Acquisition Initiatives 2005 Aviation Business Conference

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  • Initiative underway. Revision to DFARS final published. Informative as to questions being rsaised Awaiting completion of contractual wording to implement DFARS clause.
  • Show cover pages included in package to audience.

Transcript

  • 1. Acquisition Initiatives 2005 Aviation Business Conference
  • 2. AGENDA
    • UID/RFID
      • Tom McElwee
      • thomas.mcelwee@dla.mil
    • Multi-source Contracting
      • Mel Croll
      • [email_address]
    • Price Analysis
      • Tim Serfass
      • [email_address]
    • Q&A
  • 3. Acquisition Initiatives UID/RFID Tom McElwee
  • 4. Unique Identification (UID)
    • UID is being championed by OASD as a means to provide unique identification of tangible items providing better asset accountability, valuation and life cycle management
    • UID is primarily a finance driven initiative designed to provide data to allow DOD to purchase assets on an informed and timely basis.
    • Programmed implementation date for UID was Jan 1 2004
  • 5. UID (cont)
    • UID will be accomplished through the use of various Automated Identification Technologies (AIT) i.e. linear barcodes, 2D barcodes, RFID tags and labels.
    • Basically UID is bare item marking (engraving, tagging etc.) of items meeting the below requirements:
    • 1. Have a purchase $ value of 5K or more
    • 2. Are serially managed
    • 3. Are Critical Safety Items (CSI)
    • 4. Are designated by program managers as UID candidates
  • 6. UID (cont)
    • DLA is partnering with DCMA to work with the top 30 DOD suppliers on an incremental implementation strategy for UID
    • DCMA has authority to temporarily waive contract requirements for UID
    • DLA is not actively implementing UID at this time
  • 7. UID (cont)
    • … AGAIN …DLA is not implementing UID in contracts at this time pending completion of the following actions: 
      • Completion of the DCMA/DLA Top 30 DOD Supplier initiative
      • Revision to the DFARS (Final rule published in FR 22 Apr 05, Pages 20831-20838)
      • Development of implementing clauses for DFARS Rule
  • 8. UID Summary
    • Heads Up on UID
    • It is coming and will be a requirement for all
    • Get a copy of Mil Std 130L w Change 1 (Rev M coming)
    • Download a copy of “Unique Identification 101, The Basics” and
    • the DOD Defense Guide to UID from http://www.acq.osd.mil/log/rfid/index.htm
    • (UID) Bare Item part marking has a large number of Commercial providers . (LIST) Many more on web.
    • Access http://www.acq.osd.mil/dpap/UID/ for more detailed info
  • 9. Radio Frequency Identification (RFID)
    • The DOD RFID vision is to implement knowledge-enabled logistics through fully automated visibility and management of assets in support of the warfighter .
  • 10. RFID (cont)
    • There are two types of RFID tags, Active and Passive
      • Active RFID Tags:
        • Are a mature technology
        • Hold more data
        • Require a battery
        • Are bulky and expensive
        • Used on transport containers, RR cars and other industrial operations.
    • Active tags have been invaluable to the DOD in tracking its materials into theaters of war.
  • 11. RFID (cont)
      • Passive RFID Tags are an evolving technology and DOD is in the forefront of their development and usage.
        • A passive RFID tag has no internal power source.
        • The tag is activated by the reader/transponder.
        • Passive tags are currently being used for Case and pallet tagging operations
        • DOD plans to expand their use to unit pack tagging in the future.
  • 12. RFID (cont)
    • OSD has mandated a phased implementation (10 Years) as of 1 January 2005.
    • DLA is going to test delivery of tagged material of designated classes of material to 2 sites after 1 October 2005. Some voluntarily tagged receipts are being received now
    • DLA has an Implementation Team identified and in place for RFID. This team has adopted a Concept of Operations plan (CONOPS) and an Implementation Plan for DLA.
