCOs, providing uniformity across Plant Clearance group. 19

BOC Director’s Concerns Aging workforce Succession planning for key billets Space versus salaries Learning abilities Customer Service Culture 20

Aging Workforce Today 3 Years 5 Years 1103 personnel eligible for retirement Today   3 Years 5 Years On Board # Elig to Ret % Elig to Ret 251 62 24.70% 93 37.05% 117 46.61% 21

Questions 22 DTS>> 05: Summary