Trends in Services Contracting According to: Ms. Themoula (Theme) Poirier Chief of Contracts, Enterprise Acquisition Electronic Systems Center, ESC/CAA NCMA Conference dated 14 March

Theme’s Disclaimer My presentation today is from my personal point-of-view and it is not officially the AF’s CAUTION: The information contained in this briefing is for information purposes only, and may not apply to your situation NOTHING stated in today’s meeting or throughout these charts should be construed as Government Direction, Government Commitment, Government obligation or Government Changes!!! ANY questions concerning your existing or future Government solicitation (i.e. RFPs or RFQs or FOAs) or contract must be handled through the appropriate Government channel/authority (Example: Your PCO) BEFORE I proceed, does anyone have any questions on the above? 2

Overview Approaches to obtaining services: – If its not broken then why change the way we do business? – Types of Services and typical DoD problems in Services Acquisitions – Framework of Acquisition of Services (the seven steps) – Step 6 Execute Strategy and the “Why” in shifts in source selection strategies for services – LPTA Highlights – Say What? Performance Based Acquisition? – Putting it all together - Post award administration 3

Theme’s Rationale: Current budget challenges support discrete decision making From a budget and acquisition standpoint, contract services are outpacing hardware purchases Over 51% of the DoD budget is Acquisition of Services Dollars are declining, we must find more efficient approaches 14 Sep 2010 USD(AT&L) memo -- The Department's practices for buying such services are much less mature Dr Carter's Better-buying Power initiatives: Improve Tradecraft in Services Acquisition Contract services are essential to sustaining & maintaining AF mission Restoring affordability to defense goods & services—biggest “User” complaint – it costs too much to get on contract Improvement in Services Acquisition will result in significant reductions in cost at all levels across the Services & DOD organizations If it’s not broken then why change the way we do business? More $ saved = More War-Fighter Capabilities fielded! 4 Assist users of services to define requirements… Enhance competition by more frequent re-competes Limit the use of T&M and award fee contracts for services

OSD Service Contracts $212 Billion 57% of all contracts in 09 AF Share: >$34B A Lot of $$ are spent on Services DOD FY 09 Dollars Spent

TYPES OF SERVICES 6

Severe cases of “Cut-and-paste” requirements – Not analyzing what has changed from last requirement Lack of understanding of the key performance issues and stakeholder concerns Don’t understand difference between a performance objective and a performance standard Task requirements with no performance standards -- confusion on “How” to develop a PWS Overly specific “Personnel Qualifications” (Butts in Seats) Business strategy and type of contract decided in a vacuum before requirement has been finalized Typical Problems in DOD Services Acquisitions 7

7 steps to the service acquisition process to procure services 8

Step 6 – Execute Strategy and the “Why” in shifts in source selection strategies for services GreaterRelative Importance of Cost or PriceLesser LesserImportance of Non-Cost FactorsGreater Tradeoff Source Selection Process described in DoD Source Selection Procedures Oh! The possibilities! Mix-n-match tradeoffs: Lowest Price Technically Acceptable (LPTA) Source Selection Process described in DoD Source Selection Procedures, Appendix A Technical Technical Risk Past Performance Cost or Price Non–Cost Factors Chart provided by ESC/AQ USAF Source Selections now mirror DoD: AFFARs aligned w/new DoD Procedures & Competitive FAR 15 acq over $150k Goal: Consistent policy across DoD: DFARs PGI (Procedures, Guidance & Info) 04 Mar 11 Memo & SAF/AQC 08 May 11 Policy Memo Best Value Spectrum 9

Lowest Price Technically Acceptable (LPTA) is a process used in competitive negotiated contracting where the best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price. See FAR Used for acquisition of commercial or non-complex services or supplies which are clearly defined and expected to be low risk Shall evaluate cost/price and acceptability of the product or services (consideration of one or more non-price evaluation factors/subfactors) –Defined ratings for acceptable/unacceptable required for use Past Performance shall be used as evaluation factor unless waived by PCO –Rated on acceptable/unacceptable basis – ratings defined Small Business participation is exempted from evaluation –If determined an appropriate evaluation factor, should be considered one of the “technical” factors/subfactors LPTA Highlights Chart provided by ESC/AQ Lowest Price Technically Acceptable (LPTA) Source Selection (see FAR ) 10