    • DLA is aggressively planning for RFID and pursuing implementation.
  • 13. RFID Summary
    • BE AWARE
    • RFID is here…(Reference Suppliers Implementation plan)
      • If you have a contract requiring delivery (after 1 October 2005) of Class I, II,VI or IX items to DDSP Susquehanna or DDJC San Joaquin the shipping containers and pallets will be required to have RFID tags.
      • Additional Classes of material and delivery sites will require RFID tags after 1 Jan 06 (ref as above)
      • All classes of material will require tags after 1 Jan 2007
      • Long term contracts will be modified ASAP
  • 14. RFID Summary (cont)
    • For more information:
      • Access http://www.acq.osd.mil/log/rfid/index.htm /
      • Download a copy of: The US DOD Suppliers Passive RFID Information Guide from: http://www.acq.osd.mil/log/rfid/Events/DoD_Suppliers_Passive_RFID_Information_Guide_v7.0.pdf
      • Download a copy of: The Supplier Implementation Plan from: http://www.acq.osd.mil/log/rfid/implementation_plan.htm
  • 15. RFID Summary (cont)
    • OASD RFID Training Program. See particulars as below: http://www.acq.osd.mil/log/rfid/suppliered_training.htm
    • Get a copy of Mil Std 129 w change 3 from The DOD Single Stock Point for Specifications and Standards (DODSSP) http://dodssp.daps.dla.mil/
  • 16. Acquisition Initiatives MULTISOURCE CONTRACTING By Mel Croll
  • 17. Agenda
    • Defining Multisource Contracting
    • Procedures for the use of Multisource Contracting
    • Multisource Contracting at DSCR
    • Process at DSCR
      • Firm Fixed Price
      • Long Term Contracts
    • Overview
    • Questions
  • 18. Definition
    • Multisource Contracting:
    • More than one awardee selected to fulfill a given requirement for supplies or services
  • 19. Multisource Contracting at DSCR
    • Utilized for the Purpose of Supply Assurance
      • History of poor performance unrelated to Government caused delay
      • Complex or difficult specification with requirements that must be satisfied in a relatively constrained timeframe
      • First Article Testing requirements
  • 20. Procedures
    • Single Use Firm Fixed Price Contracts
    • DSCR Provision 52.217-9G34 Supply Assurance Through Multisource Contracting
    • DSCR Clause 52.217-9G36 Multisource Contracting Supply Assurance Option
    • Criteria
    • Reduce or eliminate supply availability problems
    • Benefits must outweigh increased costs
    • All awardees must be determined responsible
    • Price reasonableness
  • 21. Example Evaluation
    • Requirement for 100 EA
    • 40 EA on backorder
    • First Article Testing is required
    • Contractor A
      • 2 FA @ $500.00 EA 120 DARO
      • 100 Production @ $219.00 EA 120 DAFAA
    • Contractor B
      • FA Waived
      • 100 Production @ $264.00 EA 120 DARO
  • 22. Example Evaluation (Cont’d)
  • 23. Requirements
    • Proven source shall be awarded no more than 40% of the requirement – Contractor B 40 EA
    • Unproven source shall be awarded the balance of the requirement – Contractor A 60 EA
    • 40 EA
    • 60 EA
    • 100 EA
  • 24. Performance
    • If the unproven source fails to perform their contract may be cancelled or terminated
    • Under 52.217-9G36 the Government may award an option of up to 150% to the proven source
  • 25. 150% Option
    • Contractor A fails to perform, their contract for 60 EA is cancelled
    • The Government exercises its 150% option on Contractor B
    • 40 EA x 150% = 60 EA
    • Base Quantity 40 EA
    • 150% Option 60 EA
    • Total 100 EA
  • 26. Procedures
    • Long Term Contracts
    • DSCR Provision 52.217-9G43 Single or Multiple Awards
    • FAR Provision 52.216-27 Single or Multiple Awards
  • 27. Prerequisites
    • Reduce or eliminate supply availability problems
    • Benefits must outweigh increased costs
