Acquisition and Contracting Acquisition Planning ... · PDF fileAcquisition Planning The...
Transcript of Acquisition and Contracting Acquisition Planning ... · PDF fileAcquisition Planning The...
Acquisition Planning
DOES YOUR ENTIRE TEAM KNOW AND CLEARLY HAVE A “VISION” OF WHAT IT IS YOU ARE BUYING AND WHY?
Take your hands off the keyboard.
Before you start any writing, ask yourself the following question…..
?
The Importance of Vision
Focus the team’s energies Establishes a sense of orientation,
being and purpose Prevents team from being
sidetracked and distracted Team resources are smartly
applied against the highest Return on Investment activities
Vision -- the FIRST order of business!
“Where there is no vision, the people perish...”Proverbs 29:18
“Begin with the end in mind.”Stephen R. Covey
“Would you tell me please, which way I ought to go from here?”
“That depends a good deal on where you want to get to.”
Lewis Carrol, Alice in Wonderland
Communications, Research and Planning
Objective: Understand the critical importance of:Communicating with
industryResearching the
marketplaceDeveloping effective
acquisition plans
Communicating With Industry
Why should we communicate with industry? Advertise our needs and prepare the marketplace Do our “homework” before defining requirements Increase quality, innovation and competition Save money Decrease dependency on incumbent suppliers and
traditional technologiesWhen is the best time to talk with industry?
NOW...BEFORE THE RFP IS RELEASED!
Effective Methods for Communicating
One-on-One Interviews Industry Conferences Electronic Bulletin Boards Advisory Multi-Step Process
Researching the Marketplace
Market research is an interactive process for…gathering data on product characteristics,
suppliers’ capabilities and market business practices...
plus the analysis of that data to make smart acquisition decisions.
Why do Research?
Good market research can help:develop innovative acquisition strategies leverage commercial solutionsdefine best O&M approachdetermine the relevant terms and conditions
needed for the contractdiscover “discriminating” evaluation criteria for
the source selection
Surveillance and Investigation
Market Surveillance(staying abreast of general
industry practices and trends)
Market Investigation (investigates against a defined requirement -- narrow focus and specified time frame)
Market Surveillance Example techniques for staying current
on marketplace practices/trendscontact industry and government expertsreview the market surveillance results of
otherspublish requests for informationaccess Internet databasesreview catalogs and trade journals
FAR 10.002(b)(2)
Market Investigation
The Six Partsof a
Market Investigation
1
2 3 4 5
6Summarize Market Surveillance
Identify Sources
Survey Manufacturers
Check References
Evaluate Candidates
Document Results
Acquisition Planning
The process by which the efforts of all personnel responsible for an acquisition are coordinated and integrated through a comprehensive plan for fulfilling the agency need in a timely manner at a reasonable cost. It includes developing the overall strategy for managing the acquisition.
FAR 7.101
Acquisition Planning
Agencies shall perform acquisition planning for all acquisitions in order to promote and provide for: Acquisition of commercial/ nondevelopmental items Full and open competition
FAR 7.102
Acquisition Plans Should Ensure:
Government will get what it needs, when it is needed
Sufficient/appropriate funds are available Sound business arrangement is planned Risks are identified and managed A healthy competition is promoted
Possible Subjects for an Acquisition Planning
Unique Circumstances
Performance Goals and Objectives
Period of Performance
Key Tradeoffs
Budget & Funding
Ops and Maintenance
Source Selection Streamlining Techniques
Potential Sources
Competition Issues
Source Selection Strategies
Contracting Strategies
GFP/GFI Approach
Key Acquisition Risks
Security Concerns
Data Rights
Milestone Schedule
Source Selection Strategies
Best Value the expected outcome of an acquisition that,
in the Government’s estimation, provides the greatest overall benefit in response to the requirement
FAR 2.101
Source Selection Strategies
LOW PRICE TECHNICALLY ACCEPTABLETRADEOFF PROCESS
• Less definite requirements
• More development work
• More performance risk
The Best Value Continuum
• More definite requirements
• Less development work
• Less performance risk
Non-Cost More Important
Cost More Important
Tradeoff Process
Used when it is in Government’s best interest to consider award to other than the lowest priced offeror or other than the highest technically rated offerorPermits tradeoffs among cost or price and
non-cost factors (technical, past performance, etc.)
