Emerging Trends in Procurement:Crisis or Opportunity? And the NCMA Response

Andrew C. Obermeyer, CPCM, FellowMember, Board of DirectorsNational Contract Management Association

The Acquisition Workforce Has Changed

•Years of downsizing (1990’s)•Human capital strategies have not kept up

with evolving demand•Different set of expectations, e.g. business

advisor•Evolving gap in replacing the retiring

professionals• Inadequate investment in training

Acquisition Workforce Demographics - Age55+30%

45-5439%

35-4418%

<359%

Acquisition Workforce Demographics - Education

Doctorate6%

Masters44%

Bachelors36%

other13%

College Graduates - 2005

0

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

China India United States

GraduatesCollegeEngineering

It will take about a generation to reverse the ratio of highly skilled workers between the U.S. and India and China. When the generation of engineers and scientists that sent the man to the moon retires, who is going to replace them?”Academic Disciplines & Employment Trends’Applied Information Management Institute, Jan 2006

3.2M3.1M

2.0M

600k

300k

<100k

Raytheon Company Employee Population Profile

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

<1 1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 45+

Years of Service

Nu

mb

er

of

Ex

em

pt

Em

plo

yee

s

Under 25 26-35 36-45 46-55 56-65 66-75 76-85Age:

Strategic Target Areas

Targeted College Hires Targeted

Experienced Hires

The Emerging Competition For Talent"One in every three of Lockheed's employees is over 50. To sustain our talent base, we're hiring 14,000 people a year. In two years, we're going to need 29,000 new hires; in three years, 44,000. If this trend continues, over the next decade we will need 142,000." - ROBERT J. STEVENS, chairman, President and CEO of Lockheed Martin. Wall Street Journal, April 19, 2006

The Nature of What Government Buys Has Changed

•Offloading simple transactions•Larger, more encompassing services•Complex IT, communications, and weapons

systems•Accelerated fielding to serve the war

fighter•Emphasis on logistical support

PEGASYS

WARSIM SE-CORE

NGATS

IBS

AVCATTAWACS

TSV TBMCS TCO

PATRIOT

NFCS

MCTIS

LFC2IS

MAGIS

MOUT-OIS

MILES XXI

F/A- 22

SIMACET

BATESAALPS

SECOMPI

C-130C-17

SOLDIER-CATT

C-5

CBS

ACTF

FIOP

GIG

TACSIM

IEWTPT

LOGISTICS AALPS

C-5 C-17 C-130 MILES XXI PEGASYS SE-CORE

INTEL AWACS IBS MAGIS MCTIS MTS NGATS PKI

TRAINING ACTF AVCATT CBS IEWTPT SECOMPI SOLDIER-CATT TACSIM WARSIM

FIRE SUPPORT BATES F/A-22 NFCS TSV

MOB/SUR STEPS MOUT-OIS

Command and Control FIOP GIG LFC2IS SIMACET TBMCS TCO TELEPORTS

ADLER

MTS

ACS

JC2

SLAMRAMM

MIP

MSD

IDM

DMS-A

BSTF

JCM

GMLRS

ATACMS

Profiler

TAIS

PAFCS

MLRS

MEADS

MCSLLAPI

JTAGSJLENS

IMETS

GCCS-A

GBS

Mongoose

FAAD-C31

FBCB2

DTSS

C2PC

BCS3 BFT

ADOCS ASAS AMDWS

AFATDS

HMEE

REBS

APACHE

HIMARS

CHINOOK

Blackhawk

A2C2S APKWS

PHOENIX

FIREFINDER (Q37)

PLS

BSM

SHORAD

Engineer Vehicle

CBRNRS

INTEL ACS JTAGS TES UAV-CL IV-b

C2 ADOCS

ADSSI AFATDS AMDWS A2C2S ASAS BCS3 BFT C2PC DMS-A DTSS FAAD-C3 FBCB2 GCCS-A IDM IMETS JC2 TAIS PAFCS MCS MIP

MANEUVER APACHE APKWS JCM

AIR DEFENSE ATACMS MEADS SLAMRAMM SHORAD JLENS LLAPI

FIRE SUPPORT ADLER FIREFINDER-Q37 GMLRS HIMARS PROFILER PHOENIX MLRS

LOGISTICS BSTF CLOE PLS MSD

MOB/SURV BSM BLACKHAWK CBRNRS CHINOOK Engineer vehicle HMEE REBS MONGOOSE

GCSS-A

TES

UAV-CL IV -b

Soldier System

Internal Interfaces

CAMEL

HIPPO

TEP

DCGS-A CHIMS

Land Warrior

LWP

FRS

LHS FUEL FARM

AMPS/JMPS

HEMTT

HMMWV

AAFARS

PLST

FIREFINDER (Q36)