    • All awardees must be determined responsible
    • Price reasonableness
  • 28. Example Evaluation
    • Five year IQC consisting of a base plus four option years
    • Backorders Exist
    • First Article Testing Applies
    • Contractor A (Unproven) submits a best value proposal
    • Contractor B (Proven) submits a proposal under which the First Article Requirement has been waived
  • 29. Awards
    • Contractor A and Contractor B are both awarded Long Term Contracts
    • Both contractors will receive Guaranteed minimum orders as described in the solicitation
    • Unproven contractor will submit to First Article Testing
    • Orders after guaranteed minimums have been met are to be competed
    • All awardees must be afforded fair opportunity for consideration
    • Streamlined processes may be used
  • 30. Ordering (Cont’d)
    • Requirements in FAR Part 6 and Policies in FAR Part 13.5 do not apply, however the Contracting Officer must;
      • Ensure fair opportunity for consideration
      • Tailor the procedures to each acquisition
      • Include the procedures in the solicitation and contract
      • Consider price or cost as an evaluation factor
  • 31. Ordering (Cont’d)
    • Exceptions to the Fair Opportunity Process
      • Order value is less than $2500
      • Agency need is so urgent that competition would cause an unacceptable delay
      • Only one awardee is capable of meeting the requirements of the specification
      • Logical follow-on to an already competed order
      • Order is a guaranteed minimum
  • 32. Ordering (Cont’d)
    • Should One Contractor Fail to Perform
      • The Contract awarded to the non-performing contractor will be cancelled
      • Competition of orders ceases
      • The contract awarded to the remaining, performing contractor reverts to a standard Long Term Contract and the pricing submitted in the proposal applies
  • 33. Overview
    • Reasons for Multisource Contracting
    • Single Use Contracts
      • Requirements are split between awardees
      • Provisions for non-performance
    • Long Term Contracts
      • Orders are competed between awardees
      • Provisions for non-performance
  • 34. Reasons for the Use of Multisource Contracting
    • Establishing or Maintaining Alternative Sources FAR 6.202
    • Industrial Mobilization FAR 6.302-3
    • Production Testing FAR 6.101
    • Prospective Contractor Not Responsible for Entire Quantity FAR 9.103
    • Supply Assurance FAR 6.101
  • 35. PRICE ANALYSIS DSCR-CB
  • 36. Price Analysis Required by FAR Performed when adequate price history is available. Comparison made with representative price history.
  • 37. Analysis Factors Q uantity Price Relationship P revious Prices Paid A nnual Escalation Rates
  • 38. Escalation Rates D efault escalation rate 3% P roducers Price Index (PPI) O ther factors considered
  • 39. Quantity Price Relationship D efault 95% Curve (why?)
  • 40. Quantity & Escalation Calculation
    • Calculation Formula (Projected Unit Price)=
    • (Prior Unit Price) x (QPR Adjustment) x (Escalation Adjustment)
    • QPR Adjustment =
    • (Current Qty/Prior Qty)^(LOG(QPR Curve)/LOG 2)
    • Escalation Adjustment =
    • (1 + Annual Escalation Rate)^(Elapsed Time in Years)
  • 41. Quantity & Escalation
    • Example
    • Projected Unit Price =
    • (Prior Unit Price) x (QPR Adjustment) x (Escalation Adjustment)
      • Prior Unit Price = $100
      • Quantities: Current = 200 and Prior = 100
      • QPR Curve = 95%
      • Elapsed Time = 2 years
      • Annual Escalation Rate = 3%
    • Projected U/P = $100 x [(200/100)^(LOG 0.95/LOG 2)] x (1.03)^2
    • = $100 x (0.95) x (1.061)
    • Projected Unit Price = $100.79
  • 42. Summary C onsiderations R ough measurement Q uestions / Discussion
  • 43. Questions?