ncma boston education workshop policy update copyright. unpublished work. raytheon company. customer...

NCMA Boston Education Workshop

Policy Update

Copyright. Unpublished Work. Raytheon Company.

Customer Success Is Our Mission is a registered trademark of Raytheon Company.

04/19/23

Talking Points

Current Capitol Hill Environment

DoD Efficiency Initiative/Impacts

New FAR/DFARS Requirements

On the Horizon

04/19/23

“Where this new FAR rule come from?”

Plenty of sources:– Congress– Washington Post Front Page– DoD IG– GAO

Deliberative process – Most changes allow the public an opportunity to comment before implementation

Industry associations play an important role in shaping policies on key issues– Aerospace Industries Association– National Defense Industry Association– TechAmerica, etc.

Contract Policy Challenges

04/19/23

04/19/23

Current Washington Environment Budget Pressures – Less wiggle room and shrinking

DoD Key target for cuts- Proactive approach

Efficiency Initiative is DoD’s first step– Frees up funds needed in constrained budget environment

– Programs at risk of termination

Continuing Resolution Frustrations– Currently March 18th, no end in sight

DoD Efficiency Initiative

Secretary Ashton Carter (USD/ATL) issued guidance to Services and OSD September 14, 2010

Identified 23 Initiatives in Five (5) areas:– Targeting Affordability and Control Cost Growth

– Incentivize Productivity and Innovation in Industry

– Promote Real Competition

– Improve Tradecraft in Services Acquisition

– Reduce Non-Productive Processes and Bureaucracy

OSD’s goal for savings is two to three percent annually of the $400 billion DoD spends on contracted products and services.

– Projected savings of $8-12 Billion per year

– Frees up funds to maintain modernization efforts in constrained budget

Target Affordability and Controlling Cost Growth Mandate Affordability as a requirement for ACAT programs

– Affordability as a key performance parameter

– Support engineering, cost and schedule tradeoffs

Drive productivity growth through Will Cost/Should Cost management– Should Cost targets as management tools

– Used as basis for contract negotiations and incentives

Eliminate redundancy within warfighter portfolio

Make Production rates economical and hold them stable– Define production rates change limits based on affordability assessments

Incentivize Productivity and Innovation in Industry Reward contractors for successful supply chain and indirect

expense management– Part of incentive strategy and aligned to profit

Increase the use of FPIF with 50/50 Cost share-120% ceiling as starting point*

Adjust progress payments to incentivize performance*– Identify pilot programs to use innovative financing methods– Develop cash flow model and guidance of preferred financing hierarchy– Flow down to subcontractors

Establish Superior Supplier Incentive Program pilot– Based on Navy’s “Preferred Supplier Program” concepts

Promises better terms and conditions for qualified contractors

Reinvigorate IRAD program—more defense related R&D*

* New OSD Policy/DFARS proposed guidance issued

“Incentivize Productivity and Innovation in Industry” - Secretary Carter’s Directive Secretary Carter’s direction to OSD/DPAP - November 2010

– “I expect that the basis of negotiations shall be the use of customary progress payments. After agreement on price on the basis of customary progress payments, the contractor shall have the flexibility to propose an alternate payment arrangement for the Government’s consideration”, such as PBPs.

New OSD Performance Based Payments Analysis Tool at:

www.acq.osd.mil/dpap/cpf/Performance_based_payments.htm

Promote Real Competition

Competitive Acquisition strategy at each program milestone– Focus on single bid contracts- directed 2% reduction starting in 2011

Negotiations on single bid offers ##– PCOs use certified or non-certified cost or pricing data

Develop plan to improve competition rate by 10% annually

Increase small business awards– Past performance factor, profit/fee consideration

## See OSD Memo dated November 24, 2010 “Improving Competition in Defense Acquisitions”

Improve Tradecraft in Services Acquisitions Create PEO for Services-benchmark Air Force’s example

Uniform categories for types of Services

Address causes of poor services contracts– Standardize for Performance Work Statements

– Increase market research usage

– More frequent re-competes of knowledge based services

– 1 bid proposals open < 30 days require re-advertising additional 30 days*

– CPFF/CPIF contracts for limited competition or pricing history

– FFP type for “robust” competition

– Increase small business participation in Multiple award/IDIQ contracts

04/19/23

DoD Efficiency Initiative – Secretary Carter’s 7 Guiding Principles

Seven (7) guiding principles for the 23 DoD Efficiency Initiatives

Reliance on market forces to cause industry’s mergers and acquisitions Will not support further consolidation of “principal weapon systems prime

contractors”

Competition –“key driver of productivity and value” Competition includes head to head competition and acquisition strategies.

Sector reviews of defense sectors – Shipbuilding, services, space, etc.

“Right sized” to meet future needs

Focus on the Supply Chain Subcontracted goods and services account for 66 to 75% of defense dollars and

are the key drivers of program cost and delays

–

DoD Efficiency Initiative – Secretary Carter’s 7 Guiding Principles

Services acquisitions – Consumes 60% of DoD spend

Remove barriers to ensure DoD can benefit from new and emerging technologies

Become easier to do business with

Leverage the Global industrial base

Balance obtaining the best technology with security concerns

DFARS Final Rule – Award Fee Contracts Effective date: February 14, 2011

Key Provisions– Eliminates “provisional award fee payments”

No payment made within an evaluation period prior to a final evaluation for that period.”

