NCMA: What’s In it For You!

Twin Cities ChapterApril 19, 2011

Karen L. Wilson, J.D., LLM, Fellow President

National Contract Management Association

NCMA – The First 50 Years• >150,000 people have joined as members.• >50,000 people have volunteered.• 120 chapters. • >100,000 people attended NES (since 1986).• >35,000 people attended national conferences (since 1961).• 400,000 Journals delivered (since 1966).• 540,000 copies of CM Magazine delivered (since 1977).• ~8,000 people have been certified (since 1976).• >6,000 people have taken e-courses (since 1998).• >75,000 audio-seminar participants (since 2004).• Facebook page, LinkedIn group, Twitter following - 2008.• First virtual conference 2009 – Small Business Contracting

CoP.• First virtual chapter – 2010 – 250 members!

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NCMA is Stronger Today Than Ever!

•>20,000 members!•FY2009-2010 was best financial year ever…>$750k

net gain!•Significant financial reserves and investments,

headquarters office building in Ashburn, VA!•World Congress continues to grow and excel…

>1600 participants July 2010!•Leading presence in social media.•Leading voice for the CM

profession….professionalism advocacy!

Megatrends Shaping CM Sphere

1. The demand for CM talent exceeds the supply.

2. The people doing CM work are defining ‘career’ differently.

3. Changes in the U.S. federal regulatory and budgetary environment will continue at a high pace for foreseeable future.

NCMA Has a New Strategic Plan!Mission• NCMA’s mission is to advance the contract management profession.

Vision For The Profession• Contract management will be viewed by all organizations – public and private –

as an essential business management function that directly contributes to organizational success.

• People will recognize contract management is a challenging and rewarding profession, and will prepare for and seek out positions in the profession.

• Universities will provide undergraduate and graduate degree programs and courses designed to prepare students for entry into or advancement in the contract management profession.

Vision For The Organization• NCMA will lead in defining the standards and the body of knowledge for the

contract management profession.• NCMA will provide tools that enable the entry, development, and advancement

of all CM professionals.• NCMA will be a model for not-for-profit individual membership organizations,

recognized for innovation, effective and efficient operations, and agile responsible governance.

Strategic Objectives

1.Develop and institutionalize an effective advocacy and outreach program that provides a neutral forum for the profession.

The desired outcomes for this objective are public recognition that CM is an essential business management function, and public recognition that NCMA is the preeminent neutral forum for contracting professionals.

2.Create standards for the profession that are widely recognized and adopted.

The desired outcome for this objective is for NCMA's standards to be accepted across multiple domains (Government, Industry, Academia) as a framework for best practices.

Strategic Objectives

3. Create programs and services to help people enter into and progress within the contract management profession.

The desired outcome is for the contract management profession to be recognized as a career field in which education, professional development and advancement opportunities exist for long-term practitioners as well as recent entrants into the profession.

4. Enhance and develop program delivery techniques to improve value for existing and potential members.

The desired outcome for this objective is that NCMA will have multiple program and service delivery methods to maximize member value and engagement opportunities.

Environment Affecting Acquisition Policy• Carter and Gates Efficiency Initiatives.Carter and Gates Efficiency Initiatives.

– Competition.Competition.– Reducing services contracts.Reducing services contracts.– Improving tradecraft in services.Improving tradecraft in services.– Reducing non-productive processes. Reducing non-productive processes.

• FY11 NDAA provisions.FY11 NDAA provisions.

• FY11 and FY12 budgets and process.FY11 and FY12 budgets and process.

• Evolving issues on:Evolving issues on:– OCIOCI– Insourcing and work reserved for Federal employeesInsourcing and work reserved for Federal employees– Competition and Life Cycle ManagementCompetition and Life Cycle Management

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Adopted recommendations on March 14, 2011.Adopted recommendations on March 14, 2011.

• Defense-wide savings of $78 billion across the FYDP.Defense-wide savings of $78 billion across the FYDP.

• Directed a reduction in service support contracts by $6 billion. Directed a reduction in service support contracts by $6 billion.

• Freeze on civilian personnel levels and pay ($25 billion). Freeze on civilian personnel levels and pay ($25 billion).

