Defense Contract Management Agency Supplier Risk Management Quality Leadership Forum, September 25, 2002 Presented by: Sydney Pope Contract Technical Operations Director, DCMA

2 Agenda DCMA in Acquisition Risk Management Quality Assurance (QA) Support Shifting Emphasis QA Business Case Flight Critical Support Readiness and Overhaul Maint, Mod, & Repair (OMMR) Issues DCMA and NASA DCMA and NATO DCMA and JACG NADCAP Pilot Study Earned Value Mgmt (EVM) and Technical Performance Measures (TPM)

3 DCMA is a Team Member... Secretary of Defense Chairman Joint Chiefs of Staff Under Secretary of Defense (Acquisition, Technology, & Logistics) DCMA Army Navy Air Force Marine Corps...In the defense acquisition community

4 Risk Management Planning –Customer requirements –Identifying key processes Assessing –Consequence –Probability Handling –Mitigate / Manage Risk –Methods / Tools Monitoring –Evaluating Supplier Performance –Adjusting Surveillance Documenting

5 Effective Risk Management ensures program success: –Provides real-time supplier information in risk- based terms. –Provides visibility on where to focus attention. –Permits partnering with ALL stakeholders. Risk Management

6 The Critical Few Depot Maintenance Timely Return to Mission Capable Status Weapon System Life Cycle SupportWeapon System Life Cycle Support Visibility and Influence within DoD Supply ChainVisibility and Influence within DoD Supply Chain Knowledge of Industrial Capability and CapacityKnowledge of Industrial Capability and Capacity Readiness and OMMR Issues Readiness Driver NSN Delinquent Backorder SMCC Informed Engagement on Spares The Full Spectrum The Apparent Big Items - Big $ - High Attention The Less Apparent Small Items - Small $ - High Importance DCMA covers…

7 QA Risk Management Oversight Adversarial Mil-Spec Mil-Q Source Acceptance C/SCSC Insight/Risk Based Partnership/Alliances Performance-based ISO9000 / AS9100 Supplier Excellence Earned Value Management From : To: DCMA Shifting Emphasis

8 QA Training Requirements Mandatory Training and Certifications are required for Quality Assurance positions –Four (4) types of Quality Assurance Training Certification are required: Defense Acquisition Workforce Improvement Act (DAWIA) Core Courses Commodity Specialty

9 Training Certification Types Commodity Certification – 15 commodity types –Based on the Specialists assigned facility type code –End Item Risk dictates Training or OJT Need Specialized Certification –Specialized Certification is to support Customer mandated requests and requirements –Customer / Request Types: HAZMAT NASA NDT Navy Special Emphasis

10 QA Workforce l DCMA QA personnel severely reduced - Down 66% (9,000 to 3,060*) since Similar for the Services and DLA l Fewer DoD QA resources results in - more reliance on contractors - less product inspection - lower cost (at least initially) - higher risk (focusing on likelihood vs. consequence) * As of Mar 02

11 QA Business Case Study Study mandated by Undersecretary of AT&L to determine cost of outsourcing Government QA functions. Studied non-resident quality assurance functions performed in comparison to industry costs and capabilities. Study showed DCMA less expensive than contractors who provide comparable services to Civilian Agencies. Surveyed customers about turning back technical functions to them. Customer satisfied with in-plant technical support and prefer that the responsibility for it remain in DCMA.

12 Flight Critical QA Support Provide intensive surveillance / continuing product audits of identified critical characteristics –Customer identified through contracts, drawings, letters of instruction or any other means –Independently performed or conducted by witnessing contractor product inspection/test/installation operations Specialist determines items may be flight critical and the customer has not identified any critical characteristics - initiate contact with the customer to request guidance

13 Flight Critical QA Methods Risk Management Techniques Drive drive Risk Handling Activities –High Risk Processes Process Proofing (Evaluation) Product Audits Data Analysis –Moderate Risk Processes Product Audits Data Analysis –Low Risk Processes Data Analysis Products Audits accomplished regardless of assessed risk and in addition to process proofing (evaluation) and data analysis dependent on risk

14 DCMA and JACG Joint Aeronautical Commanders Group Management of Aviation Critical Safety Items –Disciplined Approach to Managing CSI –Guidance for Activities Associated with CSI –DCMA QA Activities Include Provide Assistance to Service ESA regarding “Value-Added” QA requirements –Assure that Technical Requirements Include Critical Characteristics Verify Compliance of Critical Characteristics Disposition Nonconforming Items Provide GSI for all CSI as appropriate

15 DCMA and NASA New Initiatives April National Aeronautics and Space Administration (NASA) submitted a request to DCMA to view the Risk Assessment Management Plans (RAMP) from all delegated prime and sub- tier Goddard Space Flight Centers. April DCMA conducted a data call. May 2002 – A total of 69 Risk Plans were forwarded to NASA for their review.

16 DCMA and NATO DCMA Represents U.S. at NATO AC/250, NATO Group of National Directors for Quality Assurance, Subgroup B, QA Implementation and Operations DCMA Chairs the S/G B Ad Hoc Working Party on Mutual GQA Improvement DCMA CMOs Currently Reviewing the New AQAP-2000 Series Documents (Contractual QA Standards)

17 National Aerospace and Defense Contractor Accreditation Program (NADCAP) Pilot Study New Initiatives Purpose: To test the feasibility and effectiveness of relying on NADCAP Data to eliminate redundant surveillance to the maximum extent possible. DCMA Test Sites: –DCMAE - Baltimore, Syracuse, and Detroit –DCMAW - Chicago, and Van Nuys Test Areas: Welding, Heat Treating, NDT

18 Continue the present level of NADCAP membership and provide training to the remaining CMOs for DCMA wide implementation. Continue the NADCAP test through FY03 to focus on the second objective (using analysis of most common problems). Continue efforts to engage NASA in tests using NADCAP audits. NADCAP Next Steps

19 Linking EV to TPMs Traceability – Requirements to WBS to TPMs to EV control accounts. Impact - How much WBS work, & therefore EV money, is covered/accounted for by the TPM(s)? TPM Banding/Sensitivity – What banding (R/Y/G) and sensitivity (EV impact) should be used for each TPM? Bonus Key: Technical Readiness Level – What’s the state of the technology supporting the requirement(s) for which TPM is a metric?

20 TPM Discussion: Risk Vs Problem Preventive Corrective Action May occur Has occurred Problem Strategic Tactical Thinking Long Short Time horizon Manage Risk and Future Issues (TPM Emphasis) Is it a Risk …………………………or a Problem Manage Problem and Future Impact (EV Emphasis)

21 TPM – Next Steps Working with Northrop Grumman to do a proof- of-concept on a well structured program Reaching out to Program Management Offices, other suppliers/organizations, selected CMOs

22 Summary Provide Customer-Focused Contract Management Services –Right Item = Quality –Right Time = On-Time Delivery –Right Price = Value for Money QA Approach Adapting –Reduced QA resources –Risk Management Maturing –Enhanced Analytical Techniques Needed DCMA is Focused on Customer Needs!