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Trends in Procurement . . . and how to respond to them

Š ESI International 2011

Welcome! • Speaker introduction— Kathleen Dawn, ESI Senior Instructor • ESI International helps organizations improve the way they manage projects, contracts, requirements, and vendors; we deliver performance improvement results to more than 100 government agencies • In conjunction with NISH’s training department, ESI delivers contract management courses to help CRPs better navigate the federal procurement landscape

Session Objectives • Provide an overview of key government initiatives, mandates, and policy changes that aim to improve acquisition in the federal government • Identify themes in acquisition reform and share insight into how they meet overarching reform objectives • Provide tangible actions members of the acquisition workforce can take in response to acquisition reform

Overview of Major Supporting Memoranda Presidential Memorandum on Government Contracting March 4, 2009

This memorandum was the first of twenty-four (24) memoranda focused upon the government’s intent to reduce wasteful and inefficient programs, improve its acquisition capabilities, and provide the American public unprecedented insight into how its taxpayers’ dollars are being allocated and managed. This initiative has not been limited to OMB- and OFPPissued policy – further instruction has been distributed by the newly appointed Federal Chief Information Officer.

Reforming Acquisition Presidential Memorandum on Government Contracting March 4, 2009 “The Federal Government has an overriding obligation to American taxpayers.”

Since 2001, spending on Government contracts has more than doubled

Significant increase in dollars awarded without full and open competition

Cost-reimbursement contract dollars doubled in FY00-FY08

The misuse of noncompetitive and cost-reimbursement contracts have resulted in wasted taxpayer resources, poor contractor performance, and inadequate accountability for results

Reforming Acquisition Presidential Memorandum on Government Contracting March 4, 2009

Strategic Goals: • • • •

Save $40B by reducing contractor spending by 7% Reduce by 10% use of no-bid contracts Clarify when outsourcing services is/is not appropriate Increase acquisition workforce by 5%

Impact on Agencies: • • •

Greater pressure to deliver programs at lower cost Must increase competition, reduce cost-reimbursement contracts and increase fixed-price contracts and performance-based contracts Evaluate contracts in terms of performance of both the government and contractors

Memoranda Highlights Increasing Competition and Structuring Contracts for the Best Results (OMB) October 27, 2009


Action by Acquisition Team Members

Examines agency efforts to reduce the number of sole source awards and the use of costreimbursement/T&M contracts

Planning for the migration of work from a cost-type to fixed-price contract as requirements become better defined

Maximize the effective use of competition

 Develop clear and robust requirements to receive the most responsive proposals  Engage vendors early to better understand market capabilities  Leverage contract management and program management skill sets based upon the benefits inherent to an integrated program team approach

Mitigate risk of both competitive and noncompetitive contracts

 Link payment to performance and conduct regular reviews of contractor performance  Ensure price reasonableness  Assign the right acquisition resources to the procurement

 Analyze repeatedly-renewed T&M/LH contracts to consider the continued need and cost-effectiveness of such arrangements. Based upon results of analysis, determine whether a lower-risk contract type is more appropriate.

Discussion • What percentage of your agency’s contracts are noncompetitively awarded? What percentage of your contracts rely on a cost-reimbursement/T&M pricing structure? • Who gathers, defines, and manages the requirements for acquisitions in your agency? • In what ways do you currently involve vendors prior to award? • Is risk discussed and analyzed during the procurement process in your agency? How are those risks quantified and incorporated into your acquisition strategy?

Memoranda Highlights Performance-Based Management Systems (OFPP) October 29, 2009 Objective Agencies will be assessed on their performance-based management systems (PBMS). To do so, agencies must provide: 1. A description of how IT and non-IT projects are evaluating cost and schedule performance 2. Hard investment data for IT projects; budget and performance data for the top 10 non-IT projects

Action by Acquisition Team Members To be best prepared to respond to requests related to PBMS—  Ensure all major acquisitions are implemented and managed by an integrated project team (IPT); the accurate measurement of performance requires inputs from acquisition, program/project management, and appropriate business stakeholders  Employ Earned Value Management (EVM)  Review OMB Circular A-11 Part 7 and its supplement, The Capital Programming Guide

Discussion •

How do you currently plan for performance measurement throughout the life cycle of an acquisition?

What criteria around performance measurement are you requesting of your vendors, both pre-award and post-award? What challenges has your agency experienced developing sound performance-based requirements?

