DCMA’s Strategic Plan - Achieving Contracting Performance Expectations & Partnering with Industry to Achieve Performance Goals Presented By: Marie Greening Leona Fitzpatrick Chief Operations Officer Operations Contracts Director October 29, 2013

Overview DCMA Mission DCMA Strategic Plan Highlights Contracting Performance Measures Why it’s important Select DCMA Contracting Performance Indicator Achievements and Current State Partnering for Success 2

Overview DCMA Mission We provide Contract Administration Services to the Department of Defense Acquisition Enterprise and its partners to ensure the delivery of quality procedures and service to the warfighter on time and on cost 3

Strategic Plan/Balanced Scorecard STRATEGIC ENDSTATES Acquisition Enterprise: DCMA’s acquisition customers receive excellent CAS and the management information needed to make sound business decisions. Policies and Processes: Effective policies and process standards are in place to support delivery of consistent and cost-effective CAS. Human Capital: A diverse, agile, high-performing workforce equipped with the competencies needed to execute current and future missions. Stewardship: An ethical organization with well-defined roles, responsibilities, infrastructure and management controls fully aligned to effectively and efficiently manage public resources. 4

Strategic Plan Implementation Performance Management: Integral component of DCMA’s strategic planning and management philosophy Provides ability to track strategic initiatives, assess operations capability Performance indicators are the foundation to assessing organization performance for DCMA processes and supplier performance 5

Contracting Performance Measures Eighteen Performance Indicators in Eight Main Areas Contract Closeout Final Overhead Rates Canceling Funds Undefinitized Contract Actions Forward Pricing Rate Agreements/Recommendations Proposal Pricing Contract Audit Follow Up On Time Delivery 6

Why It’s Important Each area represents financial interest to both government and contractor teams $1.8B in Canceling Funds in FY 2013 55,000 overage contracts for closeout Resolution of questioned costs on DCAA audits Undefinitized Contracts Actions 7

Operations Directorate Contract Closeout: Timeliness Contract Closeout: Close 90% of Contracts within FAR Timeline P.I. #46 Data as of Sep 2013 Operations Directorate POC: Eugenia Vinson 8

Operations Directorate Contract Closeout: Timeliness FY 2010-FY 2013 Performance Indicator 46 9

Operations Directorate Contract Closeout: Overage OPERATIONS PERFORMANCE GRAPH Reduce the Number of Overage Contracts by 10% P.I. #47 Data as of Sep 2013 Operations Directorate POC: Marc Rabinowitz/Kerri Roberts 10

Operations Directorate Contract Closeout: Overage FY 2010-FY 2013 Performance Indicator 47 11

Current State Contract Closeout Approximately 48,000 overage contracts for closeout are coded as awaiting settlement of final overhead rates Backlog has steadily grown over the last 4 years DCAA is using a multipronged approach to address incurred cost backlog DCMA is focused on ensuring contracts awaiting settlement of final overhead rates have all other action completed Will expedite closeout when audits/rates are received Partnering with AbilityOne to work closeout actions DCMA Initiated Contract Closeout Blitz to focus on closing contracts within DCMA’s control Fixed Price Contracts Contracts coded as having a paid final voucher “Reopened” contracts 12

Current State Final Overhead Rates Performance Indicator “reporting” has been suspended due to system interface issues between DCAA and DCMA Information still flows over to DCMA, just not necessarily aligned to correct office for PI reporting purposes DCMA system indicates over 20,000 open overhead years DCAA increased the number of closed audits in FY 12 and FY 13 DCMA systems tracks status/closure of ACO determined rates and DCAA audit determined rates DCMA and DCAA are ensuring both agencies data is congruent to ensure all DCAA closed overhead years are accounted for by DCMA Facilitates maximum number of closeouts DCMA is partnering with DCAA to identify audits needed to close the most overage contracts 13

Operations Directorate UCAs Definitized On-Time AQ – UCAs: Definitize 80% of UCAs within 180 days of order issuance or induction of asset P.I. #50 Data as of September 2013 Operations Directorate POC: April Johnson 14 P&N eTool. ad hoc

UCAs Definitized (On Time) Performance Indicator 50 Operations UCAs Definitized (On Time) FY 2010-FY 2013 Performance Indicator 50 Percent Definitize 80% of UCAs within 180 days of order issuance or induction of asset 15

Operations Directorate UCAs Overage AQ – UCAs: Reduce Number of Overage UCAs by 10% P.I. #51 The difference between the total listed above and the total in the eTool are the 8 overage UCAs in the NA category and 1 from the DCMA International. They are being researched for closure. As of this date, there are 1,408 open UCAs. The CMOs have corrective action plans and root causes identified in Metric Studio at the region levels. Data as of September 2013 Operations Directorate POC: April Johnson 16 P&N eTool. ad hoc