Government must justify why additional technical merit is worth a higher price to the buying activity
FAR 15.101-1
A Process Of Elimination
High LowNon-Cost Non-Cost
High ?Cost
Low ? Cost
Lowest Price/Technically Acceptable (LPTA)
Evaluation factors used to establish requirements for technical acceptability
Exchanges (discussions) are permitted Tradeoffs (cost-technical) are NOT permitted Award to lowest price/technically acceptable
offeror
LPTA effective for commodity procurements with established production histories
Requirements Definition Methods
PROCESS Define requirements by stating how things must be done to
obtain the required end state.
EFFORT Define requirements by stating how many people, positions and
skill sets are needed to obtain the required end state.
PERFORMANCE Define requirements by stating what results and performance are
needed to obtain the end state.
Performance-Based Acquisition (PBA)
What is it?PBA is an approach to acquisition that focuses on measurable contractor performance and results, not process and effort. PBA requires seamless integration and consistency between the work statement, selection criteria and contract incentive structure. All must work in harmony to establish a business relationship where the contractor is highly motivated and fully accountable to deliver results-oriented, best value products and services.
PBA Characteristics and Benefits
Performance and results can be measured Focuses on the purpose of the work Work statement, selection criteria, and incentive
structures are integrated and consistent Contractor motivated to achieve customer
objectives Contractor fully accountable for performance Leverages competition and fuels innovation Increases customer satisfaction at a lower price
RequirementDescriptions
EvaluationCriteria
IncentiveStructures
Performance-Based
AcquisitionKey Elements
RequirementDescriptions
EvaluationCriteria
IncentiveStructures
Key ElementsPerformance-
BasedAcquisition
Performance-Oriented Requirement Descriptions
OFPP Letter 91-2 (41 U.S.C. section 405)“It is the policy of the Federal Government
that agencies use performance-based contracting
methods to the maximum extent practicable when acquiring services…..
…..agencies shall justify the use of other than performance-based contracting methods when acquiring services, and document affected contract files”
Describing Agency Needs State requirements in terms of….
Functions to be performed Performance required Essential physical characteristics
THEN NOW
FAR 11.002
Describing Requirements
Need: “Move 20,000 lbs of cargo across the river” Functional: Provide a method for transporting 20,000 lbs
of cargo across the river Performance: Provide a method for transporting 20,000
lbs of cargo across the river in all-weather and within a 30 minute threshold from transport start to finish
Essential Physical: Construct a bridge that draws upwards in the center for moving 20,000 lbs of cargo across the river
Design/detail: Build a bridge based on the following detailed engineering drawings
Statement of Objectives (SOO)
SOOs: Provides offerors the government’s top-level objectives of the acquisitionUsed in lieu of government-written SOWGives offerors flexibility to propose solutions which
meet requirements but are tailored to their optimal technical/business approach
Promotes “what we need” instead of “do it this way” mentality
SOOs v. SOWs
Statement of Objectives Summarizes overall
purpose of the acquisition Outlines top-level
performance goals and objectives
Establishes a relationship between requirements, evaluation criteria and contract incentives
Helps define programmatic risks and concerns
Statement of Work Directly responds to the
SOO Establishes a “contractor-
specific” approach to SOO performance requirements
Used during source selection to evaluate offeror’s understanding of customer requirements
Serves as the basis for contract performance
Example SOO Approach
SOO
WBS
Sec L
Sec M
Model Contract
RFP Proposal
SOW
CWBS
Contract
GovernmentOfferor
RequirementDescriptions
EvaluationCriteria
IncentiveStructures
Key Elements
Performance-Based
Acquisition
Selecting The Right Contract Type
ObjectiveNegotiate a contract type and price that
results in reasonable contractor risk and provides incentive for efficient and economical performance
