Services Acquisition

DoDI 5000.74 Defense Acquisition of ServicesWhat's new? GAO and DoDIG Reports Say…

Mr. Lawrence FloydDr. Adam Stroup

Agenda

• State of Services Acquisition– DoDI 5000.74 Services Acquisition Policy– DoDI 5000.74 Revisions (NDAA FY17)

• GAO and DoDIG Findings

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Changing Landscape……

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What was once performed by uniformed military may now be

provided by contractors

Contractors perform vital services in support of the entire DoD mission and team

• Maintain combat equipment• Move forces to and from

combat operations• Provide life support at

contingency bases• Sustain facilities and test

ranges• Provide health care services• Etc.

FY16 Spend - DoD as Contracting DeptServices = 50.3% of Obligations

S&E ($147.0B)Services ($148.7B)

Knowledge Based Svcs

($33.7B) 23%

Facility RelatedSvcs ($24.0B)

16%

Research &Development

($23.2B)15%

Equip RelatedSvcs ($17.7B)

12%

Electronic &Comm Svcs

($16.1B) 11%

Medical Svcs ($13.3B)

9%

Construction Svcs ($10.2B)

7%

Transportation Svcs ($5.7B)

4%

Logistics Mgmt Svcs ($4.8B)

3%

Acft, Ships/Subs,

Land Vehicles ($56.5B)

39%

Electronic &Comm Equip

($31.2B) 21%

Sustainment S&E ($22.1B)

15%

Facilities S&E($10.4B)

7%

Weapons &Ammo

($20.4B) 14%

Clothing, Textiles &

Subsistence S&E ($6.5B)

4%

Miscellaneous S&E ($.05B)

0%

50.3%

Data from Business Intelligence Tool; all services obligations where DoD is contracting department, 19 Oct 16 Note: these numbers have not yet been certified

49.7%

Historical Services Spend by MILDEP

$60

$40

$20

$-FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

$80

$100

$120

$220

$200

$180

$160

$140

Billi

ons

DOD Total

Army

Navy

AF

4th Estate

Data from Business Intelligence Tool; all services obligations where DoD is contracting department, 19 Oct 16 Note: FY16 numbers have not yet been certified

DoDI 5000.74 Purpose

• Establishes policy, assigns responsibilities, provides direction

• Implements management structure for acquisition of services

• Authorizes decision authorities to tailor procedures

• Mandates data collection to provide management information

• Incorporates and cancels Enclosure 9 of DoDI 5000.02, (8 Dec, 2008)

DoDI 5000.74 applies to:

• DoD acquisition of services from private sector entities (total est.$ > simplified acquisition threshold)

• Acquisition of all advisory and assistance services in support of research and development or construction activities categorized within the knowledge-based services portfolio group

DoDI 5000.74 doesn’t apply to Services:

• Managed and reviewed as part of defense acquisition programs and IT programs

• Meeting Major Automated Information Systems thresholds (including software as a service)

• Included in non-major programs whose primary purpose is to provide capabilities, goods, or systems in accordance with DODI 5000.02

• Listed in FAR 37.502 (personal service, below SAT, etc.)

DoDI 5000.74 doesn’t apply to Services: (cont.)

• Included in classified, cryptologic, and intelligence projects (except to the extent practical at discretion of senior officials)

• From DoD Federally Funded Research and Development Centers

• In direct support of declared overseas contingency, humanitarian or peacekeeping operations as defined in FAR 2.101

• Required to respond/recover from an emergency or disaster (Presidential declaration)

DoDI 5000.74 Revision

• FY17 NDAA directs revision of DoDI 5000.74• DPAP SA working group formed (first met March 16th)• Include Software as a Service, FFRDCs and UARCs

– More services “dollars under management”• DoD CIO keep Enclosure 7, IT Services (due to the large number of

questions that the CIO’s office receives), requires extensive revisions (led by the DoD CIO)

• crosswalk or alignment between the Federal category management structure and the DoD SA taxonomy

• SAW required >$500 million – as provided by the DAU or other DAU-approved provider – before seeking acquisition strategy approval.