Performance Indicator 51 Operations UCAs (Overage) FY 2010-FY 2013 Performance Indicator 51 Number Reduce Number of Overage UCAs by 10% 17

Current State Undefinitzed Contract Actions (UCA) Navy is largest customer delegating UCAs for issuance or definitization In FY 13, there was an average of 1,435 UCAs on hand 744 was typically overage Main factors for exceeding the 180 days for definitization are Non-Receipt of asset Late receipt of proposal Awaiting additional funds Partnering with NAVSUP WSS to develop strategies to reduce overage backlog and improve timeliness Establishment of priced long term agreements has been the most impactful 18

Operations Directorate Proposal Pricing P.I. #54 AQ – Proposal Pricing: Ensure 90% of Pricing Reports Completed within 45 days or Other Mutually Agreed Upon Due Date Operations Directorate POC: Erik Mims Alternate POC: Rosalind Lanham Data as of September 2013 19

Performance Indicator 54 Operations Proposal Pricing FY 2010-FY 2013 Performance Indicator 54 Percent Ensure 90% of pricing reports completed within 45 days or other mutually agreed upon due date 20

Current State Proposal Pricing Over 300 Cost/Price Analysts have been added over the past 3-4 years Cost Monitoring Program has been reinvigorated Corporate Administrative Contracting Officers (ACO) and Divisional ACOs aligned into a Cost & Price Center Integrated Cost Analysis Teams have been established at largest contractor facilities based on government sales Combined Business and Technical focus on contractor pricing Knowledge of cost models, cost estimating relationships, etc. 21

Current State Forward Pricing Rate Agreements (FPRA)/Forward Pricing Rate Recommendation (FPRR) Performance Indicator “reporting” has been suspended due to system issues Majority of FRPA/FPRRs issued from DCMA Cost and Pricing Center CACOs and DACOs reside in the Center DCMA Operations Directorate has responsibility for remainder of FPRA/FPRRs In FY 13, about 40% of all contractor divisions had FPRA coverage at one time or another Majority had FPRR coverage at a minimum Based on cost monitoring efforts, FPRAs have been pursued in advance of DCAA audit 22

Current State On-time Delivery and Delinquency Reduction Surveillance planning and contractor engagement at facilities (CAGEs) represents greatest potential to influence and provide positive results DCMA Top 500 Seeking total reduction in the volume of delinquent schedules across the board Affects ability to process contracts 180 days past final delivery date Focus on delinquent supply schedules greater than 1 year 23

On-Time Delivery Facilities (CAGEs) in the Top 500 Base of Influence This represents the end of period on-time delivery performance for the focused supplier base population Poor Performance: <75% Moderate Performance: 75%-90% High Performance: >90% Volume of facilities in the base of influence changes from period to period Goal is to see an improvement from period to period in the % of suppliers in the moderate (75%-90% range) and high performance (>90%) ranges and a reduction (decrease) in the % of suppliers in the poor performance (<75%) range Causal Factors: Actual delinquency Data discrepancy Unrealistic contract requirement Operations Directorate   Jan-Jun 2012 Jul-Dec 2012 Jan-Jun 2013 Period To Date (Jul-Sep 2013) On Time Performance # of Facilities % of Total > 90% 55 11% 12% 51 62 14% 75%-90% 145 30% 110 24% 129 109 <75% 289 59% 297 64% 256 281 62% Total 489 462 436 452 24

Past Due Delinquency All CAGEs This represents the posture and trend associated with the volume of delinquent deliverable schedules by deliverable type (supplies vs. services) As of 30 Sep 2013, the Operations Directorate had a volume of 719,632 open deliverable schedules Of this total volume, approximately 53% were past due/delinquent (379,751 delinquent deliverable schedules) The greatest volume and % of the delinquency is associated with non-supply related contractual requirements (237,178 or 62% of the total delinquency) The trend is up from the end of the previous reporting period by 8.38% Not pictured but of note is that of the 142,573 delinquent supply schedules, 47% (66,323) are greater than 1 year past due Operations Directorate Delinquency Posture - By Volume/Type of Delinquency Type of Delay EOP (30 Jun 2012) % of Del EOP (31 Dec 2012) EOP (30 Jun 2013) Period to Date (30 Sep 2013) Supply Schedule 135,072 40% 145,307 134,905 39% 142,573 38% Service Schedule 198,667 60% 217,586 215,463 61% 237,178 62% Total 333,739   362,893 350,368 379,751 25

Partnering for Success Submit adequate and timely incurred cost proposals Pursue all contract closeout actions while awaiting final overhead rates Submit final vouchers in a timely manner Submit adequate and timely UCA proposals Pursue long term agreements on repetitive repairs Submit adequate and timely FPRA proposals Know what DCMA says your on time delivery rate is 26