2

Dr. Rene G. Rendon, CPCM, C.P.M., PMPU.S. Naval Postgraduate School

Monterey, Californiargrendon@nps.edu

An Analysis of DoD Services Acquisition:

Implications for a

Program Management Approach

Overview

• Services Acquisition Environment

• Characteristics of Services

• Results of Preliminary Research

• Innovative Approaches to Services Acquisition

• Current Research Findings

• Conclusion

The Services Acquisition Environment

0

20

40

60

80

100

120

140

1999 2000 2001 2002 2003

Dollars in Billions

DoD Spending on Services(Source: GAO-05-274, March 2005, pg. 5)

The Services Acquisition Environment

Figure 3: DoD's Contracts for Goods and Services(Source: GAO 03-935, September 2003, pg. 4)

0

10

20

30

40

50

60

70

80

90

100

1998 1999 2000 2001 2002

Dollars

in b

illions

Goods

Services

The Services Acquisition Environment

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Services Purchased by the DoD in FY 2000(Source: GAO 02-230, January 2002, pg. 18)

• Consistent problems in managing service contracts

• Fragmented and uncoordinated approach

• Not employing sound business practices

• Inadequate contractor oversight

The Services Acquisition Environment

Characteristics of Services

• Intangibility of service outcomes• Difficult to define and measure quality• Simultaneity of production and consumption• Co-production requirement for some services• Diversity of services

Presidio of Monterey (POM)

• Directorate of Contracting– Reports to POM Garrison Commander– Functionally aligned under Army Contracting Agency

Southern Region

• DLI is major customer

• Major contracts include:– Grounds and infrastructure maintenance– Custodial and janitorial services– Food services, motor pool services– Audio visual and IT services

Presidio of Monterey (POM)

• Presidio Municipal Services Agency (PMSA)– Inter-municipal consortium (Monterey and Seaside)– Maintains buildings at DLI and POM

• Contractor performance management– POM, DLI, or other benefiting organization– Use of Quality Assurance Evaluators or other Technical

Managers

Services Supply Chain at POM

Municipal Workers

IndependentVendors

PMSA

POMContracting

Office

DLI

OMC

Other

Customers

Other Contractors

Travis AFB

• 60th Contracting Squadron– Manages over $320M annually– Supports 60th Air Mobility Wing and David Grant Medical

Center

• Service contracts include– Grounds maintenance, Custodial– Food services, MFH maintenance– Passenger Terminal Operations– Medical services

• Successful NIB/NISH Program: Pride Industries, Inc.

Travis AFB

• Contractor performance management– Quality Assurance Evaluators– Business Requirement Advisory Group (BRAG)

• Cross-functional teams representing service users• Plan and manage contract services life cycle • Develop Statement of Objectives or Performance Work

Statement, Quality Assurance Surveillance Plan (QASP)

Services Supply Chain at Travis AFB

PrideIndustries

CONSHospital

AMW

Other

Customers

Other Contractors

Observations from Site Visits

• Continued growth in the volume of service acquisition in DoD

• POM: Innovative Supply Chain arrangement with PMSA has resulted in significant cost savings

• Travis AFB: Proactive and frequent communications are essential for successful service contracts (BRAGs)

• Travis AFB: Co-location of contracting squadron (CONS) with Air Mobility Wing (AMW)

• Difficult to establish service specifications and measure and monitor service output and quality.

• Ensuring the right number of skilled acquisition personnel is highly critical. The observed downsizing of contracting workforce does not appear to be in line with this need.

• The management infrastructure for the acquisition of services is less developed than that for acquisition of products and systems.