Do you, the COTR, and/or the project/program manager discuss performance evaluation at regular and scheduled intervals? Does everyone contribute to the analysis?

Is your agency consistently using EVM as a performance management tool?

Memoranda Highlights Open Government Directive – Federal Spending Transparency (OMB) April 6, 2010


Action by Acquisition Team Members

In further support of the Transparency Act, increase the quality of data provided to the public on

 Explore your agency’s submissions to by going to Summaries  By Agency  Review the types of contracts awarded by your agency, the percentage of contracts that have been competed, and the top awards

Assess agency compliance by conducting quarterly reviews of the data for completeness, timeliness, and accuracy of reporting

 Find the details of your last procurement and check them for accuracy and completeness  Determine how to correct any misinformation you discover, and have those corrections made

Effective October 1, 2010, expenditures on sub-awards must be reported

 Ensure that you are collecting all necessary subaward data in order to report accurately  Ensure you have a quality control process in place to determine accuracy of data

Discussion •

In what ways do you think taxpayers are using

How does and its reporting requirements relate to other acquisition initiatives?

Who on your team is responsible for ensuring timely and accurate reporting on spending? Is that being vetted by your IPT?

What challenges has your agency faced in meeting these requirements? Have you changed your business process in order to comply?

What about all the IT reform? 25 Point Implementation Plan to Reform Federal Information Technology Management Vivek Kundra, United States CIO December 9, 2010

“Too often, Federal IT projects run over budget, behind schedule, or fail to deliver promised functionality.” • • • •

Turnaround or terminate at least one-third of underperforming projects in IT portfolio within the next 18 months Shift to “Cloud First” policy. Each agency will identify three “must move” services within three months, and move one of those services to the cloud within 12 month and the remaining two within 18 months. Reduce number of Federal data centers by at least 800 by 2015 Only approve funding of major IT programs that: – Have a dedicated program manager and a fully staffed integrated program team – Use a modular approach with usable functionality delivered every six months – Use specialized IT acquisition professionals Work with Congress to: – Consolidate commodity IT funding under the Agency CIOs and – Develop flexible budget models that align with modular development Launch an interactive platform for pre-RFP agency-industry collaboration

What about all the IT reform? Goals

Action by Acquisition Team Members

Shift to a cloud first policy

 When evaluating options, default to cloud-based solutions when secure, reliable, cost-effective options exist  Learn more about soon-to-be available GSA set of contract vehicles for cloud-based infrastructure-as-aservice solutions  Find out more about soon to be published business case templates for transitioning to software-as-aservice email and other back-end cloud-based solutions

Integrated program teams

 Review upcoming OMB guidance requiring an IPT led by program manager to learn how to provide effective support  Undergo cross-functional training to better understand the processes of an IPT and how to anticipate the needs of members of the team  Ensure understanding of individual performance goals that cover program objectives.

What exactly is an IPT? An integrated project/program team comprised of individuals who contribute their expertise at various levels throughout the entire project life cycle with the overall goal of maximizing the project’s success. Typically, an IPT is comprised of: • • • • •

Contracting Officer COTR Project Manager Business process sponsor Finance team member

Symptom of a “stove-pipe� organization

Stove-piped and siloed teams can cause antagonistic relationships between project teams and the acquisition/ procurement staff

. . . IPTs drive teamwork and leverage the skill sets of all team members to best achieve agency objectives

Benefits of an IPT • • • •

Breaks down organizational silos and bureaucracy to create a collaborative environment among technical experts Improves clarity of requirements Allows for a more predictive program outcome Reduces costs by-• Increasing efficiency •

Streamlining communications

. . . IPTs drive teamwork and leverage the skill sets of all team members to best achieve agency objectives

Business Analysts Business Analysts gather, determine, analyze, model and test project stakeholder requirements.

Project Managers Project managers manage the project through the use of process, tools and techniques for optimal results.

Acquisition Specialists Acquisition specialists determine contractual arrangements to procure goods and services that support the project outcome.

Exercise 1. Write down the names and titles of those who make up your IPT. If you don’t have an IPT, think about the individuals within your organization that SHOULD be on your IPT. 2. Map the names of those people to the three different IPT functions on the IPT diagram: Project Management, Business Analysis, and Contract Management. 3. Do each of these team members perform the activities listed on the diagram? Where are there gaps? Where is there overlap? 4. Does your IPT have the necessary competencies to perform effectively throughout a project life cycle?

