NASA Contracting:  Where Are We Going? Bill McNally Assistant Administrator for Procurement National Aeronautics and Space...
Overview <ul><li>The President’s March 4, 2009, Memo on Contracting </li></ul><ul><li>Improving Acquisition </li></ul><ul>...
President’s Memo – Highlights <ul><li>Focus of the Memo </li></ul><ul><ul><li>Strive for an  open  and  competitive  proce...
Improving Government Acquisition   <ul><li>Administration’s goal is to save $40 billion a year through better acquisition ...
Reduce “High Risk  Contracting Authorities” <ul><li>Using FY 2008 achievements as a baseline </li></ul><ul><li>Reduce by a...
Acquisition Savings Plan <ul><li>Develop a plan to save 7% on contract spending by the end of FY 2011  </li></ul><ul><ul><...
Acquisition Savings Plan (Cont’d.) <ul><li>Highlights of NASA’s Plan: </li></ul><ul><ul><li>Utilize Strategic Acquisition ...
Procurement Tenets Purpose <ul><li>August 1, 2008, the Procurement Tenets memo was signed by the Chief Acquisition Officer...
Procurement Tenets –  Purpose (Cont’d.) <ul><li>Each Tenet shall be addressed by Headquarters, project, program, and contr...
The Nine Procurement Tenets <ul><li>Integrated Strategies : involve all functional authorities early and throughout the pl...
The Nine Procurement Tenets  (Cont’d.) <ul><li>Performance Incentives : use to enhance   desired outcomes </li></ul><ul><l...
Contract Type <ul><li>Reducing Cost and Cost Risk for Procurements </li></ul><ul><ul><li>Cost risk for each requirement sh...
Contract Type (Cont’d.)  <ul><li>NASA’s Culture of Award Fee </li></ul><ul><ul><li>Because so much of what we do is develo...
IEMP * <ul><li>IEMP implements requirements </li></ul><ul><li>Training </li></ul><ul><li>Structure, award, monitor, and ma...
Strategic Acquisition Framework <ul><li>Acquisition Strategy Planning Meeting (ASP) </li></ul><ul><ul><li>Aligns decision ...
Strategic Acquisition Framework (Cont’d.) <ul><li>Procurement Strategy Meeting (PSM) </li></ul><ul><ul><li>Ensures that sp...
Challenges <ul><li>Executing affordable, world-class missions – for NASA and for industry implementing high risk contracts...
Challenges (Cont’d.) <ul><li>Reducing Procurement Cost and Risk </li></ul><ul><ul><li>Improve the analysis behind our stra...
<ul><li>NASA’s Procurement Tenets are in line with  </li></ul><ul><li>the President’s and OMB’s Memos  </li></ul><ul><li>a...
 
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  • NASA Presentation Sign-Off Page
  • Mc nally

    1. 1. NASA Contracting: Where Are We Going? Bill McNally Assistant Administrator for Procurement National Aeronautics and Space Administration www.nasa.gov [email_address] Project Management Challenge February 9, 2011
    2. 2. Overview <ul><li>The President’s March 4, 2009, Memo on Contracting </li></ul><ul><li>Improving Acquisition </li></ul><ul><li>NASA’s Procurement Tenets </li></ul><ul><li>NASA’s Strategic Acquisition Framework </li></ul><ul><li>Challenges </li></ul>
    3. 3. President’s Memo – Highlights <ul><li>Focus of the Memo </li></ul><ul><ul><li>Strive for an open and competitive process </li></ul></ul><ul><ul><ul><li>Agencies must have the flexibility to tailor contracts to carry out their missions and achieve policy goals </li></ul></ul></ul><ul><ul><li>Preference for fixed price type of contracts </li></ul></ul><ul><ul><ul><li>Appropriate use and oversight of cost type contracts </li></ul></ul></ul><ul><ul><li>Agencies must have sufficient capacity to manage and oversee the contracting process from start to finish </li></ul></ul><ul><ul><li>Inherently governmental functions must be performed by the Agency and not outsourced (use of support contractors) </li></ul></ul><ul><ul><ul><li>Not a huge issue at NASA </li></ul></ul></ul>
    4. 4. Improving Government Acquisition <ul><li>Administration’s goal is to save $40 billion a year through better acquisition practices </li></ul><ul><ul><li>Ending contracts that are no longer essential </li></ul></ul><ul><ul><li>Recruiting the acquisition workforce necessary to negotiate more favorably priced contracts and manage costs more effectively </li></ul></ul><ul><ul><li>Developing strategic acquisition approaches to leverage buying power </li></ul></ul><ul><ul><li>Increasing the use of technology to control contracts </li></ul></ul><ul><ul><li>Reengineering ineffective business processes and practices </li></ul></ul>OMB Memorandum of July 29, 2009