EXAMPLE OF RECENTLY AWARDED AF A&AS CONTRACTS UTILIZING LPTAs: Air Combat Command (ACC) Acquisition Management and Integration Center - Contracted Advisory and Assistance Services (CAAS) IV--LPTA Evaluation Criteria: - FACTOR 1: Technical acceptability with subfactors: Subfactor 1: Program Management (organizational structure; human resources; quality control plan); Subfactor 2: Organizational conflict of interest plan; Subfactor 3: Security; Subfactor 4: OCONUS Support and Subfactor 5: Small business Subcontracting Plan (for Large primes business only) - FACTOR 2 – Past Performance - FACTOR 3 – Cost/Price ASC - Aeronautical Systems Center (ASC) - Acquisition of Consolidated Enterprise Support Services (ACCESS) – LPTA Evaluation Criteria: - FACTOR 1: Technical Acceptability with subfactors: Subfactor 1: Program Management and Subfactor 2: Organizational Conflict of Interest Mitigation - FACTOR 2: Price Evaluation Factor EXAMPLES OF LPTA EVALUATION CRITERIA 11

Say What? Performance Based Acquisition? Involves acquisition strategies, methods, and techniques that describe and communicate measurable outcomes rather than direct performance processes. It is structured around defining a service requirement in terms of performance objectives and providing contractors the latitude to determine how to meet those objectives (via Performance Work Statements (PWS)) Simply put, it is a method for acquiring what is required and placing the responsibility for how it is accomplished on the contractor Objectives of PBAS * Maximize performance * Maximize competition and innovation * Encourage and promote the use of commercial services * Shift in risk * Achieve savings 12 Who do you think he looks like?

Based on All metrics being within Standard Transportation Sub Processes – On-Base Taxi Response – DV In Place – Off-Base Taxi Response – Air Crew Taxi – Supply Delivery Time – Vehicle In Commission – Vehicle In Commission (Detail) – Overdue Scheduled Maintenance Metric 30: Overdue Scheduled Maintenance (Vehicles) Metric 27: Air Crew Taxi Response Time (Minutes) Standard = 10 Min FY08FY07 Minutes Metric 29: Vehicle In Commission Rate Percent FY08FY07 Standard = 90 % Standard = 1 or less Example: Good Transportation Metrics 13

The Government’s systematic method to evaluate the services the contractor is required to perform The Government has an obligation to actively manage performance after the supplier is selected – Government’s job doesn’t stop at contract award – QASP cites the same performance objectives (contract expectation) and performance thresholds (how it is measured) identified in the PWS, and specifies the method of surveillance – Ensures the government receives acceptable contractor performance against contractual requirements – Contractor is responsible for quality control, not the government – Minimum surveillance of the contractor is required to ensure contractual compliance 14 How Government evaluates contractor’s performance: Quality Assurance Surveillance Plan (QASP) (formerly called the Performance Plan)

Putting it all together - Post award administration Performance Management - It’s More than “Watching” the Supplier Getting the supplier to meet our needs “It’s in the contract, now it’s the supplier’s problem.” Blame and punish the supplier Unpleasant surprises Finding a way to meet both our needs Work together to achieve the performance and compensation goals Communicate the issues, jointly find solutions Integrated planning and communications BECOMES Effective Supplier Relationship Management Are All of the Supplier’s Team Are On Board? 15 THE NOT TO’STHE HOW TO’S

Contract surveillance Prime responsibility of Contracting Officer Representative (COR) is surveillance Government COR is assigned and trained IAW AFFARS MP (d) Method of surveillance in the QASP dictates how the COR will evaluate the contractor’s performance Establish a Performance Management Team that includes the contractor Use the Quality Assurance Surveillance Plan (QASP) to ensure that performance objectives are being met Track performance trends and results Determine if stakeholder needs are being met Develop a change management strategy Communicate performance results to stakeholders and customers Start planning for replacement contract when appropriate Step Seven – Performance Management 16

Performance Plan (QASP) Inspection Incentive Plus or Minus Performance Objective Expectation Threshold Measurement PWS Paragraph Who COR Method/Data Source (Customer Surveys) Frequency A -1 A -2 A -3 A -3 a A -3 b ResultsAction B -1 B -2 Plan Alignment Elements of Performance Plan Requirements Roadmap Worksheet Will measured Results be traceable back to the Objectives? 17

18 ANY QUESTIONS????