May 4, 2011

Establish an Acquisition process that produces: Required, Affordable, Timely Products Big “A” Acquisition Resources Acquisition Requirements Establish a Resource Allocation Process that produces: Realistic program cost and schedule estimates Balances requirements across Department Establish a Requirements process that produces: Clearly defined, stable, validated and affordable requirements Processes are inter- and intra- departmentally coordinated and supported Synchronize Requirements, Resources and Acquisition to deliver capabilities 2

Small “a” acquisition Big “A” Acquisition Resources Acquisition Requirements Funding instability Insufficient resource trade space Budget not properly phased/magnitude to support planned development Lack of life-cycle focus Lack of corporate risk management Immature technologies Inadequate systems engineering Inadequate requirements flow-down/ traceability/ decomposition Insufficient schedule trade space Inadequate project management including risk management Inadequate implementation of Earned Value Management System Lack of time and assets for testing Lack of validated requirements for basic program Inadequate requirements for basic program and any increments Critical dependence on external programs with developmental issues Lack of relative priorities across department Lack of inter- and intra-departmental stakeholder coordination and support Synchronize Requirements, Resources and Acquisition to deliver capabilities 3

4 Cost to correct problem Planning PhaseAcquisition Phase

5  Identify “Mission Critical” projects  Identify and manage risk: Cost Schedule Performance Risk Management

Severity Rating Matrix Likelihood Consequence Legend High Priority management attention required. Moderate Additional management attention may be needed. Low Minimum oversight needed to ensure risk remains low. Likelihood LevelWhat is the likelihood the risk will occur? 5 Extremely Likely. Current controls will not prevent this risk. 4 Likely. Current controls have significant uncertainties. 3 Moderately likely. Current controls have some uncertainties. 2 Not likely. Current controls have minor uncertainties. 1 Extremely unlikely. Strong controls in place. Consequence Level12345 Performance (including cost and schedule) No impact on DOC goals 1. Significant impact to any single DOC objective. Significant impact to multiple DOC objectives. Failure to meet multiple DOC objectives. Failure to meet DOC Goal. Reputation No damage to DOC or Administration reputation. Reputation questioned but easily recovered. Reputation diminished but recoverable at moderate price. Reputation diminished but recoverable at heavy price. Reputation damaged and never fully recoverable. Budget Minimal impact (<$100K). Moderate impact ($100K up to $1M). Significant impact ($1M up to $10M). Major impact ($10M up to $50M). Major impact. (> $50M). Compliance Non-compliance with DOC policy or procedure. Regulatory non- compliance (ex. OMB ). Mild corrective action required. Moderate regulatory non-compliance. Corrective actions required. Major regulatory non- compliance. Corrections are required. Statutory non- compliance. Corrective actions are unknown. Safety and Security No harm. Minor first aid treatment or minor loss of DOC asset 2. Medical treatment required or moderate loss of DOC asset. Serious injury or major loss of DOC asset. Death or permanent injury or complete loss of DOC asset. Timeframe NearImpact felt this fiscal year, MidImpact felt next fiscal year. FarImpact felt in 3-5 years. 1.DOC goals and objectives are those found on the DOC Balanced Scorecard. 2.DOC assets include facilities, vehicles, equipment, inventories and information assets, such as data. 6

7 GROUP YES (X) CRITERIAWEIGHT IMPACT CRITERIA A program, project, or mission area that is key to achieving objectives in the DOC Balanced Scorecard. An area is currently under the scrutiny of an external stakeholder, such as: Congress, Government Accountability Office (GAO), Office of Management and Budget (OMB), Office of Inspector General (OIG) A program, project, or mission that will significantly impair the reputation of the Department or has heighten political sensitivity COMPLEXITY CRITERIA Budget or revenue impact >$100M annually Multiple BDOs are involved Technology challenges identified High risks identified Skills required to perform activity are unavailable Shared characteristics with similar area that faced challenges MITIGATION CRITERIA Substantial progress is being made to strengthen the controls that address the known risks Internal controls are in place and demonstrated to work Area is comprised of routine activities with well-defined work processes IF TOTAL IS 1 OR GREATER, THEN AREA IS RECOMMENDED AS MISSION CRITICAL∑

Identify and train RMOs and RMs Tailor ERM to fit the organization Set the “tone at the top” Consider the mission & constraints Determine the response to a risk Develop a corrective action plan Execute that plan 8 Review corrective action plans Changes to the risk baseline Communicate pertinent information Identify and score risks Review the risks Establish the risk baseline for DOC Determine risk severity Check risk related controls Assign responsibility Report risk status

 A systematic planning process for all acquisitions ◦ Formal application to “Mission Critical” projects  General framework that incorporates leading practices from other organizations ◦ DOC Bureaus create unique procedures consistent with overall framework 9

10 Strategic Investment Decisions We can only take so many trips! Where do we need to go? What is the best way to get there from here? Prepare for the trip! Follow the road! Trip planning approval OK to here! Now define it. OK to here! Now get ready. OK to here! Now do it.

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Project Initiation Approval Project Definition Phase Project Approval Investment Approval MS 1 Needs Analysis Resource/Affordability Analysis Independent Cost Review/Estimate Initial Risk Assessment Alternatives ID Analysis of Alternatives Capabilities Requirements Development Requirements Traceability Resource Requirements Project Cost Estimate Independent Cost Estimate Project Planning Risk Update Tech Readiness Assessment Requirements Traceability Budget Acquisition Strategy Update Independent Cost Estimate Procurement Requirements Project Planning Update External Independent Review Risk Assessment Update Product Demo/ Prototype Requirements Traceability Execution Management, Oversight, and Adjustment Mission Need Statement Sponsor Commitment Initial Risk Assessment AOA Report CONOPS Preliminary Reqmnts Doc Selected Alternative Project Mgt Plan Project Baseline Sponsor Commitment Reaffirmed Acquisition Strategy Risk Assessment Update Requirements Document Project Mgt Plan Update Sponsor Commitment Reaffirmed Acquisition Strategy Update Risk Assessment Update Project Execution Phase Project Development Phase Conceptual Phase MS 3MS 2 Tasks to be conducted during phases: Deliverables required for milestone reviews: MS 0 MS 4 Project Delivery Concept Initiation