Defense Contract Management Agency -...

Defense Contract Management Agency

Presented By:

Mr. Timothy Callahan

Executive Director of Contracts, DCMA

19 June 2014

Proprietary and Confidential

Agenda

DCMA Mission, Scope and Authorities

Strategic Plan FY14/15 Priorities

Affordability

Audit Readiness

Contract Administration

Cost Recovery Initiative

Business Systems

Cost and Pricing

Forward Pricing Rate Agreements

CACP/DACO Re-alignment

Small Business

Workforce Development

2


3

Mission

We provide Contract Administration Services to the Department of Defense

Acquisition Enterprise and its partners to ensure delivery of quality products and

services to the warfighter; on time and on cost.

Vision

DODs leading experts in Quality Assurance; Cost, Schedule, and Supply Chain

Predictability; and Contract Administration; enabling our partners to achieve

contract objectives.

Values

Integrity Committed to the highest standards of ethical and moral behavior at all times.

Service Working for the benefit of our nation and putting professional responsibilities

before self-interests.

Excellence Committed to exceptional performance in everything we do.

DCMA Mission, Vision, and Values


DCMA is a Team Member In the Defense Acquisition Community

4

Under Secretary

of Defense (AT&L)

DCMA

Chairman

Joint Chief of Staff

Secretary of Defense

Assistant

Secretary of Defense

(Acquisition)

Historical Perspective Service PROs/DCAS to DLA (1990) to DCMA (2000)

Buying Commands

Combat Support Agency

Army

Navy

Air Force

Marines

Contract Administration DLA


Aircraft

Operations

CAPT Drew

Swenson

Engineering

& Analysis

Ms. Karron

Small

Financial &

Business

Operations

Ms. Pamela

Conklin

Contracts

Mr. Timothy

Callahan

Quality

Assurance

Mr. Michael

Shields

Portfolio

Management

& Integration

Mr. Joseph

Sweeney

Information

Technology

Mr. Jacob

Haynes

Chief Operating Officer

Ms. Marie Greening

Corporate

Support

Mr. Martin

Jakim

Organizational Chart

General

Counsel

Ms. Sharron

Philo

Current as of 6/6/21/14

Director

Lt. Gen. Masiello

International

RDML Deborah Haven

Special Programs

Mr. James Norris

Equal Opportunity

Dr. Larry Ross

Chief of Staff

Col Steven Buetow

Sr. Enlisted Advisor

CMSgt Rita Green

Human

Capital

Ms. Kathleen

Butera

Independent Assessment

Ms. Diana Graff

Diversity and Inclusion

Mr. George Braxton

Mobilization Assistant

Brig Gen Wade Smith


6

Worldwide Acquisition Impact

DCMA Eastern Region:

Headquarters Boston, MA

Contract Management Offices:

Atlanta, GA

Baltimore, MD

Boeing, Philadelphia, PA

Boston, MA

Garden City, NY

Hartford, CT

Lockheed Martin, Marietta, GA

Lockheed Martin, Moorestown, NJ

Lockheed Martin, Orlando, FL

Manassas, VA

Orlando, FL

Philadelphia, PA

Raytheon, Tewksbury, MA

Sikorsky Aircraft, Stratford, CT

Springfield, NJ

APO (Aircraft Propulsion Operations),

Hartford, CT

NESO (Naval Special Emphasis

Operations), Philadelphia, PA

DCMA Central Region:

Headquarters Chicago, IL


Bell Helicopter, Forth Worth, TX

Boeing, St. Louis, MO

Chicago, IL

Dallas, TX

Dayton, OH

Detroit, MI

Huntsville, AL

Lockheed Martin, Forth Worth, TX

Twin Cities, MN

AIMO (Aircraft Integrated Maintenance

Operations), St. Augustine, FL

DCMA Western Region:

Headquarters Carson, CA


Boeing Huntington Beach, CA

Denver, CO

Lathrop, CA

Lockheed Martin Denver, CO

Lockheed Martin Sunnyvale, CA

Los Angeles, CA

Palmdale, CA

Phoenix, AZ

Raytheon, Tucson, AZ

Santa Ana, CA

NPO (NASA Product Operations),

Fort Sam Houston, TX

International Contract Management Offices:

DCMA Americas Ottawa, Canada

DCMA Northern Europe RAF Wyton, United Kingdom

*DCMA Southern Europe Wiesbaden, Germany

*DCMA Middle East Kuwait City, Kuwait

*DCMA Afghanistan Kabul, Afghanistan

DCMA Pacific Atsugi, Japan

* Includes Contingency Contract Administration (CCAS) Operations

DCMA Headquarters

Fort Lee, VA

Regional Headquarters

International CMOs

Special Programs

DCMA Special Programs

Special Programs East

Special Programs South

Special Programs West


7

Total Contract Amount 6,577.5B

Obligated Amount $1,860B

Active Contractors 20,001

Active Contracts 347.6K

Unliquidated Obligations Amount $223B

ACAT I (IAC, IC, ID) and II Programs 193

Aircraft per Year (FY13) 1,569

Flying Hours (FY13) 20,516

Government Property Value $155.6B

Progress Payments $15.6B

Performance-based Payments $15.7B

SCOPE

of

WORK

Civilians On-board 11,441

Military (Active Duty - 429), (Reserve - 119) 548

Operational Directorates 3

Locations 740+

Contract Management Offices 47

Budget Authority $1.35B

Reimbursable Target $125.5M

SPAN

of

CONTROL

Scope of Work and Span of Control Data for 1QFY14


Quality Assurance Svcs (34%) Contract Admin Support & Services (20%)

Engineering & Manufacturing Svcs (17%) Cost & Pricing Svcs (12%)

Major Program Support (5%) Earned Value Management (3%)

Property Mgmt & Plant Clearance Svcs (3%) Transportation Svcs (2%)

Aircraft Operations Svcs (1%) Supply Chain Support (1%)

Industrial Base Analysis Svcs (1%) Contractor Purchasing Sys Reviews (1%)

Small Business Support (1%) Contract Safety Services (1%)

Contract Termination Svcs (

Contracts Directorate (DCMA-AQ)

Operations Support

Budget JERRY KOTVASZ (804) 734-0458

Exec Services BEN KELLEY (804) 734-0461

Personnel JIM LEROY (804) 734-0471

Executive Director

TIMOTHY P. CALLAHAN (804) 734-0500

Deputy Executive Director

SALLEE JUSTIS (804) 734-0501

Executive Assistant

CINDY ROBINSON (804) 734-0657

Business Ops Center AQB

ANDREW OBERMEYER

(804) 734-0494

CPSR Group AQBC

KAREN ZINN

(214) 670-9351

Plant Clearance Group AQBP

KATHERINE BURKE

(617) 753-3130

Terminations Group AQBT

PAUL SLEMONS

(678) 503-6351

Property Group AQBY

CYNTHIA THRAILKILL

(937) 656-3154

CMO Contracts Director DCMAO

LEONA FITZPATRICK

(804) 416-9079

Int Contracts Director DCMAI

CAT IGNACIO

(804) 734-1148

SP Contracts Director DCMAS

KATHLEEN MILLER

(804) 734-0156

Cost & Pricing Center AQK

RON YOUNGS

(703) 530-3675

PA, FP, & IC Group AQKA

STEVE TRAUTWEIN

(703) 530-3203

DA, T, & R Group AQKC

MICHAEL PAULINI

(224) 625-9171

CACO\DACO Group AQKD

SEAYANNE SHELEY

(617) 753-3407

Financial Cap Group AQKF

PAUL REUBEN

(703) 530-3249

CIPR Team AQKDO

GEORGE MATRAY

(718) 354-3767

DAR Council AQCD

TOM RUCKDASCHEL (ACTING)

(804) 734-0505

Contracts Policy Division AQC

STACY STRICKLAND

(804) 734-0488

Property Branch AQCP

TOM RUCKDASCHEL

(804) 734-0505

Finance & Payment Branch AQCF

MARY SHERIDAN

(804) 734-2458

Plan & Perf Assess Division AQA

WENDY LAUGHLIN

(804) 734-1515

Small Business Center AQSC

TATIA EVELYN-BELLAMY

(804) 734-0506

Small Business Division AQS

TATIA EVELYN-BELLAMY

(804) 734-0506

Procurement Division AQP

TARA PETERSEN

(804) 734-0487

Procurement Center AQPW

AMANDA PARKER

(804) 734-1534

Cost & Pricing Policy Division AQD

JOAN SHERWOOD

(804) 734-0480

Bus Proc, Ana, & Dev Division AQI

KEVIN CONNEEN

(804) 734-0483

FIRM Center AQII

SHAWN MAPEL

(804) 734-0482

As of 20140521


Strategic Management Plan FY14/15


11

11

Priorities for 2014 Support On-going Operations

Achieve Affordable Programs

Improve Efficiency

Strengthen Industrial Base

Strengthen the Professionalism of the Acquisition

Workforce

Protect the Future

There will be a Better Buying Power 3.0

USD AT&L Priorities


https://home.dcma.mil/express/headlines/2012/041812.cfm

DCMA Strategic Management Plan FY14-15

10 Business Priorities each

with supporting goals

Organized by the balanced

scorecard:

