Contracting in a Changing Environment Leslie Deneault Defense Acquisition University Leslie.deneault@dau.mil

Why don’t acquisition programs stay the same? Requirement change Threat changes New missions New users for the system Technology improvements Parts obsolescence Congressional influence Funding cuts Sometimes these changes effect a specific contract and sometimes these changes effect our entire acquisition strategy and planning and what the user ultimately needs to satisfy their requirements in a changing environment.

Ideas about a Changing Environment Partnering relationship Increases trust and understanding Contract Terms and Conditions The contract allows for change Evolutionary Acquisition Strategy allows for change Partnering increases trust between the parties and increases the understanding of the requirement being contracted for and what work will be done. I believe that inevitably it will help control changes. Evolutionary acknowleges that the technical environment is changing and that the user may change its mind. It builds in the concept of short blocks of available technology to meet a current user need.

Partnering Alpha negotiations Alternative Disputes Resolution Senior Leadership Meetings Alpha – a few slides in a minute ADR- Gov’t and Ktr agree that they will stay out of the courts at all cost. They will try to resolve disagreements at the lowest level using arbitrators and mediators Sr Leadership mtgs. The big guys meet on a regular basis. Forces the big issues to rise and forces the small issues to get resolved.

Who are the partners? Buying Activity DCMA (ACO…) DCAA (Auditor) Contractor Subcontractors User

ALPHA Process Modification Requirement ECP Technical &Cost Understanding CCB Model Modification Distribution Contractor and Government Sign Rev iews Contractor offer/TINA TINA requirements are still in place. We work together on the model modification to the contract, but the contractor must still submit certified cost and pricing data and a proposal Sole Source Contractor and Government Government

Important Elements of the Process MOA – Everyone agrees to play Team Continuity Standard Software & Formats Communications – No back-room discussions Schedule Approval Guidelines Engineers can meet and agree without contracting Team Meetings MOA: Ktrs have to play and they don’t always want to if they have complete competitive advantage. DCAA can support Team continuity: Over time the same players will be working Software: Doesn’t work very well if you do not have standard cost models to work out cost and pricing. Want to be able to work on the model contract at the same time Communications: Ideas are bubbled up in front of each other. If you have to confer seperately all the time, then you are not doing alpha Schedule: Up front agreement. Big commitment of time. Everyone should agree to the schedule.

Contract Terms and Conditions that help change Swing Clauses Contract type relates to risk MOA for partnering Agreed process for using the changes clause Broad performance objectives Set up study CLINs

Evolutionary Acquisition Evolutionary acquisition is DoD’s preferred strategy for rapid acquisition of mature technology for the user. An evolutionary approach delivers capability in increments, recognizing, up front, the need for future capability improvements. The success of the strategy depends on the consistent and continuous definition of requirements and the maturation of technologies that lead to disciplined development and production of systems that provide increasing capability towards a materiel concept. Willing to take a current technology and not meet all requirements. Short increments of deliverable The difference between evolutionary acquisition and P3I is that in evolutionary acquisition, requirements are vague, in P3I they are not 5000.2; 12 May 2003

Incremental Development Incremental Development (ID) definition In this process, a desired capability is identified, an end-state requirement is known, and that requirement is met over time by development of several increments, each dependent on available mature technology. 5000.2, 12 May 2003

Spiral Development Spiral Development (SD) definition In this process, a desired capability is identified, but the end-state requirements are not known at program initiation. Those requirements are refined through demonstration and risk management; there is continuous user feedback; and each increment provides the user the best possible capability. The requirements for future increments depend on feedback from users and technology maturation. 5000.2; 12 May 2003

Evolutionary Acquisition versus Linear-Sequential Acquisition Linear-Sequential Acquisition Process Requirements Design Code & Unit Test Integrate & Deploy Support Evolutionary Acquisition Process Requirements development, experimentation, risk reduction, market analysis, etc. This graphic shows the key differences between the linear-sequential acquisition process and the evolutionary acquisition process. Note the ongoing requirements development, experimentation, risk reduction, market analysis effort. This will tend to drive substantial increases in system engineering/program management effort per delivered source instruction as compared to historical factors. This is driven by the need to control multiple simultaneous baselines, while continually eliciting/validating User requirements, and supporting the fielded capability As a result, you will likely observe substantial decreases in specific productivity (e.g., delivered source instructions per unit time) due to development of non-deliverable software. Finally, note the early initiation of support activities relative to the linear-sequential process. Design Design Design Incr 1 Incr 2 Incr 3 Code & Unit Test Code & Unit Test Code & Unit Test Integrate & Deploy Integrate & Deploy Integrate & Deploy Support

Advantages of Spiral Development Spiral development is designed to be more responsive to user needs. It accomodates change Shorten turn around time for emergent user needs Focus on the most critical user needs at the current time Address threat changes, technology improvements, new users of the system, parts obsolescence, new missions, congressional influence Continuous feedback between testers, users and developers (Gov’t and Ktr). Overtime we will relook at the requirement, and threat , new mission, new technologies. We will change what we are building

Evolutionary and Contracting Be part of the preparing the Acquisition Strategy/Plan Use Award Fee or performance incentives to motivate contractor Schedule may be most important consideration Broad scope to contracts to minimize ECP’s and J&A’s or new contracts. Minimal thresholds. Broad performance objectives Options Section H clauses that develop scope Contracts are CR, FFP, and ID/IQ. FAR 39.103 Modular Contracting (18 months/IDIQ) IAW with 39: agencies should to the mximum extent praticable use modular contracting to aquire major system of information technology