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GAO and DoDIG Findings

TRAINING AID FOR DOD AUDITORS IN PLANNING, EXECUTING, AND REPORTING FOR ACQUISITION AUDITS (2005-ATM-001)

Acquisition and Technology Management Directorate Office of the Deputy Inspector General for Audit August 2005

Budgeting and Forecasting for Services

• GAO-16-119 DoD Service Acquisition. Improved use of available data needed to better manage and forecast service contract requirements

• GAO Recommends: – Congress should consider amending reporting requirements to include

estimated spending on services beyond the budget Year. – GAO recommends that the Secretary of Defense and military departments

revise Program Objective Memorandum (POM) guidance, coordinate efforts to forecast services, and fully comply with budget reporting. DOD concurred with the budget reporting recommendation and partially

concurred with the two others, citing challenges with estimating future spending, but did not address revised guidance or coordination. GAO believes such actions are needed.

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GAO High Risk Report for 2017*

• DOD is, by far, the single largest contracting agency in the federal government, typically accounting for about two-thirds of all federal contracting activity. GAO (and others) identified challenges DOD faces within three segments of contract management:

1. the acquisition workforce, 2. service acquisitions, and 3. operational contract support (OCS).

13*See http://www.gao.gov/highrisk/dod_contract_management/why_did_study

DoDIG and Performance Assessment• DoDIG-2016-112 Army ...Assessing Contractor Performance July 25, 2016• Finding Contractor Performance Assessment Reports (CPARs) • officials did not consistently comply with requirements for evaluating contractor past performance

– Late (not prepared within the 120 day required timeframe)– Did not include sufficient written narratives to justify ratings

• This occurred because– organization-specific procedures did not ensure timeliness– assessors did not understand PAR rating of evaluation factor– assessors did not take CPARS Quality and Narrative Writing Training– organization-specific procedures did not require reviews of PARs

• DODIG-2016-04367 Air Force Past Performance Information January 29, 2016– Timeliness, training and quality checks on the PAR

• DODIG-2015-11466 Navy Past Performance Information May 1, 2015– Late and insufficient narratives

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DoDIG and Performance Assessment

Finding for King Abdullah Special Ops Training Center (KASOTC) Facilities Services• U.S. Army Central (ARCENT) and U.S. Army Contracting Command–

Rock Island (ACC–RI) officials did not effectively maintain facilities at KASOTC.

• As a result, U.S. military personnel at KASOTC may be at risk of illness, injury, or death. Also, DoD may not be getting the best value for its money for the base operations services. Upon being informed, the Director took immediate action to have the facilities inspected.

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Guardians of the Galaxy

TRAINING AID FOR DOD AUDITORS IN PLANNING, EXECUTING, AND REPORTING FOR ACQUISITION AUDITS (2005-ATM-001)

Acquisition and Technology Management Directorate Office of the Deputy Inspector General for Audit August 2005

Competitive Sourcing Potential Risks:

• Failing to develop an implementation strategy• Outsourcing highly technical jobs• Performing inadequate/inaccurate cost comparisons• Loss of institutional knowledge• Failing to retain a residual in-house capability• Creating what is essentially a sole-source environment• Failure to track actual performance against cost comparison

predictions• Failing to maintain accurate contract performance information

databases

Services Acquisition Management Potential Risks

• Not using best practices identified by other program managers• Not employing acquisition reform techniques• Not complying with mandatory requirements of acquisition

instructions (DOD 5000 series)• Acquisition strategy does not give adequate consideration to

various essential elements, e.g., mission need, performance assessment, technology

• Subordinate strategies and plans are not developed in a timely manner or based on the acquisition strategy, e.g. source selection, risk management

Services Acquisition Management Potential Risks

• Proper mix (experience, skills, stability) of people not assigned to Program Management Office or to contractor team

• Failure to prepare a Risk Management Plan (for either the program office or the contractor)

• Effective risk assessments not performed or results not understood and acted upon