– No “rollover” of unearned award fee to another period

– Requires 40% of award fee pool set aside for final evaluation period Contracting officer can lower with HCA Approval

– Incorporation in existing contracts require a bi-lateral modification

Federal Funding Accountability and Transparency Act of 2006 (FFATA) The Federal Funding Accountability and Transparency Act of 2006

requires the Government establish a free, public, website containing full disclosure of all Federal contract award information.

The rule requires contractors to report executive compensation and first tier subcontract awards on contracts expected to be $25,000 or more.– Applies to all modifications made to those subcontracts

First tier subcontract ” a subcontract awarded directly by a Contractor to furnish supplies or services for performance of a prime contract”.

Key Exclusions:– Classified contracts and contracts with individuals

– Less than 80 percent or more of its annual gross revenue in Federal contracts (and subcontracts), loans, grants (and subgrants), and cooperative agreements

04/19/23

FFATA - Classified Contracts Exemption FFATA Pilot test in 2007 recognized industry’s concerns about industrial,

national security information on a public, searchable website.

The Government responded that “Section 3 of FFATA does not require disclosure of classified information and exempts “classified contracts that may be applicable to industrial, national and other security issues”.

Per FAR 2.101 a classified contract “means any contract in which the contractor or its employees must have access to classified information during contract performance. A contract may be a classified contract even though the contract document itself is unclassified.”

– If the prime contract requires access to classified information FAR 52.204-10 does not apply to your contract. A DD Form 254 on your contract indicates the need for access to classified information.

– Section 3 of the FFATA stipulates the Act exempts contracts that may be applicable to industrial, national and other security issues.

04/19/23

Federal Awardee Performance Information System (FAPIIS)

Applies to vendors submitting proposals on Federal Contracts over $500k and that have more than $10M in active contracts as of the time of the proposal submission

Goals: – Assist the Contracting officer in making responsibility determinations. – Improve Government’s ability to evaluate business ethics and

performance of prospective contractors.

Requires contracting officers to review the FAPIIS before awarding a contract over simplified acquisition threshhold

Must certify that the offeror has accurately and completely disclosed in FAPIIS:

– Within the last 5 years Any criminal proceeding, conviction Any finding of fault and liability that results in a payment of a fine of

$5,000 or more

FAPIIS - Contractor Actions Update FAPIIS semiannually

– Centralized Corporate POC for all Raytheon business units– Information entered in Central Contractor Registration (CCR)– Failure to update could result in a range of penalties including suspension or

debarment or a determination of non-responsibility

Contractor will receive updates when Government posts new information

Contractor will have opportunity to post comments regarding Government posted information

All contractor information viewed only on a need to know basis– Information treated as source selection sensitive– Information retained for six years– However, determinations as to whether FAPIIS data is releasable or exempt

from disclosure under FOIA will be determined on a case-by-case basis.

DFARS ProposedBusiness Systems Rule Second Proposed DFARS Rule issued Dec 3, 2010

– Updates initial DFARS Business Systems rule issued Jan 15, 2010

Allows for Contracting Officers to withhold payments for business systems deficiencies

Defines six contractors business systems– Accounting Systems– Estimating Systems– Earned Value Management Systems (EVMS)– Materiel Management and Accounting Systems (MMAS) – Purchasing Systems– Property Systems

Applies to contracts over $50M

Excludes FAR Part 12 awards

DFARS Business Systems RuleKey Changes

Withholds– Deletes potential 100% withhold for deficiencies

– Reduced from 10% to 5% for systems deficiencies (2% for small businesses)

– Reduced to 2% when an acceptable corrective action plan is submitted

– Cumulative withholds on one or more systems is 20% (10% small businesses)

– Applies to all contracts that contain the business systems clause

04/19/23

DFARS Business Systems RuleKey Changes DCMA/DCAA

– Contracting Officers have the authority to determine if system deficiencies warrant withholds DCAA reports deficiency in accordance with GAGAS Contracting Officer consults with auditor, makes determination to

withhold or discontinue withholds

Due Process

– Contracting officer initial determination of system deficiency

– Contractor afforded 30 days to respond in writing

– Contracting officer evaluates and makes final determination

– Contractor allowed an additional 45 days to correct deficiency

– Allows for Contractor to bill for withheld payments when Contracting officer determines all deficiencies are corrected

04/19/23

DCMA/DCAA Roles and Responsibilities DCMA and DCAA’s involvement critical for successful contract administration

– Pending DFARS “Business Systems” rule mandate clear roles, responsibilities and expectations

OSD/DPAP issued a Policy memorandum January 4, 2011 that clarifies DCMA and DCAA’s roles and responsibilities. They include:

– Increased Thresholds for Cost/Price Proposal Audits – DCAA will no longer perform field pricing audits on cost-type proposal less than $100M and fixed priced proposals less than $10M.