IPT Leadership Who should lead the IPT? An IPT leader must possess the skills, acumen and leadership qualities that can elicit the optimum performance from each team member while achieving the most accurate project results against the triple constraints. Proper leadership will enable each IPT member to effectively: • • • •

Communicate their strengths and expertise Apply critical thinking skills Identify and analyze business problems Select the optimal solutions that will enhance their overall contribution to the IPT


• Who leads your IPT? • What kinds of decisions is the leader empowered to make? •

What are the implications of a “leader-less” IPT?

Four Best Practices for Effective IPTs

1. First order of business — find the “right” people for your IPT 2. A good start is absolutely critical for IPT success 3. Recognize the critical importance of good teambuilding 4. Develop skills and leverage relevant tools to power up your IPT

Best Practice #1 Select the “Right” People for the IPT • • • • •

Do they have proven expertise in critical subject matter areas? What is the depth of their understanding of federal acquisition? Can they engage in healthy debate but still unify behind IPT decisions regardless of parochial interests? Will they commit their time and energy to the success of the IPT? Are they a true stakeholder and have a vested interest in the outcome of the acquisition?

Best Practice #2 Get the right start Develop and publish an IPT charter

Train IPT Team members

Develop a Plan of Actions and Milestones (POA&M)

Best Practice #3 Recognize the critical importance of good IPT teambuilding Forming



 Observance

 Resistance

 Acceptance

 Excitement

 Power struggles

 Anxiety

 Defensiveness

 Testing

 Selfishness

 Developing harmony, trust, respect, and support

 Questioning

 Competitiveness

 Task definition

 Loyalty and selflessness  High espirit de corp

 Giving feedback

 Confidence and optimism

 Disunity

 Sharing responsibilities

 Work is almost effortless

 Jealousy

 “We” rather than “I”

 Creativity

 Tension Productivity very low


Productivity stifled

Productivity increasing

Productivity significant

Best Practice #4 Develop skills and leverage relevant tools to power up your IPT Tool

Key Benefits

Skill Development

Trained IPT members are more valuable contributors to group success

Decision support software and systems

Automated tools that help streamline IPT decision processes and cut cycle time

Group facilitation workshops

Significantly increases IPT productivity and efficiency

Dedicated IPT office space and hardware

Greatly increases IPT focus and avoids day-to-day mission distractions

Sources Public , on-site and online training Your favorite search engine — type “decision support software”

Igniter Workshops

What not to do with the IPT • Empower the team to make decisions — then overturn their decision • Allow “interested observers” to attend and participate in meetings (the curious with no real stake in the outcome) • Regularly swap out IPT leaders or members • Force the IPT to endure premature senior management reviews of their work in progress

A Better Approach • Ensure the goals and objectives of team members are consistent with IPT goals and objectives — no hidden agendas • Conduct full and open discussions with no secrets • Choose your team members wisely — resist the temptation to change out team membership and leadership unless it is absolutely necessary • Empower the IPT — each member must have the authority to speak for and commit the functional area they represent • Raise and resolve issues early when they have the least cost and schedule impacts

What can we expect from an effective IPT? • Better quality decisions and support to mission customers • Significantly faster acquisition cycle time (30% to 60% faster) • Highly motivated team members dedicated to success • Contract awards for critical projects using stimulus funding before it expires

What else in IT reform affects acquisition? Goals

Action by Acquisition Team Members

Design and develop cadre of specialized IT acquisition professionals

 Build up knowledge of the Federal acquisition system, including tools available  Develop a deep understanding of the commercial IT marketplace  Build up understanding of delivering large-scale IT programs in using a modular approach  Develop learning programs that will support the goals of building up IT acquisition capability

Roll out “TechStat” model

 Take advantage of training around the “TechStat” toolkit now available online. All IPT members will be accountable for program results, so knowing the evaluation process and how to improve the performance of programs and their acquisitions will be key to success.


Š ESI International 2011

Session Evaluation Information Trends in Procurement, Part 1 SESSION TITLE: Trends1 SESSION CODE: F-W130 Trends in Procurement, Part 2 SESSION TITLE: Trends2 SESSION CODE: F-W300

Trends in Procurement-Presentation  

. . . and how to respond to them © ESI International 2011 • ESI International helps organizations improve the way they manage projects, cont...