• Required program oversight is not provided at the proper level because the program is split to avoid funding thresholds or the wrong Services Acquisition Category is assigned

Performance Improvement Recommendations

Contingency Contracting: A Framework for Reform – 2015 Update

DoD Inspector General for Audit DODIG-2015-101

What Needs to Be Done to Improve

• Oversight and Surveillance– Quality Assurance Surveillance Plans and surveillance logs are measurable

and documented to show quality and quantity of surveillance performed– Robust surveillance system is essential– Consider the following when evaluating amount of surveillance:

• Contract type;• Products versus services;• Criticality of product and service (Risk)• The contractor’s history of contract performance• Incentives and remedies

– Perform realistic and measurable reviews and ratings of contractor performance

What Needs to Be Done to Improve

• Requirements– Ensure clear, complete, well-defined requirements exist– Use a contract structure that allows development of well-defined

requirements for segments of work, e.g. IDIQ or ordering agreements

• Property Accountability– Policy is to rely upon the contractor– Periodic government oversight required

• Review records• Review contractor property control systems

What Needs to Be Done to Improve

• Financial Management– Maintenance of complete, consistent, and accurate contract files and

accounting records is necessary to reduce the potential for violations of the Antideficiency Act [bonafide need] and to minimize the number of problem disbursements.

– Ensure the COR maintains a copy of all invoices and vouchers and a payment register, indicating a balance of funds remaining.

• Source Selection– Source selection criteria are well-defined and measurable.– Selection decisions are well-documented and appropriately discuss price

and technical tradeoffs for competitive procurements.

What Needs to Be Done to Improve

• Contract Pricing– To the extent available, DCAA and DCMA should be brought into the

process early and used throughout the life of the contract.– For cost-type contracts, DCAA should review the accounting system

of the proposed contractors.1) Use competitive proposed prices or previous contract prices2) Use Independent Government Cost Estimates (IGCE) comparison to

proposed price as only basis for establishing price reasonableness if 1) is not available

– IGCE, when used, should be detailed and well documented as to the basis for the supporting documentation.

What Needs to Be Done to Improve

• Contract Documentation– The contracting officer should make sure that a complete and well-

documented contracting file is maintained for the life of the contract.– The file should include the basis of the acquisition and award of the

contract, assignment of contract administration, the performance of contract administration responsibilities and duties, the basic contract, and all the modifications or task orders.

• Contract Type– Consider the procurement history and, if applicable, evaluate prior work to

support the contract type decision. – Contract type is important to future surveillance considerations. If a

contracting officer includes more cost-type work, then more surveillance assets are required.

What Needs to Be Done to Improve

• Contractor Personnel– The contracting officer should not award personal services contracts

unless specifically authorized by statute. A personal services contract is a contract that, by its express terms or as administered, makes the contractor personnel, in effect, to be Government employees.

Services Tools Updated March 28, 2017

• SAM: Service Acquisition Mall Version 5.7 deployedOnline resource for performance based services knowledge and tools

• ARRT Suite: the suite is a collection of tools that help you build strategic elements of your acquisition documents by walking you through structured processes

• ARRT Requirements Definition (ARRT-RD) is a tool used to write performance-based requirements following the Requirements Roadmap process. Using the tool, you can create Performance Work Statements (PWS), Quality Assurance Surveillance Plans (QASP), & Performance Requirement Summaries (PRS). Version 4.3 deployed.

• ARRT Evaluation Factors (ARRT-EF): provides a simple, structured approach for developing your contract source selection factors. It walks you through a step by step process to set your factors and subfactors, describe what will be evaluated, and set their relative importance. Version 2.3 deployed.