Acquisition Enterprise

Policy & Processes

Human Capital

Stewardship

Focused more on shorter term

goals than the multi-year plan

FY14-FY15 Execution plan

published

Business Priorities:

1. Affordability

2. Predictability

3. Reliability

4. Business Process Engineering

5. Recruit

6. Hire

7. Develop

8. Retain

9. Internal Audit Readiness

10. Audit Readiness Service

Provider


Business Priority: Affordability

Alignment: Acquisition Enterprise

Enhance DoD buying power by increasing affordability

Six supporting goals:

Establish an Agency-wide capability to support timely reviews of Disclosure Statement

revisions

Support enterprise pricing with the expertise of the Integrated Cost Analysis Teams

(ICAT) and improving/expanding efforts on Should Cost Reviews

Improve and expand efforts from the CACO/DACO/Cost Monitors on forward pricing

and Boards of Review

Enhance the real time information for rates/business systems status in Contract

Business Analysis Repository (CBAR)

Reduce the backlog of overage accounting issues and final overheads to enable timely

settlement of contract cost entitlements

Support the Service Acquisition Review Board (SARB) initiatives to improve the

tradecraft in acquisition of services

13

Goal Leader: Contracts Directorate Proprietary and Confidential

Business Priority: Audit Readiness Service Provider

Alignment: Stewardship

Support our DoD customers in their efforts to attain and sustain a

clean audit opinion on their financial statements

Four Supporting Goals:

Assert audit readiness to OSD FIAR Directorate

Assert audit readiness to DoD customers for which DCMA is Contract Pay Service

Provider

Complete initial Statement on Standards for Attestation Engagements (SSAE No. 16)

examination

Complete final Statement on Standards for Attestation Engagements (SSAE No. 16)

examination


DoD Mandate to Improve Financial Management and Auditability

15


Service Provider

Reporting Entity:

(appropriated budget)

Service Provider:

(stewardship of delegated funds)

DCMA is pursuing a single audit opinion to preclude audits by each RE Customer

SSAE #16 - Reporting on Controls at a Service Organization

DCMA USAF Navy

Department of Defense

DCMA - Contract Pay

Army ODOs*

* Other Defense Organizations


Process / System Mapping

Events with Financial Statement impacts - Outcomes

Obligations (new, modified, close-out)

Accruals (receipt/acceptance without invoice)

Payables (receipt/acceptance with invoice)

Disbursements (outlay)

Receivables (recoupment/demands)

Will also require asserting to systems

in which the work is performed

MOCAS

WAWF

e Tools

GAO Federal Information System Controls Audit Manual

(FISCAM) Proprietary and Confidential

Contract Pay End-to-End Process

(DCMA SSAE No. 16 Scope)

Invoice

Entitlement Pre-Validation

Disbursing &

Posting

Expenditure

Receipt &

Acceptance Commitment &

Obligation

Reconciliation

& Contract

Closeout

Reporting &

Accounting

Pro

ce

ss

Sub

-Pro

ce

ss

Distribute

Funding

**

Purchase

Requisition

**

Receive &

Obligate

Funding

00

Contract Input

00

Issue Orders &

Adjustments 00

Contract Award

**

Validate Funds

**

Receive/Accept

Goods/Srvcs at

Destination

**

Resolve

Payment

Discrepancies

**

Commercial

Invoices

00

Funds

Reconciliation-

MOCAS

00

Erroneous

Payment Check

00

Calculate EOM

Accrual

00

Disallow Costs

00

Receive/Accept

Goods/Srvcs at

Source

00

Deobligate

Excess/

Remaining

Funds

00

Full Termination

Settlement

00

Partial

Termination

Settlement

00 Funds

Reconciliation-

Component

**

GL Posting

**

Demand/

Recoup Funds

**

Contract

Financing

00

Contract

Closeout

00

Invoice

Processing

00

Validate Inputs

& Funding

00

Notice of Last

Action Process

**

DCAA

DFAS Component

DCMA

SSAE No. 16

Treasury

Reporting

**

EOM Reporting

**

Research &

Resolve

NULOs/UMDs **

Tri-Annual

Review

**

GL Posting

**

Commitments &

Obligations **

EOM Accrual

GL Posting &

Reversal **

EOM Payable

GL Posting **

Disbursements/

Expenditures **

Adjustments

**

Planned

Disbursement

Matched to

Recorded

Obligation 00

Payment

Authorization

00

Authorize

Disbursement

Processing 00

Erroneous

Payment Check

00

Certification &

Balancing

00

Erroneous

Payment Check

00

Payment File

Generation &

Release 00

Calculate EOM

Payable

00

Debt

Management

00

Disbursing

Reporting &

Reconciliation

00

Financial

Reporting

**


Sound processes that:

have detecting and preventive controls (properly designed)

produce the expected outcome (operating effectively)

are documented and have evidence of execution

(properly posted)

Result: an unqualified audit

and a state of audit readiness

1

9

End Result


Contract Administration Services


Contract Administration & Support Services

Mission

Provide contract administration support and

advice on all contract related matters and

improve the overall contracting mission.