Observations from Site Visits

• Less formal approach to the acquisition and management of services

• Lack of standardization of business practices in services acquisition

Observations from Site Visits

Purpose of Continuing Research

• Explore the application of a program management approach and project management concepts to services acquisition in the Department of Defense

Program Management Approach

• Well-defined, disciplined methodology and infrastructure (PMI, 2004; Kerzner, 2006)

• Centralized, coordinated management to achieve the program’s strategic benefits and project objectives (PMI, 2004)

• Program management approach incorporates project management concepts (PMI, 2004)

Project Management Concepts

• Project lifecycle• Integrated processes• Designated manager with project authority• Integrated cross-functional teams• Enabling organizational structure

21

IOCBA

System Development& Demonstration

Production & Deployment

Pre-Systems Acquisition

Systems Acquisition

Operations & Support

C

Sustainment

Technology Opportunities & User Needs

Concept Refinement

TechnologyDevelopment

System Integration

System Demonstration

LRIP Full-Rate Prod & Deployment

DesignReadiness Review

FRPDecisionReview

Sustainment

Disposal

FOC

ConceptDecision

The Defense Acquisition Management Framework

22

System Program Director

LogisticsSystems

Engineering Testing ContractingFinancial

Management Integration

AirVehicle

Analysis & Integration

PropulsionIntegration

Armament

VehicleMgt

System

Utilities &Subsystems

Airframe

Avionics

Cockpit

Analysis & Integration

Exhaust & Controls

Support

TurboMachinery

Engine Support Systems

Training System

OperationsSupport

Support Data

Support Equipment

Pilot

Maintenance

Engine

Auto Test System

23

Traditional Systems PM Structure

PM

CO

FM

Engineer

LogisticsS/W

Traditional Supply Acquisition

PM

S/W Eng

ManufUser

SE FM

Log

PCO

Traditional Services Management Structure

(Post Award)

CO

QAE

FAC

Traditional Services Acquisition

PCO

FM

FAC

QAE

Traditional Services Acquisition

PCOFAC FM

QAE

User

Services Life Cycle (Conceptual)

Access DiagnosisService Process Planning

Execution Continuation Closure

Innovative Approaches to Services Acquisition Management

• Air Education and Training Command (AETC)– AETC Program Management Flight– AETC Contracting Squadron

• Air Combat Command (ACC)– Acquisition Management and Integration Center

• Centralized Panning, Control, and Execution

– “Services SPO”• Combined program management and contracting

organization

Services Life Cycle

Define Source BuyEnsure Quality

Administer Release

Centralized Services Acquisition Management

ACO

QAE

FAC

Pre-Award

ProgramManagement

Flight(PM)

HQ Contracting

Squadron(PCO)

HQFunctional

Reps

Post-Award

PM PCO

HQReps

Innovative Approaches to Services Acquisition Management

• AETC Model– Centralized Planning (Pre-Award)

• Roles and responsibilities shared by HQ PMF and HQ CONS

– Decentralized Execution (Post-Award)

• HQ retains PM authority (No on-site PM)• HQ delegates contracting officer

authority (On-site ACO)

Innovative Approaches to Services Acquisition Management

• ACC Model– Centralized Planning and Execution

• Single point control, integrated management, and a unique cradle-to-grave sustainment capability

• Integrated services “SPO-like” program management organization

Services Acquisition

PMPCO FM

QAE

User

Research Findings

• Traditional approach to managing services acquisition does not incorporate program management approach – Well-defined, disciplined methodology and

infrastructure– Centralized, coordinated management

• Project lifecycle• Integrated processes• Designated manager with project authority• Integrated cross-functional teams• Enabling organizational structure

Research Findings

• AETC model incorporates– Well-defined, disciplined methodology and

infrastructure– Centralized, coordinated pre-award management

• Project lifecycle• Integrated cross-functional teams• Enabling organizational structure• Integrated processes

– No on-site Program Manager– On-site ACO

Research Findings

• ACC model incorporates– Well-defined, disciplined methodology and

infrastructure– Centralized, coordinated program management

• Project lifecycle• Integrated processes• Designated manager with project authority• Integrated cross-functional teams• Enabling organizational structure

Conclusion

• Program management approach needed to manage DoD’s critical services acquisition– Well-defined, disciplined methodology and

infrastructure – Centralized, coordinated approach incorporating

project management concepts

• AETC and ACC models provide innovate and successful approaches to services acquisition