SentinelTC-AIMS II

Logistics AAFARS CAMEL FMTV HEMTT HMMWV HMMWV M1114 HIPPO LHS FUEL FARM LWP MAINTENANCE TRUCK/FRS PLST TEP TC-AIMS II

C2 AMPS/JMPS

Sentinel

INTEL DCGS-A CHIMS

FIRE SUPPORT FIREFINDER (Q36) IMS NLOS-LS

MANEUVER

LAND WARRIOR SOLDIER SYSTEM

FMTV

HMMWV M1114

UAV CL IV ASTAMIDS / EO/IR Tactical SIGINT PAYLOAD UAV –SAR/GMTI

NETWORK ADSI BVTC CLOE DCTS GPS JTRS1 JTRS5 JWARN LFED MC4 NCES PKI STEPS TELEPORTS WIN-T

LETHALITY ACSW AIRBURST MUNITION ACSW KE MUNITION ACSW TRAINING MUNITION CKEM Electronic Time Fuse EXCALIBUR MACS MOFA NON-LETHAL 155mm PGMM Training Unique Ammo MK-44 AMMO 30 mm AIRBURST MK-44 AMMO 30 mm KE MK-44 AMMO 40 mm AIRBURST MK-44 AMMO 40 mm KE MRM/ERM

MGV ACSW CED FCS–Non FCS CID HTI-FLIR LIGHTWEIGHT120MM cannon (Pending) MFCS MK-44 PROPHET JCAD JSLSCAD JBPDS JBSDS

SOLDIER HSTAMIDS LLDR MK VII RADIAC SET Soldier to FCS CID Soldier to Soldier CID

UGV ARV(L) JAVELIN MULE GSTAMIDS

TRAININGATIA

CCTTCTIADLSOneSAFOneTESS

ExternalSystems and Interfaces

Future Combat System (FCS)

The Working Conditions Have Changed•Compelling urgency – everything is

accelerated in fight against terrorism•Doing business in the battle space•Deployment of personnel leaves home

force shorthanded•Unprecedented level of support needed for

hurricane Katrina response•Constant threat of oversight and second-

guessing decisions•High media attention

The Acquisition Rules Have Changed

•Years of acquisition reform (1990’s)•Commercial items and complex services•Larger task orders with less transparency•Organization conflicts of interests• Interagency contracting•More outsourcing (competitive sourcing)•Expanded socio-economic programs•Buy American and Buy America

The Supply Base Has Changed

• Industrial base consolidation•Partnerships and teaming•Global competition has increased•Strategic sourcing•More eBusiness•More competition at 2nd and 3rd tier• Increased OCI challenges

National Imperatives Driving Changes

Domestic Economics - Debt, Medicare, Social Security, Supplementals, Trade Balance

Threat Changes - Asymmetric warfare (bio, cyber, IEDs); world-wide terrorism; weapons proliferation; rogue nuclear states

New Missions - Homeland defense; missile defense; counterinsurgency; stability and reconstruction

Warfighting Changes - Netcentric Warfare; Systems-of-Systems; Joint and coalition operations

Defense Budget Shifts - From Equipment to Personnel, O&M and Homeland Security

Technological Changes - Integrated data; open-sources; bio, nano, robotics, high-energy lasers, etc.

Industrial Changes - Horizontal & vertical integration; commercial high-tech advances

Globalization - Rapid spread of Technology; multinational firms; foreign competition

Acquisition Workforce - Aging; wrong skill mix; training needs; competition for skilled people

Recent “Scandals” - Druyun, Cunningham, Abramoff, etc.

This All Adds Up To Risk!

•There is more work, it is more complex, and it must be acquired faster than ever.

•Workforce downsizing, expert class retiring, while expectations and oversight increases.

•Rules are more flexible, actions are less transparent.