Functions

Provide pre-award support

Identify potential performance risks

throughout the entire lifecycle of the contract

Support contract negotiations

Negotiate and execute ACO mods

Monitor contract performance

Review and process progress payments,

vouchers, and invoices

Contract closeout

Cost Accounting Standards compliance

Resolve contract disputes

Impact $15.6B in progress payments managed (1Q14)

$15.7B in performance based payments (1Q14)

579,614 closed in FY13

21


Impact of Disapproved Business Systems and Inadequate Disclosure Statements

Business Systems

FAR Parts 9 and 16 address contractor responsibility and business systems adherence necessary to perform government contracts

Key Business Systems include: Accounting, Material Management Accounting Systems, Estimating, Earned Value Management, Purchasing, Property

To be determined responsible, a prospective contractor must have the necessary organization, experience, accounting, operational controls, and technical skills, or the ability to obtain them

FAR 16.301-3 Limitations A cost-reimbursement contract may be used only when the contractors accounting

system is adequate for determining costs applicable to the contract or order

Disclosure Statements

Contracting officers shall not award a CAS-covered contract until a written determination that Disclosure Statement is adequate unless waived by head of Agency

22

DCMA approves/disapproves Proprietary and Confidential

Business Systems

DFARS CBS Timelines

10 days for determination after receipt of audit/functional specialist report

Initial determination if one or more significant deficiencies

Final determination if no significant deficiencies

30 days for contractor response to initial determination

30 days for final determination after receipt of contractors response

Legacy determinations and reports

Reports dated prior to May 18, 2011

Findings may or may not be considered significant deficiencies under the new rule

Policy included in DCMA-INST 131, CBS

Procedures for addressing legacy determinations and issuing final determinations

Business system status guidelines Approved, Disapproved, Not Evaluated, & Not Applicable

Not Evaluated systems in the Contract Business Analysis Repository (CBAR) eTool

Aug 2012 Sep 2013 Apr 2014

2875

2

3

993 692 Proprietary and Confidential

Business System Rule

24

Contractor Business Systems must provide reliable information for decision making (FY2011 NDAA)

Interim Rule - 18 May 2011; Final Rule - 24 Feb 2012

Rule covers six contractor business systems

Challenge is consistent and timely determinations Business System Review Panel for proposed disapprovals Timeliness Standards established in Policy

System Disapprovals (count of CAGES)

Withhold

Accounting 51 $36.2 M

Estimating 13 $12.6 M

Earned Value Management 13 $95.2 M

Material Management and Accounting 0 $0

Property 17 $25.0 M

Purchasing 17 $0.6 M

Total 111 $169.6 M


25

25

Significant Shift in Subcontract Content of Major Programs 20 years ago Prime was 70-80% and Subs were 20-30% Today Primes are 20-30% and Subs are 70-80%

Supply Chain Management Concerns Single Points of Failure Detection and Avoidance of Counterfeit Parts Specialty Metals Sourcing Contractor Purchasing System Reviews

Cost and Pricing Issues

Privity of Contract and Proprietary Information Audit Access and Field Pricing Support Commercial Item Determinations and Pricing

Subcontract Management



Cost and Pricing Services


Cost and Pricing Services

27

Mission

Establish the right price for Department

Requirements

Functions Provide field pricing assistance

Establish forward pricing and final indirect rates

Monitor contractor indirect costs

Perform overhead should cost reviews

Provide support to negotiations

Provide specialized support (pensions, financial

capability reviews and commercial pricing)

Maintain Contract Business Analysis Repository

(CBAR) for DoD

Impact 11,390 Field Pricing Support cases - CY13

4,000 negotiations - CY13

690 Contractor Sites with FPRA/FPRR

3 Overhead Should Cost reviews - CY13

992 Financial Capability Reviews CY 13


28 Proprietary and Confidential

Cost and Pricing

29

Successes: Enterprise cost & pricing capability yielded in excess of $6B in cost recovery, savings,

and/or avoidance

Conducted deep-dive overhead should cost reviews & provided mobile proposal

pricing/surge support

Closed 656 (out of 705) aging CAS issues with costs demanded or negotiated of

$787,933,347

Implemented policy change requiring DCMA to review disclosure statement changes

(vice DCAA)

