Trends in Procurement

. . . and how to respond to them

© 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 ContractingMarch 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 OFPP-issued policy – further instruction has been distributed by the

newly appointed Federal Chief Information Officer.

Reforming Acquisition

Presidential Memorandum on Government ContractingMarch 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

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

Presidential Memorandum on Government ContractingMarch 4, 2009

Memoranda Highlights

Objective Action by Acquisition Team MembersExamines agency efforts to reduce thenumber of sole source awards and the use of cost-reimbursement/T&M contracts

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

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.

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 setsbased 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

Increasing Competition and Structuring Contractsfor the Best Results (OMB)

October 27, 2009

Discussion

• What percentage of your agency’s contracts are non-competitively 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

Objective Action by Acquisition Team Members

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

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

Performance-Based Management Systems (OFPP)October 29, 2009

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

Objective Action by Acquisition Team Members

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

Explore your agency’s submissions to USAspending.gov 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 sub-award data in order to report accurately Ensure you have a quality control process in place to determine accuracy of data

Open Government Directive –Federal Spending Transparency (OMB)

April 6, 2010

Discussion

• In what ways do you think taxpayers are using USAspending.gov?

• How does USAspending.gov 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?

• 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

25 Point Implementation Plan to Reform Federal Information Technology Management

Vivek Kundra, United States CIODecember 9, 2010

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

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-a-service solutions Find out more about soon to be published business case templates for transitioning to software-as-a-service 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 AnalystsBusiness Analysts gather, determine, analyze,

model and test project stakeholder requirements.

Project ManagersProject managers manage the project through the use of

process, tools and techniques for optimal results.

Acquisition SpecialistsAcquisition 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

Discussion

• 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

• 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?

Select the “Right” People for the IPT

Best Practice #2

Develop and publish an IPT charter

Train IPT Team members

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

Get the right start

Forming

Observance

Excitement

Anxiety

Testing

Questioning

Task definition

Storming

Resistance

Power struggles

Defensiveness

Selfishness

Competitiveness

Disunity

Jealousy

Tension

Norming

Acceptance

Developing harmony, trust, respect, and support

Giving feedback

Sharing responsibilities

“We” rather than “I”

Performing

Loyalty and selflessness

High espirit de corp

Confidence and optimism

Work is almost effortless

Creativity

Productivity very low

Productivity stifled

Productivity increasing

Productivity significant

Best Practice #3Recognize the critical importance of good

IPT teambuilding

Develop skills and leverage relevant tools to power up your IPT

Tool Key Benefits Sources

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

Public , on-siteand online training

Igniter Workshops

Your favorite search engine — type “decision support software”

Best Practice #4

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.

Questions?

© ESI International 2011

Session Evaluation Information

Trends in Procurement, Part 1SESSION TITLE: Trends1SESSION CODE: F-W130

Trends in Procurement, Part 2SESSION TITLE: Trends2SESSION CODE: F-W300