    5. 5. Reduce “High Risk Contracting Authorities” <ul><li>Using FY 2008 achievements as a baseline </li></ul><ul><li>Reduce by at least 10% the share of dollars obligated through new contracts in FY 2010 that </li></ul><ul><ul><li>Are awarded noncompetitively </li></ul></ul><ul><ul><li>Receive only one bid or </li></ul></ul><ul><ul><li>Are cost reimbursement or Time and Material </li></ul></ul>
    6. 6. Acquisition Savings Plan <ul><li>Develop a plan to save 7% on contract spending by the end of FY 2011 </li></ul><ul><ul><li>Save 3.5% of baseline contract spending in FY 2010 </li></ul></ul><ul><ul><li>Save 3.5% of baseline contract spending in FY 2011 </li></ul></ul><ul><li>Plan must identify both projected savings and steps to achieve savings </li></ul><ul><li>Each Center submitted its Savings Plan to implement the memorandum </li></ul><ul><li>NASA submitted its Savings Plan to OMB on November 2, 2009 </li></ul>
    7. 7. Acquisition Savings Plan (Cont’d.) <ul><li>Highlights of NASA’s Plan: </li></ul><ul><ul><li>Utilize Strategic Acquisition approach </li></ul></ul><ul><ul><li>Improve Cost Estimating and EVM </li></ul></ul><ul><ul><li>Restructure contracts </li></ul></ul><ul><ul><li>Improve Cost/Price analysis and negotiations </li></ul></ul><ul><li>“ Living Plan” being managed by HQ Office of Procurement, Program Operations Division </li></ul><ul><ul><li>Discussed at procurement leadership meeting to achieve cross-fertilization of ideas, peer reviews, standardization </li></ul></ul><ul><ul><li>Semi-annual call to NASA Centers for update </li></ul></ul><ul><li>Progress briefed to OMB on November 8, 2010 </li></ul>
    8. 8. Procurement Tenets Purpose <ul><li>August 1, 2008, the Procurement Tenets memo was signed by the Chief Acquisition Officer endorsing the Tenets and expecting the NASA Centers to start using them </li></ul><ul><li>85% of NASA’s budget is obligated for procurements so NASA must maximize its buying power </li></ul><ul><li>The Procurement Tenets are a set of principles for a NASA way of doing business with the objective of increasing NASA’s Return on Investment </li></ul><ul><li>The Procurement Tenets are ancillary to the other Federal and Agency regulations, policies, and core values. Implement based on the circumstances for each acquisition </li></ul>
    9. 9. Procurement Tenets – Purpose (Cont’d.) <ul><li>Each Tenet shall be addressed by Headquarters, project, program, and contract managers in their acquisition and procurement strategies, processes, and procedures </li></ul>
    10. 10. The Nine Procurement Tenets <ul><li>Integrated Strategies : involve all functional authorities early and throughout the planning process </li></ul><ul><li>Turn Contract Upside-Down : in the planning process, determine the right number of prime contracts and understand the supply chain of a requirement </li></ul><ul><li>Maximize and Optimize Competition : establish and take advantage of a competitive environment to meet NASA requirements </li></ul><ul><li>Requirements : clearly specify what is to be acquired; zero-based approach in developing requirements </li></ul><ul><li>Streamline : remove non-value added steps and requirements that do not support the desired outcomes </li></ul>
    11. 11. The Nine Procurement Tenets (Cont’d.) <ul><li>Performance Incentives : use to enhance desired outcomes </li></ul><ul><li>Merge NASA’s and Industry’s Core Expertise : define NASA and industry’s role with research, design, development, and integration for projects </li></ul><ul><li>Common NASA Contracts and Strategies : common face to industry ; a NASA contract: not a Center or mission directorate contract </li></ul><ul><li>Contract Cost : reduce the cost and cost risk for procurements; move towards Firm Fixed Price contracts after development and on repetitive service contracts </li></ul>
    12. 12. Contract Type <ul><li>Reducing Cost and Cost Risk for Procurements </li></ul><ul><ul><li>Cost risk for each requirement shall be properly allocated between NASA and industry </li></ul></ul><ul><ul><li>Competition and the cost of managing contracts are enhanced by the appropriate allocation of cost risk </li></ul></ul><ul><ul><li>Development Phase: NASA takes cost risk </li></ul></ul><ul><ul><ul><li>Use appropriate tools to manage contracts </li></ul></ul></ul><ul><ul><li>Production and Operations Phases: industry assumes risk </li></ul></ul><ul><ul><ul><li>Firm Fixed Price </li></ul></ul></ul><ul><ul><ul><li>Industry earns appropriate profit for assuming cost risk </li></ul></ul></ul>