“The optimum balance between risk and reward”
Contract Type Risk Relationship Government Risk
Time & Materials (can’t predict extent or duration)
CPFF (preliminary study)
CPAF (hard to objectivelyevaluate)
CPIF (prototyping, initial production
Cost and Cost Sharing (commercial opportunities)
FPIF (initial production)
FFP w/EPA (cost variations expected)
FFP (commercial items, low performance risk)
Contractor Risk FFP (commercial items, low
performance risk)
FFP w/EPA (cost variations expected)
FPIF (initial production)
Cost and Cost Sharing (commercial opportunities
CPIF (prototyping, initial production)
CPAF (hard to objectivelyevaluate)
CPFF (preliminary study)
Time & Materials (can’t predict extent or duration)
Low Risk
HighRisk
HighRisk
Low Risk
Factors in Selecting Contract Type
Overall mission objectives
Type and complexity of requirements
Schedule urgency Period of Performance Inherent risks of
performance
Adequacy of accounting systems
Past performance Adequacy of price/cost
analysis Contractor’s technical
capability and financial responsibility
Price competition
Incentive Contracts
Appropriate when supplies/services can be bought at lower costs and, in certain instances, with improved delivery of technical performance, by linking profit or fee to contractor performance
Incentive Contracts
FAR 16.401: Incentive contracts are designed to obtain specific
acquisition objectives by -- (1) Establishing reasonable and attainable targets
that are clearly communicated to the contractor; and
(2) Including appropriate incentive arrangements designed to -- (i) motivate contractor efforts that might not otherwise be
emphasized and (ii) discourage contractor inefficiency and waste
What Can Be Incentivized?
CostAll incentive contracts must include a cost
incentive feature Profit or fee adjustment formula Intended to motivate cost management Normally includes target cost, target profit or fee,
and a profit or fee adjustment formulaAC = TC Target Fee
AC >TC Downward Target Fee
AC <TC Upward
Target Fee
What Can Be Incentivized?
Performance Designed to relate profit/fee to results achieved by
contractor compared with goals Useful on service contracts when sustained, high
quality performance is mission critical Clear, objective measurements important
Test and acceptance criteria must be explicit in contract
Technical/performance incentives must be balanced
What Can Be Incentivized?
Delivery/ScheduleUse when strict schedule
adherence is mission criticalContract should specify application
of reward/penalty mechanism in the event Government caused delays or other delays beyond contractor control (i.e., no-fault provisions)
What Can Be Incentivized?
Multiple-incentive approachesMotivates contractor to strive for success in all areas
of cost, schedule and performance Compels smart trade-off decisions consistent with key
objectives of the acquisition Because of interdependent nature of cost, schedule and
performance, multiple-incentive structures help mitigate risk of overemphasizing one area at the expense of another
Incentive ContractsIncentive Contracts
Fixed-Price Incentive
Cost-Reimbursement
Incentive
Firm Target
Successive Targets
Fixed-Price Award Fee
Cost-Plus Incentive
Fee
Cost-Plus Award Fee
When to Use Cost Reimbursement
When costs of performance can not be estimated with reasonable certainty or accuracy
May only be used when: Contractor’s accounting system is adequateGovernment surveillance during performance will
provides assurances that efficient methods and effective cost controls are used
Cost-Plus-Award-Fee (CPAF)
CPAF is a cost-reimbursement contract that provides for a fee consisting of:a base amount (which may be zero) fixed at
inception of the contract andan award amount, based upon a judgmental
evaluation by the Government, sufficient to provide motivation for excellence in contract performance
FAR 16.305
Cost-Plus-Award-Fee (CPAF)
Suitable when Neither feasible nor effective to devise predetermined
objective incentive targets applicable to cost, technical performance, or schedule
Contractor performance evaluation is more subjective in nature (i.e. situational analysis)
Additional cost of administration is justified by the expected benefits
FAR 16.405-2