– Forward Pricing Rate Agreements (FPRAs/Forward Pricing Rate Recommendations (PFRRs) - DCMA is the single agency responsible for issuing all FPRAs and FPRRs for contractors where DCMA is the cognizant contract administration office.

– Financial Capability Reviews – DCAA is withdrawing from performing Financial Capability Reviews and Audits. DCMA will conduct this requirement as part of the Pre-Award Survey process.

– Purchasing System Reviews – DCMA will lead and conduct Contractor Purchasing Systems Reviews. DCAA will withdraw from Purchasing Systems Audits.

04/19/23

Cyber-Terrorism and DoD “Safeguarding Unclassified Information”

The threat of cyber terrorism is real and pervasive

Need to protect data internally and also on contractors’ systems

ANPR addressed potential DFARS changes to safeguard unclassified information. Information includes:

– Any unclassified DoD information not cleared for public release– Enhanced safeguarding requirements, including cyber incident

reporting, that apply to information subject to the following: a. Critical Program Information protection. b. Export control under ITAR and EAR

Initial Concerns– Definitions too broad for effective implementation e.g.,

“Adequate security”– Reporting concerns- how is information treated in Past

Performance– Flow-down to subcontractors- are primes liable for

subcontractors’ implementation?

Interim FAR Rule - Text Messaging Ban (Sept 2010)

New FAR part 23 and an associated clause to encourage Federal contractors and subcontractors to adopt and enforce policies that ban:– Text messaging while driving company-owned, rented or government-owned vehicles; or

– Text messaging while driving privately owned vehicles when performing official government business, or when performing any work for or on behalf of the government

– The interim rule also encourages federal contractors to:– Establish new rules and programs, or re-evaluate existing programs, to prohibit text

messaging while driving; and

– Develop and implement educational and outreach programs to inform employees about safety risks associated with texting while driving.

The clause at 52.223-18, titled “Contractor Policy To Ban Text Messaging While Driving,” must be included in all covered solicitations, contracts, grants and cooperative agreements awarded or entered into on or after September 29, 2010.

On the Horizon New Supply Chain Challenges

– Counterfeit Parts– Rare Earths and Conflict Minerals

Weighted Guidelines– Goal is “Profit for a purpose”, not reduced profit– Will be open for public comment

Data Rights – Acquire no more than needed– Huge industry concern, may be more public meetings to clarify

Recent Developments

Source Selection Guide – Just released!– Effective date: July 1, 2011

Proposed DFARS Rule “Independent Research and Development Technical Descriptions”– Require contractors to report independent research and

development (IR&D) projects generating annual costs in excess of $50,000.

– Goal: Increased visibility into gov’t sponsored DoD projects

DFARS Proposed Rule “Increase the Use of Fixed-Price Incentive (Firm Target) Contracts”– Increased use transitioning from development to production

– Use 50/50 cost share line 120% ceiling as default

04/19/23

“Report to Congress on Contracting Fraud”

Congress directed Secretary of Defense and DoD Inspector General report on Contracting Fraud

Requested total value of DoD contractswith contractors “been convicted of fraud”– Indicted for, settled charges, or fined by any Department or

agency– Limited to last three years

Report: $285B taxpayer dollars paid to contractors “criminally convicted of fraud”

Anticipate some legislation in FY2012 NDAA

OFPP- “Myth Busters”-Improve Communications with Industry during the Acquisition Process

OMB issued memo Addressing top 10 Misconceptions

“We can’t meet one on one with a potential offeror”

“Since communications with contractors is like communications with registered lobbyists, and since contact with lobbyists must be disclosed, additional communications with contractors will involve a substantial additional disclosure burden, so we should avoid these meetings.”

“A protest is something to be avoided at all costs—even if it means the government limits conversation with industry.”

“Myth Busters”-Improve Communications with Industry during the Acquisition Process - Misconceptions

“Conducting discussions/negotiations after receipt of proposals will add too much time to the schedule”

“If the government meets with vendors, that may cause them to submit an unsolicited proposal and that will delay the procurement process.”

When the government award a task/delivery order using FSS, debriefing the offerors is not required, so it shouldn’t be done.”

“Myth Busters”-Improve Communications with Industry during the Acquisition Process - Misconceptions

“Industry days and similar events attended by multiple vendors are of low value to industry and the government because industry won’t provide useful information in front of competitors, and the government doesn’t release new information.”

“The program manager already talked to industry to develop the technical requirements, so the contracting officer doesn’t need to do anything else before issuing the RFP.”

“Giving industry only a few days to respond to an RFP is OK since the government has been talking to industry about this procurement for over a year.”

“Getting broad participation by many different vendors is too difficult; we’re better off dealing with the established companies we know.”

Some Final Thoughts

Contracts – Expected to be our best in times of turmoil– Team members depend on us to provide the BEST business advice

for program execution

Be proactive! Identify the business risks early

Communicate, Communicate, Communicate!– Collaborate on the thorny issues to ensure a better product

The Warfighter needs us to solve these challenges– You are not in this alone…successful program performance is a

shared responsibility

04/19/23

Questions???

04/19/23

ncma boston education workshop policy update copyright. unpublished work. raytheon company. customer...

Documents