Stuart A. HazlettDeputy Director, OUSD(AT&L)

Defense PricingDefense Procurement and Acquisition Policy

A Presentation toNCMA Pentagon

A Presentation toNCMA Pentagon

8 September 2011

The Status of Better Buying Power

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Better Buying Power Results

Promote Real Competition

Improve Tradecraft in Acquisition of Services

Quality of the Deal

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Promote Real CompetitionWhat we’ve done: Provided guidance for the development of Competition Strategies for review Issued Departmental Guidance to conduct negotiations with all single bid offers based on cost or price analysis and using non-certified data Clarified guidance on 30 day re-advertisement on one offer

Promulgated a maximum practicable opportunity analysis tool to help Components achieve small business goals

What we are doing: Requiring PEOs and PMs to present their strategy to create and maintain a competitive environment for their contractors at DAB and DAES

reviews Disseminating best practices to optimize small business participation across DoD Modifying BBP guidance on 3 year re-competition requirement Increasing emphasis on Mentor Protégé program and exploring other mechanisms for more non-traditional suppliers Using the Peer Review Process to ensure that negotiated prices are fair and reasonable Implementing open systems architectures and defining operational guidance for acquisition of data rights

Measures of success: The number of programs presenting competitive strategies at each Milestone The increase in the number of small businesses and more "non-traditional" DoD suppliers to expand competition The impacts on program cost resulting from the increased use of small businesses Improvement rate of 2% per year for overall competition Improvement rate of 10% per year for effective competition Evidence of competitive strategies at DAB and DAES reviews Reduced average time to field products/capabilities Service examples of the successful use of open architecture and buying of data rights

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Improve Tradecraft in Acquisition of Services

What we’ve done: Established senior mgr for acquisition of services and holding monthly meetings with component senior managers and DPAP Issued Directive detailing specific implementation guidance for the effort to standardize service taxonomy Required OSD Office of Small Business Programs to review acquisition plans for services acquisitions exceeding $1B, and to be members of the OSD

peer reviews of services acquisitions Developed guidance for establishing a taxonomy of preferred contract types in services acquisition Employed standard templates for developing Performance Work Statements to improve contract performance

What we are doing: Encouraging the use of Multiple Award/IDIQ contracts among small businesses, where suitable Establishing market research teams within the senior manager for services construct at the portfolio manager level to understand industry’s capabilities Developing tools to assist requirements developers in creating better service contracting requirements

Measures of success Increased use of CPFF and CPIF contracts in services acquisition when no previous competition exists, with evidence of knowledge gained informing

future "Should Cost" estimates Increased use of FFP contracts when competition already exists Percentage of service contracts exceeding $1B that contain cost efficiency objectives Percentage of multiple award service contracts exceeding $1B that are set aside for small business Percentage of “one-bid” contracts relative to overall contracts and availability of fully negotiated pricing and cost data Component categorization of service acquisition spend, with year-to year trend data

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Quality of the Deal

What we’ve done: Increased the use of FPI contract vehicles where appropriate Taken advantage of highly productive acquisition strategy opportunities (i.e., LCS) Asked Congress for block buy authorization for some programs

Issued guidance on progress payments of Fixed Price contracts Published Cash Flow model for other than customary progress payments Developed plan for collecting data/initiating pilot to improve industry IRAD return on investment

What we are doing: Working with industry to define win-win arrangements to drive productivity gains Developing other opportunities for more efficient acquisition strategies (e.g., missile systems) Holding production rates at economic levels (e.g. SDB II) Challenging programs that are not affordable at economic rates

Reviewing Weighted Guidelines emphasizing the tie between profit and performance Transitioning SSIP to a full DoD program with Navy still leading

Measures of success Lower costs in production and sustainment on programs Percentage of Acquisition Strategies with distinct reward and incentive strategies Cost savings from WG strategies Number of fewer programs that overrun their cost targets Number of improved cash flow opportunities that provide benefit to industry and taxpayer Reinvigorated IRAD program with greater insight into link between funding and technology Increased employment of FFP contracts

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