    13. 13. Contract Type (Cont’d.) <ul><li>NASA’s Culture of Award Fee </li></ul><ul><ul><li>Because so much of what we do is development, Award Fee has become ingrained </li></ul></ul><ul><ul><ul><li>In the past, some things with little or no cost risk were done Award Fee – comfort zone </li></ul></ul></ul><ul><ul><ul><li>Moving to Firm Fixed Price – where no high risk or uncertainty </li></ul></ul></ul><ul><ul><ul><li>Shift contract to Firm Fixed Price as soon as possible </li></ul></ul></ul><ul><li>The President’s Memo and the Tenets are pointing us in the same direction. NASA also applies an Agency acquisition strategy framework to manage its high risk environment. </li></ul>
    14. 14. IEMP * <ul><li>IEMP implements requirements </li></ul><ul><li>Training </li></ul><ul><li>Structure, award, monitor, and manage contracts </li></ul><ul><li>Collect data to assess contract performance </li></ul><ul><li>Training </li></ul>Contract Management * Acquisition Policy * (1000.0, 7120.4, 7120.5, 7123.1, FAR, NASA FAR Sup.) Project Management * Cost Estimating * Other… <ul><li>Planning, execution, and performance assessment (cost, schedule, technical) </li></ul><ul><li>Key decision points (entry and exit criteria and metrics) </li></ul><ul><li>CADRe (LCCE) </li></ul><ul><li>Training </li></ul><ul><li>Disciplined cost estimating processes </li></ul><ul><li>Cost Analysis Data Requirements (CADRe) (ICE) </li></ul><ul><li>Training </li></ul>* Directly addressing GAO High Risk List Policy Implementation Agency Acquisition Strategy GAO High Risk List NASA Contract Management
    15. 15. Strategic Acquisition Framework <ul><li>Acquisition Strategy Planning Meeting (ASP) </li></ul><ul><ul><li>Aligns decision with the budget cycle </li></ul></ul><ul><ul><li>Generates approval for a new or substantially changed program or major project, triggered by Agency requirements or legislative direction </li></ul></ul><ul><li>Acquisition Strategy Meeting (ASM) </li></ul><ul><ul><li>Validates that program level acquisition strategy can be supported by budget, schedule, and manpower </li></ul></ul><ul><ul><li>Ensures that first order program planning is in place (WBS, budget, risk assessment, schedule, etc.) </li></ul></ul><ul><ul><li>Validates make/buy rationale and any partnership decisions </li></ul></ul>
    16. 16. Strategic Acquisition Framework (Cont’d.) <ul><li>Procurement Strategy Meeting (PSM) </li></ul><ul><ul><li>Ensures that specific acquisitions are ready to proceed </li></ul></ul><ul><ul><li>Focus is on procurement process, not strategic planning </li></ul></ul>
    17. 17. Challenges <ul><li>Executing affordable, world-class missions – for NASA and for industry implementing high risk contracts </li></ul><ul><ul><li>Developing thorough understanding of technical requirements </li></ul></ul><ul><ul><li>Establishing credible cost estimates and sufficient life-cycle budgets to meet mission objectives </li></ul></ul><ul><ul><li>Avoiding over-commitment to new initiatives </li></ul></ul><ul><ul><li>Controlling costs through committed, strong program management </li></ul></ul>
    18. 18. Challenges (Cont’d.) <ul><li>Reducing Procurement Cost and Risk </li></ul><ul><ul><li>Improve the analysis behind our strategy and business decisions (contract type, conducting source selections, etc.) </li></ul></ul><ul><ul><ul><li>Must get back into analysis of the cost, risk, marketplace in choosing contract type, conducting competitions, and other strategy decisions </li></ul></ul></ul><ul><ul><li>Improving Cost/Price Analysis </li></ul></ul><ul><ul><ul><li>Must ensure paying fair and reasonable price for services/supplies procured </li></ul></ul></ul><ul><ul><ul><li>Reduces risk for sustainable protest in competitions </li></ul></ul></ul>
    19. 19. <ul><li>NASA’s Procurement Tenets are in line with </li></ul><ul><li>the President’s and OMB’s Memos </li></ul><ul><li>and guide us in meeting the Agency’s challenges. </li></ul>

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