Developed and implemented plan requiring CMOs to hold Stand Down Days with

DCAA to settle final overheads prior to the statute of limitations

Hot Topics: Significant volume of aging disclosure statement submissions, final overheads and

CAS non-compliances

Executive compensation ceiling changes will increase complexity and number of

forward pricing and final rates proposals

Budget uncertainty continues to complicate forward pricing rate forecasting


Small Business Support


31

31

Mission

Foster business innovation, new

technology, and promote private enterprise

Functions

Conduct subcontracting plan reviews at large

businesses with contracts over $650K

Provide analysis and recommendations on

subcontracting plans at contract award

Provide analysis and recommendations on

commercial plans and ensuing reports

Negotiate Master Subcontracting Plans

Negotiate and manage Comprehensive Plans

under the DOD test program

Review prime contractors mentor-protg

agreements, track progress, and develop ROI

report for Congress

Conduct reviews of Procurement Technical

Assistance Centers (PTAC)

Impact

83 Mentor Protg agreements ($56M)

resulting in 1,250 jobs created

63 PTACs provide basic assistance to

small businesses in marketing to

government

Small Business Support



Comprehensive Small Business Subcontracting Program (CSP)

DoD Test Program for Negotiation of Comprehensive Small

Business Subcontracting Plans ends December 31, 2014

DCMAs Role:

Negotiates annual CSPs on behalf of DoD in coordination with Departments and

Agencies

12 contractors with over 8,000 individual contracts

Transition Plan needs to be developed

Possible migration to use of Master Subcontracting Plans

National Defense Authorization Act

House Extend 3 Years Improve Data Analysis

Senate Extend to 30 Sep 2015 Increase Opportunities

32


Workforce Development


34

34

BRAC 2005 moved DCMA Headquarters to Fort Lee Move completed by September 2011 Less than 25% of DCMA staff made the move Headquarters functions and support impacted

HQ budget being reduced by 20% by FY2019 per SECDEF Attrition of 600 to 800 employees per year

50% of workforce has less than 5 years with DCMA Workforce Competency Not just a DCMA issue

DPAP will be conducting a Competency Assessment DCMA conducting in-house training DAU stood up College of Contract Management

Contracting Officer Warranting Process

CORB Contracting Officer Review Board COAT Contracting Officer Assessment Tool

DCMA Workforce



LEVEL II AQ Course Status With CCM

-CACO/DACO Duties -TCO Duties -Property Officer Duties -Plant Clearance Officer Duties

Job Task & Gap Analysis

Course Release

Course Analysis

Course Development

Course Pilot

AQ Functional Community Training Infrastructure Development

CMC 100 (Intro to Contract Administration) CMC 200 (Contract Financing) CMC 210 (Contract Closeout) CMC 220 (Advanced Contract Administration) CMC 230 (ACO Business Fundamentals) CMC 240 (Cost Accounting Standards) CMP 200 (Integrated Cost Proposal Evaluation) CMP 210 (Cost Monitoring) CMP 220 (Cost Accounting Standards) CMP XXX (Development of Indirect Rates)

Legend Green Mission tasks/KSAs, Learning Objectives provide training roadmap Purple Completed CCM tasks, not yet funded for Course Development Blue On contract with CCM Red FY14 work contracted/planned for CCM contract Black Transitioned to DAU/CCM complete

35

Estimate Incremental Launch of Pilots in 2nd Qtr FY15

Estimate Late FY15


36

How to Find Us (www.dcma.mil)

Policies

HQ, Regions

& CMOs

CAS Directory

CMT Finder

E-Tools

Access


3

7

Questions


Contact Us

Tysons, VA 8000 Towers Crescent Drive Suite 950 Tysons, VA 22182 P: 703.761.4848

Bethesda, MD 6720-B Rockledge Drive Suite 750 Bethesda, MD 20817 P: 301.654.7555

Annapolis, MD 888 Bestgate Road Suite 401 Annapolis, MD 21401 P: 410.571.7766

Herndon, VA 13665 Dulles Technology Drive Suite 220 Herndon, VA 20171 P: 703.885.8190

www.watkinsmeegan.com

[email protected]


Presenters

Timothy Callahan, Executive Director of Contracts Defense Contract Management Agency

[email protected] 804.734.0500

mailto:[email protected]

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