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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
Proprietary and Confidential
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 DOD’s 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
Proprietary and Confidential
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
Proprietary and Confidential
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
Proprietary and Confidential
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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 Contract Management Offices: 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 Contract Management Offices: 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
Proprietary and Confidential
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Total Contract Amount 6,577.5BObligated Amount $1,860BActive Contractors 20,001Active Contracts 347.6KUnliquidated Obligations Amount $223BACAT I (IAC, IC, ID) and II Programs 193Aircraft per Year (FY13) 1,569Flying Hours (FY13) 20,516Government Property Value $155.6BProgress Payments $15.6BPerformance-based Payments $15.7B
SCOPE of WORK
Civilians On-board 11,441Military (Active Duty - 429), (Reserve - 119) 548Operational Directorates 3Locations 740+Contract Management Offices 47Budget Authority $1.35BReimbursable Target $125.5M
SPAN of CONTROL
Scope of Work and Span of Control Data for 1QFY14
Proprietary and Confidential
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 (<1%)
1QFY14 data
Engineering & Manufacturing Services (17%)
Quality Assurance Services (34%)
Contract Administration Support & Services (20%)
Hours of Effort per Line of Service
Operational Overview
Lines of Service Contract Administration Support and Services Contractor Purchasing System Reviews Cost and Pricing Services Property Management & Plant Clearance Services Small Business Support Contract Termination Services Quality Assurance Services Contract Safety Services Transportation Services Engineering and Manufacturing Services Major Program Support Supply Chain Support Earned Value Management Industrial Base Analysis Services Aircraft Operations Services Proprietary and Confidential
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
Proprietary and Confidential
Strategic Management Plan FY14/15
Proprietary and Confidential
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• 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
Proprietary and Confidential
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
Proprietary and Confidential
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
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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
Proprietary and Confidential
DoD Mandate to Improve Financial Management and Auditability
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Proprietary and Confidential
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
Proprietary and Confidential
Process / System Mapping
• Events with Financial Statement impacts - OutcomesObligations (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
cess
S
ub-P
roce
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
**
A
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
**
Proprietary and Confidential
• 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
End Result
Proprietary and Confidential
Contract Administration Services
Proprietary and Confidential
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
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Proprietary and Confidential
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 contractor’s 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
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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 contractor’s 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
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
Proprietary and Confidential
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• 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
Proprietary and Confidential
Cost and Pricing Services
Proprietary and Confidential
Cost and Pricing Services
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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
Proprietary and Confidential
28 Proprietary and Confidential
Cost and Pricing
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• 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
Proprietary and Confidential
Small Business Support
Proprietary and Confidential
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-protégé
agreements, track progress, and develop ROI report for Congress
• Conduct reviews of Procurement Technical Assistance Centers (PTAC)
Impact
• 83 Mentor Protégé agreements ($56M) resulting in 1,250 jobs created
• 63 PTACs provide basic assistance to
small businesses in marketing to government
Small Business Support
Proprietary and Confidential
Comprehensive Small Business Subcontracting Program (CSP)
• DoD Test Program for Negotiation of Comprehensive Small
Business Subcontracting Plans ends December 31, 2014
• DCMA’s 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
Proprietary and Confidential
Workforce Development
Proprietary and Confidential
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
Proprietary and Confidential
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
Proprietary and Confidential
36
How to Find Us (www.dcma.mil)
Policies
HQ, Regions & CMOs
CAS Directory CMT Finder
E-Tools Access
Proprietary and Confidential
3
Questions
Proprietary and Confidential
Recommended