• Services developed additional savings of $100 billion across FYDP.Services developed additional savings of $100 billion across FYDP.• Includes additional contractor support reductions of $6.7 Includes additional contractor support reductions of $6.7

billionbillion• $98 billion reinvested ($28 billion for higher operating costs)$98 billion reinvested ($28 billion for higher operating costs)

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Gates Efficiency DirectiveGates Efficiency Directive

• Challenge – Achieve annual savings of 2-3% ($8-12B) on a base of Challenge – Achieve annual savings of 2-3% ($8-12B) on a base of $400 billion in contracted dollars to match DoD overhead reduction $400 billion in contracted dollars to match DoD overhead reduction initiatives ordered by Secretary Gates in May 8 Eisenhower Library initiatives ordered by Secretary Gates in May 8 Eisenhower Library speech.speech.

• USD (AT&L) meetings with industry at CSIS on June 28 and July 15.USD (AT&L) meetings with industry at CSIS on June 28 and July 15.

• Focus on new contracts and implementation over time.Focus on new contracts and implementation over time.

• Follow-up, strongly-worded implementation memo on November 3.Follow-up, strongly-worded implementation memo on November 3.

• No savings from these initiatives included in Gates’ broader effort.No savings from these initiatives included in Gates’ broader effort.

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Carter September 14 Memo on Better Buying PowerCarter September 14 Memo on Better Buying Power “Doing more without more” – “with less”? “Doing more without more” – “with less”?

Promote Real CompetitionPromote Real Competition

Present a competitive strategy at each program milestonePresent a competitive strategy at each program milestone

Remove obstacles to competitionRemove obstacles to competition

- Allow reasonable time to bid - Allow reasonable time to bid

- Require non-certified cost and pricing data on single offers- Require non-certified cost and pricing data on single offers

- Assad Nov. 24, 2010 memo.- Assad Nov. 24, 2010 memo.

- Require open system architectures and set rules for acquisition of - Require open system architectures and set rules for acquisition of

technical data rightstechnical data rights

- New tech data interim rule pending.- New tech data interim rule pending.

Increase dynamic small business role in defense marketplace competitionIncrease dynamic small business role in defense marketplace competition

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Guidance RoadmapGuidance Roadmap

Incentivize Productivity & Innovations in Industry Incentivize Productivity & Innovations in Industry

Reward contractors for successful supply chain and indirect expense Reward contractors for successful supply chain and indirect expense managementmanagement

- New weighted guidelines under consideration- New weighted guidelines under consideration

- Fee on fee issue- Fee on fee issue

Increase the use of FPIF contract type where appropriate using a 50/50 Increase the use of FPIF contract type where appropriate using a 50/50 share line and 120 percent ceiling as a point of departureshare line and 120 percent ceiling as a point of departure

Adjust progress payments to incentivize performanceAdjust progress payments to incentivize performance

Extend the Navy’s Preferred Supplier Program to a DoD-wide pilot Extend the Navy’s Preferred Supplier Program to a DoD-wide pilot

Reinvigorate industry’s independent research and development and protect Reinvigorate industry’s independent research and development and protect the defense technology basethe defense technology base

- DFARS March 2 Proposed rule on reporting efforts above $50K- DFARS March 2 Proposed rule on reporting efforts above $50K

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Guidance RoadmapGuidance Roadmap

Improve Tradecraft services AcquisitionImprove Tradecraft services Acquisition

Create a senior manager for acquisition of services in each component, Create a senior manager for acquisition of services in each component,

following Air Force example – following Air Force example – CompletedCompleted

Adopt uniform taxonomy for different types of servicesAdopt uniform taxonomy for different types of services

Address causes of poor tradecraft in services acquisitionAddress causes of poor tradecraft in services acquisition

- Assist users of services to define requirements and prevent creep- Assist users of services to define requirements and prevent creep

via requirements templatesvia requirements templates

- Assist users of services to conduct market research to support - Assist users of services to conduct market research to support

competition and pricingcompetition and pricing

- Enhance competition by requiring more frequent re-competes of - Enhance competition by requiring more frequent re-competes of

knowledge-based services contractsknowledge-based services contracts

- Limit the use of time and materials and award fee contracts for- Limit the use of time and materials and award fee contracts for

servicesservices

Require that services contracts exceeding $1B contain cost efficiency objectivesRequire that services contracts exceeding $1B contain cost efficiency objectives

Increase small business participation in providing servicesIncrease small business participation in providing services

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Guidance RoadmapGuidance Roadmap

Reduce Non-Productive Processes and Bureaucracy Reduce Non-Productive Processes and Bureaucracy

Reduce the number of OSD-level reviews to those necessary to support major Reduce the number of OSD-level reviews to those necessary to support major investment decisions or to uncover and respond to significant program investment decisions or to uncover and respond to significant program executive issues executive issues

Eliminate low-value-added statutory processesEliminate low-value-added statutory processes

Reduce by half volume and cost of internal and congressional reportsReduce by half volume and cost of internal and congressional reports

Reduce non-value-added overhead imposed on industryReduce non-value-added overhead imposed on industry

- Request for information by 3/31/11 in - Request for information by 3/31/11 in Federal Register.Federal Register.

