2. Everything is about “leadership….”
…leadership is not about making
speeches or being liked; it is
defined by results --not attributes.
3. Actual quote: ‘I hate involving
Contracting [and especially Cost and
Pricing] in an Acquisition. They just slow
things down and cost me money.’
4. Early Involvement of Pricing
Specialists Can Will Pay Dividends
No one argues seriously against
the use of Integrated Teams in the
Acquisition process. However,
Cost and Pricing specialists are
too often overlooked when
forming the IPT. When included,
“Pricers” are typically invited at
Source Selection – too late to
maximize our potential value to
the team. Today we'll take a look
at some reasons to involve us
at the very beginning of the
Acquisition; and, conversely some
potential risks of limited or late
involvement of Pricers. From
Requirements Design through
Market Research, IGCE,
development of Solicitation
Documents to the final award
decision -- Pricers can add value
every step of the way.
5. My greatest strength as a consultant is
to be ignorant and ask a few questions.
It’s my job to make people
uncomfortable.
6. Attributes of Experienced Price/Cost Analysts
Level III DAWIA Certified; eminently familiar with FAR; we know it all.*
We have no dog in the hunt.
We tend to ask good questions. You may not like them.
We recognize up to date information is essential. We help you get it.
We value and will provide input from diverse sources.
We anticipate and can explain cost impacts of poorly-defined Requirements.
We grasp the cost implications of technical aspects of specific acquisitions.
We’re THE all-around experts on Acquisition (lawyers may disagree**).
We will help frame goals and objectives.
We’re a resource for post-award and contract performance planning.
*Or, we’ll look up the answer really quickly. **But who cares what they think?
8. A Simpler View of the Acquisition Process
Planning
Form the Team
Focus on and Evaluate Current Strategy
Conduct Market Research
Development
Refine the Requirements
Articulate the Acquisition Strategy
Execution
Implement Strategy
Manage Performance
9. Plans are only good intentions
unless they immediately
degenerate into hard work.
10. Pricer Value - Planning Stage
Cost & Pricing is too often not involved at the beginning Why?
Before forming the team, consider a Pricer
We WILL help challenge assumptions – as well as the status quo
We will contribute to discussions on all topics
We don’t have to win the argument – just have the argument
Our general and specific knowledge is valuable to developing a sound
acquisition strategy
We’re focused on cost influencers: inflation trend, labor markets, state
of competition, contracting best practices, bad practices, emerging
issues
11. Pricer Value (continued)
Acquisition Planning is often “cut and paste” of the most recent successful
process. Agree? So What?
Good Pricers are focused on recognizing applicable environmental, regulatory
and industry change; primarily the effects on likely costs. And, we are among the
most aware of other critical (emerging) Acquisition issues.
“Official” guidance (for example the most recent NDAA) typically lands on our
desks for evaluation and implementation recommendations. (I guess they think
we don’t have anything to do)
Some examples:
2012 - Congress mandates establishing Government Objective Rates “no
higher” than those paid in 2010
2016 - Value Adjusted Total Evaluated Price (VATEP)
2018 – Latest Silver Bullet: 2018 NDAA prohibits use of ‘cost’ contracts on
“major systems acquisitions”
12. We are currently suffering from
an historically unparalleled
inability to be embarrassed.
Don’t worry. We’ll embarrass you.
Very Worthwhile Reading:
https://object.cato.org/sites/cato.org/files/pubs/pdf/tbb-72.pdf
13. There is nothing so useless as
doing efficiently that which
should not be done at all.
(Really? How about if we do it at twice the
projected cost and way, way behind schedule?)
16. …statistical data from …Government Accountability
Office (GAO) report (2008a) on 95 weapons
systems found that the total cost growth on these
programs was $295 billion, and the average
schedule delay was 21 months.
Source: Project Management Journal, March 2010
In 2012, it was discovered that one-quarter of $1.6
trillion spent on major weapons systems
represents unexpected cost overruns.
Source: Mother Jones
17. More realistic projections of the final costs are
needed ... recoveries from cost overruns on
defense contracts are highly improbable, and
cost overruns tend to worsen as a defense
contract proceeds to completion.
Source: PMI.org
18. Value Added – Development and Execution
Price Analysts are required to “research, evaluate and
provide answers to questions that have no historical
precedents.”
While the job description aims this talent at cost and
pricing cases, there is no situation in which cost and
pricing issues exist in a vacuum.
Market research, development of IGCEs and Life Cycle
Cost Estimates benefit from utilization of the organization’s
Cost and Pricing resources.
19. Value Added – Development and Execution
Cost and Pricing is not strictly an independent domain;
but, exists as a service appendage to both Contracting
and Programs. Use the resource!
We’re are customer-focused; identifying and meeting
YOUR needs.
“Look forward” to the execution of the awarded contract.
About $100 million in negotiated final award reductions
in 2017
20. Some Successes and Failures
Requirements Definition and Acq Strategy Development
SSES NexGen
A Success
DESS
A Lot of Lessons – Some Learned Some Not
The ‘Contract For Everything’
Not Sure – Trying Our Best
21. Successes and Failures (continued)
The Final Negotiation A
Better Late Than Never
The Final Negotiation B
Negotiating Against Ourselves
The Closeout
Guidance as ‘Deskside Training’
23. Important Value Areas
Contract Type/Structure
Proposed vs Final Award – Increasing the Inclination to Negotiate
Realism Analysis
Weighted Guidelines – How About a 0% Profit Objective?
CID; CAS; OTA
Procurement Integrity
Recognizing Bad Ideas or Flaws
Challenging ‘Silver Bullets’
Training Initiatives – Making the Source Selection a Learning Experience
Reality is a B
24. Reality is a Great Big B
Primary, Important Questions:
How Does Your Organization View Cost and Pricing?
‘Price is the Least Important Factor’
‘They Slow Us Down’
‘They Cause Protests’
Is Cost and Pricing Part of Leadership?
Decision Making
Participation
Afterthoughts
25. Is the Cost and Pricing Division Valued?
Does Leadership understand its contribution In terms
of dollars or schedule, or other quantifiable or
qualitative measures?
Are Cost and Pricing Personnel Visible?
Inclusion or exclusion at high level meetings
Can their superiors even name them?
27. Important Points
What is the State of Your Cost and Pricing Assets?
What is the Future of your Cost and Pricing Team?
Do you have a succession plan? Or, are you going back to the
future?
Do you engage in regular, continual learning AND teaching?
Is Cost/Price Review Performed on Classified Awards?
What is the Threshold for Mandatory C/P Review/Assistance?
Do/Should Contracting Specialists Perform C/P Review?
Should Pricers Swerve Out of Their “Lane?”
28. When a subject becomes
totally obsolete we make it a
required course.
29. Notice I Haven’t Mentioned Protest
Improper, unperformed or underperformed
Cost/Price Analysis results in (sustained)
protests; or worse
Believe it or not, sometimes it doesn’t occur to us
‘Protest Avoidance’ is a costly waste of time
“Pricers” often give good advice that (even if
ignored) holds up
30. Peter Drucker
Born: November 19, 1909, Vienna, Austria
Died: November 11, 2005, Claremont, CA
Yes; everything I’ve said today is obvious.
Some of you are saying, “Of course; I know all
that.”
So, my question to you is:
Why don’t we do it?
34. Information
Paul F. Stifflemire
Lead Contract Price/Cost Analyst
Defense Information Systems Agency (DISA)
Headquarters, Fort Meade, MD
301-225-4136
paul.f.stifflemire2.civ@mail.mil