1. The Federal acquisition workforce remains a major challenge.• Shortage of skilled labor is not unique to our

profession, industries or employers.• Cannot replace ‘brain drain’ fast enough.• Workload will remain.• Training funds get cut routinely.• Alternative workforce solutions required.

– Eliminate barriers to hiring external candidates.– Eliminate barriers to re-hiring annuitants.– Increase use of alternative work arrangements and

compensation plans.– Increased telework.

2. The political pressures on the Federal procurement system will increase short term.• Mission will not be reduced soon.

– Replacing war equipment and materials.– Aging systems (refueling tankers, etc.)– Insatiable appetite for improved warfighting technologies.

• Dozens of contracting oversight bills in committees.• Increased attention on blended or multi-sector

workforce.• Attention on GSA Administrator, SBA effectiveness,

NASA IG, HUD Administrator, DHS acquisition organization and DoD systems acquisitions.

3. Financial pressures will force discretionary budget reductions beginning in next five years.• The Fiscal Wake-Up Tour being conducted by the

Comptroller General.• We spent less of our budget on defense in 2006 than

in 1986 or 1966, as a % of GDP• Discretionary spending is down from 67% in 1966 to

38% in 2006.• Budget deficits of $928 billion in last two years.• Rising entitlement (health care) costs is the main

cause.“Saving Our Future Requires Tough Choices Today”

GAO-07-739CG April 4, 2007

4. Regulatory changes likely:

• Reduce number of contracts awarded non-competitively.

• Eliminate practice of Lead Systems Integrator (LSI).• Increase use of fixed-price contracts.• Increase small business contracting goals.• Restrictions on contracting with entities in tax default.• Guidance on use of award fees.• Emphasis on using hybrid contracts containing

multiple incentive types.• Restrictions on outsourcing, new requirements to in-

source.• Increase acquisition workforce development programs.

NCMA Strategic Objectives 2007-2008

•Develop the Next Generation of Contract Management Professionals

• Increase Professional Advocacy•Reach More People in the Federal Contracting

Community•Develop professional standards

Develop the Next Generation of Contract Management Professionals

1. Introduce undergraduate students to the CM profession and involve them in NCMA by offering student memberships, student chapters, and student programs.

2. Increase the preparedness for candidates entering the CM workforce by increasing undergraduate programs containing CM and related curriculum, and by publishing a standard CM curricula and promoting the program to universities.

3. Accelerate the development of new professionals through a leadership development program.

4. Increase research and writing opportunities for new professionals and students through the Macfarlan program.

Increase Professional Advocacy

1. Improve perception of the contract management profession in industry, the government (including Congress), the press, and the general public, through an active public relations program.

2. Increase recognition of NCMA in industry, the government (including Congress), the press, and the profession, through an active public relations program.

3. Increase membership participation in advocacy activities through bilateral electronic communications and events.

Reach More People in the Federal Contracting Community1. Expand the number of programs to serve the federal

community, including education, certification, conference, publication, and other types of programs.

2. Increase communication and involvement of the senior executive cadre within the profession.

3. Utilize education partners, advertisers and corporate sponsors to reach new people in the federal community.

Develop Professional Standards

1. Baseline existing professional standards for government and industry organizations; benchmark standards and processes of other professions.

2. Reach consensus among stakeholders (chapters, BOA, BOD, academia) on Generally Accepted Contract Management Practices (GACMP).

3. Align professional standards and certification processes.

Communities of Practice

•More ways to connect to the information, people, and tools that you need.

•Launch April 2008:– Task order and Schedule Contracting– Small Business Contracting– Performance Based Acquisition

•Online features: e-courses, discussion forums, listservs, blogs, expert networks, e-newsletters, website, research archives

•Meetings at World Congress, new educational conferences, quarterly magazines

New Program!

What you can do.

•Lead by your actions.•Be a “chief courage officer”•Stay informed on the issues.•Have opinions, and engage in the

discussion.•Participate in continuous learning. •Demonstrate your competency by getting

certified.•Resist cynicism and skepticism.•Participate in your NCMA chapter.Engage in your profession!

NCMA21740 Beaumeade Circle, Suite 125

Ashburn, VA 20147

Neal J. Couture, CPCMExecutive Director

couture@ncmahq.org1-800-344-8096 x423

571-382-1123703-448-0939 (fax)

www.ncmahq.org