• PA– Performance Assessment (V2.1)• Monitor and track contractor performance based on PWS• Supports incentives documentation• Generate contractor performance reports (CPARS inputs)

• CE – Cost Estimation (V2.1 released March 28, 2017 )• Develop your independent government estimate (IGE) • Use interview approach and cost estimation assistance

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Backup Slides

Post-Award Peer Reviews

• Holding Services Acquisition Workshops • (SAW) and using the Acquisition Requirements Roadmap Tool (ARRT)for effective performance work statements

• Carefully designed incentive structures that reward truly value-added performance results

• To the extent possible, appointing CORswho are trained, serve full time, and aresubject matter experts

• For multiple award contracts (MACs),allowing for on- and off- ramping ofcontractors, and encouraging task order (TO) competition by holding industrydays and providing feedback onunsuccessful proposals

• Smallest possible minimum-award guarantees

Incentivizing contractors to exceed needed performance levels

• Use of Time & Materials TOs and CLINs• Evaluations in Contractor Performance

Assessment Reporting System (CPARS) without proper justification and narratives; “grade inflation” in CPARS reports

• Vendor lock and sole-sourced TOs• Insufficient numbers of contracting

officer’s representatives (CORs) overseeing large, complex procurements

• Unfocused incentives and award fee criteria

• Contractors’ failure to meet their smallbusiness subcontracting goals

Completed 83 post-award execution reviews since Oct 2013(still discovering programs not yet on the post-award review schedule)

Best Practices Pain Points

*Note: Peer Reviews required by Section 808, NDAA for Fiscal Year 2008, Public Law 110-181

GAO Bid Protest Annual report to Congress for FY 20161

• Report to Congress on overall protest filing for FY16• 22% [22.56%] of protests sustained• Most prevalent grounds for sustaining protests:

1. Unreasonable technical evaluation2. Unreasonable past performance evaluation3. Unreasonable cost or price evaluation4. Flawed selection decision

• Cases filed increased 6% over FY151Competition in Contracting Act of 1984, 31 U.S.C. § 3554(e)(2) (CICA)

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GAO Bid Protest Annual report to Congress for FY 2016

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SERVICES ACQUISITION LEARNING ASSETS

Team-based, just-in-time, acquisition-specificfacilitated multi-phase workshop

Performance LearningFoundational Learning

ARRT-RD v4.3 Guided process for developing PWS, QASP and PRS using standard templatesARRT-EF v2.3 Set factors and subfactors and relative importance

WSM012 Services Acquisition Workshop (SAW) Required for Service Category (S-CAT) I (Army required

for SCAT II and above) andStrongly recommended S-CAT III and above

FY13: 41 SAWs (15 SAWs valued >$1B)FY14: 42 SAWs (17 SAWs valued >$1B)FY15: 51 SAWs (15 SAWs valued >$1B)FY16: 67 SAWs (10 SAWs valued >$1B)FY17: 16 SAWs Completed of 29 Scheduled (2 >$1B)

ACQ165 Defense Acquisition of Services (8 hours online)ACQ255 Services Acquisition Management Tools (~20 hours online)ACQ265 Mission-Focused Services Acquisition (28 hours, case study, classroom)CON280 Source Selection & Administration of Services Contracts (76 hours, case study, classroom)CON121, 124, & 127 Contract Planning, Execution, & Management (35 total hours of online training)CLC222 Contracting Officers Representative (COR) (32 hours online)CLC004 Market Research (2 hours online)CLC011 Contracting for the Rest of Us (2 hours online)CLC013 Services Acquisition (3 hours online)CLC106 COR with a Mission Focus (8 hours online)CLC108 Strategic Sourcing Overview (4.5 hours online)

Services Acquisition Mall (SAM)Online, on-demand, services categories-based templates, performance support tools, videos

Contact hours: 12,368Average monthly sessions: 4020Average visit duration: 4 minAverage pages per visit: 3.8

WSC005 Source Selection (2 days-client site)WSM002 Risk Management (2 days-client site)WSM008 Developing Performance Requirements for Services Acquisitions (1 day-client site)WSM009 SOW, SOO, PWS (4 days-client site)WSM014 Acquisition Strategy Dev (3.5 days-client site)WSL001 Performance Based Logistics (3 days-client site)

Workflow Learning

ARRT-CE v2.1 and ARRT-PA v2.1

As of 1Q

FY17

= In Development, planned for 1QFY18