ACQUIRE THE ADVANTAGE An Organizational Transformation - From Dysfunctional to 9/11 Recovery April...

ACQUIRE THE ADVANTAGE

An Organizational Transformation - An Organizational Transformation - From Dysfunctional to 9/11 RecoveryFrom Dysfunctional to 9/11 Recovery

April 20, 2006April 20, 2006

Mike SullivanAcquisition Solutions Inc

2Acquisition Solutions, Inc.

34 acres

6.5 million sq. ft.

3 Empire State Bldgs.

7,748 windows

17.5 miles of corridors

25,000 personnel

1,000,000 calls each

day

Police force

Metro station

Fire Station

Health Facilities

Post Office

Mini-mall

Heliport

The Pentagon – A Small CityThe Pentagon – A Small City

The Pentagon has never undergone a major renovation in the past 64+ years!The Pentagon has never undergone a major renovation in the past 64+ years!


- 400 architects and engineers - 15,000 workers - Original cost: $83 million

Fast-Track ConstructionFast-Track Construction


The Need for RenovationThe Need for RenovationMajor building systems beyond repair, non-compliant with modern building codes and ADA, hazardous materials present throughout, poor energy efficiency


Organizational/Program ChallengesOrganizational/Program Challenges

• Organizational Structure – 5 organizations / 2 agencies

• Very stovepipe environment

• Fragmented authority

• Fragmented decision-making

• Ineffective project execution

• Construction Industry – Antiquated in Any Acquisition Reform

Results:• Over budget • Behind schedule• On the verge of being cancelled

Results:• Over budget • Behind schedule• On the verge of being cancelled

Prior to 1998:


Problems with Acquisition StrategyProblems with Acquisition Strategy

- Contract’s reward inappropriate behavior

- Low price mentality drive away top performers

- Does not encourage innovative solutions

- Contractors enter into award as adversaries

- Government knows the problem but also assumes they have the answers

• Contractor simply follows the Govt’s directions

• Driven to find problems to make profit

• Contractors play the game according to the rules set by the buyer


Our StrategyOur Strategy

Key Objective:Implement an approach that rewarded behavior we like!


Changes - Changes - 1998 – 2001 (and on):1998 – 2001 (and on):

Transforming the Program

• Organization - from “stovepipe” to integrated teams

• More communication w/senior leaders and stakeholders• Acquisition Approach

• From Design-Bid-Build to Design-Build• From Low Price to Best Value• From Project Specs to Performance

Requirements• Appropriate Sharing of Risk

• Project Execution• From “us vs them” to the “we” concept

(construction, IT and services)


• Hire better contractors

• Use appropriate types of contracts

• Give incentives to achieve project goals

• Set clear goals

• Operate as a team

• Measure progress against goals

• Reward achievement

Our Plan for SuccessOur Plan for Success


• Phased source selection:

• Phase 2 (Final selection)

• Phase 1 (Initial down-select)

- Typically 3 firms selected

- Selection primarily based on past performance

- Fast decision, minimizes bid and proposal

cost to offerors

- Competition between firms from Phase 1- Use of oral presentations- May look at primary subs past performance- May look at experience of on-site team

- Best value…cost, technical solution, team, IMP/IMS

- “Build to budget”

- Stipend to offerors


Hire Better Contractors


• Fixed-Price Incentive with an award fee

• Award fee of 10% -14% of contract price - based on performance

• Contractor and government share overruns to a ceiling price

• Contractor and the government share savings

• Keeps the team focused on award fee criteria such as - performance, risk mitigation, cost control, quality, safety, communications, coordination, partnering, customer satisfaction

• Zero $0 Target Profit

• Award Fee performance tied to incentive savings to ensure quality

Our Plan for Success

Provide Incentives to Achieve Goals


Using Performance Requirements

• Tell the contractor your problem, goals and objectives -

and - let them determine how to achieve them!

A New Way of Doing BusinessA New Way of Doing Business


Wedge 1Wedge 1

Wedges 2-5Wedges 2-5

~1.1M/SF~$250M

~4.5M/SF~$700M

Using Performance-Based RequirementsUsing Performance-Based Requirements


• Integrated contractor personnel onto teams

• Not longer “arms length” from the contractor

• Relationship based on trust to do what’s right

• Integrated customers and stakeholders onto teams

• Open lines of communication

• Collocation of team for maximum effectiveness

• Entire team has common goals and objectives


Operate as a TeamOperate as a Team

May Require an Organizational/Personnel Culture Transformation


Generic ProjectTotal Progress

(Based on Weighted Units)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01

Early Earned Forecast Late

Measure Progress Against GoalsMeasure Progress Against GoalsProject Controls and Government Insight

• Effective Measures and Metrics

• Award Fee• Monthly feedback provided to the contractor• Award Fee determined and paid on a

quarterly basis• Contractor has input in the determination

process

• Monthly Measures/Metrics• EVMS• CPM• RFI Statistics• Submittal Statistics• Processing time for contract changes• Change Order Statistics• LEEDTM Certification Statistics• Customer Surveys

16Acquisition Solutions, Inc.Pentagon Phoenix Project

Shared goals and objectivesShared goals and objectives Shared definitions of success

(BIC)(BIC)


• Achieved true “team environment” between Govt and contractors

• Teams took ownership of the project – theybecame “we”• Developed relationships based on trust

• Best value source selection – we hired some of the best firms I have ever worked with and let them succeed!

• Achieved single point of responsibility for project execution

• Took the Government out of the middle of disputes

Did Our Plan for Success Work?Did Our Plan for Success Work?


• Gave the contractor freedom to develop innovative solutions to meet our goal and objectives

• Rewarded innovative problem-solving and managed risk-taking

• Encouraged the contractor to find solutions rather than create more problems

• Results: program expanded from “renovation of the Pentagon” to renovation, new construction and IT implementation/O&M across three states – from $1.2B to $5.6B

Did Our Plan for Success Work?Did Our Plan for Success Work?


Using Performance Requirements

• Tell the contractor your problem, goals and objectives -

and - let them determine how to achieve them!

A New Way of Doing BusinessA New Way of Doing Business

20Acquisition Solutions, Inc.Relocate the U.S.S. Cole to a U.S. dry dock facility as quickly as possible

Examples of PBA/PBMExamples of PBA/PBM


Pentagon Command Communications Survivability ProjectPentagon Command Communications Survivability Project



Support the Coalition Provision Authority in jump-starting rebuilding IraqSupport the Coalition Provision Authority in jump-starting rebuilding Iraq



FEMA – Converting Hazardous Zone Maps to a FEMA – Converting Hazardous Zone Maps to a Digital/Web-Based FormatDigital/Web-Based Format


24Acquisition Solutions, Inc.USCG Deep Water Project – An Integrated Solution to Protecting Our CountryUSCG Deep Water Project – An Integrated Solution to Protecting Our Country



- Contract award – 1908

- Best value

-- Offers ranged from $850 to $1M

- Carry two persons … max wt of 350 pounds

- Fly 125 miles

- Flying speed of 40 mph=100% payment

- Incentives up to 45 mph=150% payment

- Disincentives down to 37 mph=60% payment

- Flying speed less than 36 mph=$0 payment

- Contract was four pages

Heavier than Air Flying MachineHeavier than Air Flying Machine


26Acquisition Solutions, Inc.FAA – Flight Service OperationsFAA – Flight Service Operations



LA County MTA Bus Noise ReductionLA County MTA Bus Noise Reduction



Thank you for your time

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