2 Dr. Rene G. Rendon, CPCM, C.P.M., PMP U.S. Naval Postgraduate School Monterey, California An Analysis of DoD Services Acquisition: Implications for a Program Management Approach

Overview Services Acquisition Environment Characteristics of Services Results of Preliminary Research Innovative Approaches to Services Acquisition Current Research Findings Conclusion

The Services Acquisition Environment DoD Spending on Services (Source: GAO , March 2005, pg. 5)

The Services Acquisition Environment Figure 3: DoD's Contracts for Goods and Services (Source: GAO , September 2003, pg. 4)

The Services Acquisition Environment Services Purchased by the DoD in FY 2000 (Source: GAO , January 2002, pg. 18)

Consistent problems in managing service contracts Fragmented and uncoordinated approach Not employing sound business practices Inadequate contractor oversight The Services Acquisition Environment

Characteristics of Services Intangibility of service outcomes Difficult to define and measure quality Simultaneity of production and consumption Co-production requirement for some services Diversity of services

Presidio of Monterey (POM) Directorate of Contracting –Reports to POM Garrison Commander –Functionally aligned under Army Contracting Agency Southern Region DLI is major customer Major contracts include: –Grounds and infrastructure maintenance –Custodial and janitorial services –Food services, motor pool services –Audio visual and IT services

Presidio of Monterey (POM) Presidio Municipal Services Agency (PMSA) –Inter-municipal consortium (Monterey and Seaside) –Maintains buildings at DLI and POM Contractor performance management –POM, DLI, or other benefiting organization –Use of Quality Assurance Evaluators or other Technical Managers

Services Supply Chain at POM Municipal Workers Independent Vendors PMSA POM Contracting Office DLI OMC Other Customers Other Contractors

Travis AFB 60 th Contracting Squadron –Manages over $320M annually –Supports 60 th Air Mobility Wing and David Grant Medical Center Service contracts include –Grounds maintenance, Custodial –Food services, MFH maintenance –Passenger Terminal Operations –Medical services Successful NIB/NISH Program: Pride Industries, Inc.

Travis AFB Contractor performance management –Quality Assurance Evaluators –Business Requirement Advisory Group (BRAG) Cross-functional teams representing service users Plan and manage contract services life cycle Develop Statement of Objectives or Performance Work Statement, Quality Assurance Surveillance Plan (QASP)

Services Supply Chain at Travis AFB Pride Industries CONS Hospital AMW Other Customers Other Contractors

Observations from Site Visits Continued growth in the volume of service acquisition in DoD POM: Innovative Supply Chain arrangement with PMSA has resulted in significant cost savings Travis AFB: Proactive and frequent communications are essential for successful service contracts (BRAGs) Travis AFB: Co-location of contracting squadron (CONS) with Air Mobility Wing (AMW)

Difficult to establish service specifications and measure and monitor service output and quality. Ensuring the right number of skilled acquisition personnel is highly critical. The observed downsizing of contracting workforce does not appear to be in line with this need. The management infrastructure for the acquisition of services is less developed than that for acquisition of products and systems. Observations from Site Visits

Less formal approach to the acquisition and management of services Lack of standardization of business practices in services acquisition Observations from Site Visits

Purpose of Continuing Research Explore the application of a program management approach and project management concepts to services acquisition in the Department of Defense

Program Management Approach Well-defined, disciplined methodology and infrastructure (PMI, 2004; Kerzner, 2006) Centralized, coordinated management to achieve the program’s strategic benefits and project objectives (PMI, 2004) Program management approach incorporates project management concepts (PMI, 2004)

Project Management Concepts Project lifecycle Integrated processes Designated manager with project authority Integrated cross-functional teams Enabling organizational structure

21 IOC B A System Development & Demonstration Production & Deployment Pre-Systems Acquisition Systems Acquisition Operations & Support C Sustainment Technology Opportunities & User Needs Concept Refinement Technology Development System Integration System Demonstration LRIPFull-Rate Prod & Deployment Design Readiness Review FRP Decision Review Sustainment Disposal FOC Concept Decision The Defense Acquisition Management Framework

22 System Program Director Logistics Systems Engineering Testing Contracting Financial Management Integration Air Vehicle Analysis & Integration Propulsion Integration Armament Vehicle Mgt System Utilities & Subsystems Airframe Avionics Cockpit Analysis & Integration Exhaust & Controls Support Turbo Machinery Engine Support Systems Training System Operations Support Support Data Support Equipment Pilot Maintenance Engine Auto Test System

23 Traditional Systems PM Structure PM CO FM Engineer LogisticsS/W

Traditional Supply Acquisition PM S/WEng Manuf User SEFM Log PCO

Traditional Services Management Structure (Post Award) CO QAE FAC

Traditional Services Acquisition PCO FM FAC QAE

Traditional Services Acquisition PCO FACFM QAE User

Services Life Cycle (Conceptual) AccessDiagnosis Service Process Planning Execution Continuation Closure

Innovative Approaches to Services Acquisition Management Air Education and Training Command (AETC) –AETC Program Management Flight –AETC Contracting Squadron Air Combat Command (ACC) –Acquisition Management and Integration Center Centralized Panning, Control, and Execution –“Services SPO” Combined program management and contracting organization

Services Life Cycle DefineSourceBuy Ensure Quality AdministerRelease

Centralized Services Acquisition Management ACO QAE FAC Pre-Award Program Management Flight (PM) HQ Contracting Squadron (PCO) HQ Functional Reps Post-Award PMPCO HQ Reps

Innovative Approaches to Services Acquisition Management AETC Model –Centralized Planning (Pre-Award) Roles and responsibilities shared by HQ PMF and HQ CONS –Decentralized Execution (Post-Award) HQ retains PM authority (No on-site PM) HQ delegates contracting officer authority (On-site ACO)

Innovative Approaches to Services Acquisition Management ACC Model –Centralized Planning and Execution Single point control, integrated management, and a unique cradle-to-grave sustainment capability Integrated services “SPO-like” program management organization

Services Acquisition PM PCOFM QAE User

Research Findings Traditional approach to managing services acquisition does not incorporate program management approach –Well-defined, disciplined methodology and infrastructure –Centralized, coordinated management Project lifecycle Integrated processes Designated manager with project authority Integrated cross-functional teams Enabling organizational structure

Research Findings AETC model incorporates –Well-defined, disciplined methodology and infrastructure –Centralized, coordinated pre-award management Project lifecycle Integrated cross-functional teams Enabling organizational structure Integrated processes –No on-site Program Manager –On-site ACO

Research Findings ACC model incorporates –Well-defined, disciplined methodology and infrastructure –Centralized, coordinated program management Project lifecycle Integrated processes Designated manager with project authority Integrated cross-functional teams Enabling organizational structure

Conclusion Program management approach needed to manage DoD’s critical services acquisition –Well-defined, disciplined methodology and infrastructure –Centralized, coordinated approach incorporating project management concepts AETC and ACC models provide innovate and successful approaches to services acquisition