- DAU DoD-Industry meeting on April 21.- DAU DoD-Industry meeting on April 21.

Align DCMA and DCAA processes to ensure work is complementaryAlign DCMA and DCAA processes to ensure work is complementary

Increase use of Forward Pricing Rate Recommendations (FPRRs) Increase use of Forward Pricing Rate Recommendations (FPRRs)

to reduce administrative coststo reduce administrative costs

- January 4 DPAP memo on DCAA-DCMA alignment.- January 4 DPAP memo on DCAA-DCMA alignment.

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Guidance RoadmapGuidance Roadmap

• HR 6523 , “The Ike Skelton National Defense Authorization Act for HR 6523 , “The Ike Skelton National Defense Authorization Act for Fiscal Year 2011”.Fiscal Year 2011”.

• Enacted on January 7, 2011 as P.L. 111-383.Enacted on January 7, 2011 as P.L. 111-383.

• 65 acquisition and cyber security policy provisions in the bill.65 acquisition and cyber security policy provisions in the bill.

• No separate version passed in Senate prior to completion of No separate version passed in Senate prior to completion of “conference” bill.“conference” bill.

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FY11 NDAA HighlightsFY11 NDAA Highlights

– Section 321. Technical Amendment to requirements for service contract inventory.• Requires to DoD to collect direct labor hours and associated cost data from services contractors to

support the preparation of the annual services contract inventories in the services and defense agencies.

– Section 323. Prohibition on establishing goals or quotas for conversion of functionsSection 323. Prohibition on establishing goals or quotas for conversion of functions

to performance by Department of Defense civilian employees.to performance by Department of Defense civilian employees.• Prohibits use of goals or quotas in decisions to in-source work unless such goal or targets is based

on considered research and analysis.• Requires use of DTM 09-007 cost comparison methodology in cases where cost is the determining

factor for in-sourcing decisions.• Excludes decisions regarding acquisition functions or other critical functions from the requirement

to use a cost comparison methodology.

– Section 806. Requirements for information relating to supply chain risk.Section 806. Requirements for information relating to supply chain risk.• Provides broad authority for DoD to exclude a contractor or subcontractor from providing items Provides broad authority for DoD to exclude a contractor or subcontractor from providing items

under a a contract or subcontract in cases where the contractor or subcontractor is deemed to be under a a contract or subcontract in cases where the contractor or subcontractor is deemed to be a risk a s source of sabotage or other subversion by a foreign adversary.a risk a s source of sabotage or other subversion by a foreign adversary.

• Each use of the authority requires the joint recommendation of the USD(AT&L) and the DoD CIO on Each use of the authority requires the joint recommendation of the USD(AT&L) and the DoD CIO on the basis of a risk assessment by the USD (Intel) as well notification to appropriate congressional the basis of a risk assessment by the USD (Intel) as well notification to appropriate congressional committees. committees.

• The use of the authority decision is neither subject to a protest nor otherwise legally actionable .The use of the authority decision is neither subject to a protest nor otherwise legally actionable .• DoD is DoD is notnot required to provide any details to an affected source or to the prime contractor in the required to provide any details to an affected source or to the prime contractor in the

case of a subcontractor. case of a subcontractor.

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– Section 811. Cost estimates for program baselines and contract negotiations for major defense acquisition and major automated information systems programs.

• Removes the 80 % confidence level “gold standard” for cost estimates and replaces it with a requirement to develop and provide to Congress a rationale for any confidence level used.

• Prohibits using cost estimates developed for baseline descriptions from being used for contract negotiations or other purposes requiring the obligation of funds.

– Section 824. Guidance relating to rights in technical data.Section 824. Guidance relating to rights in technical data.• For purposes of determining rights in technical data, requires that IR&D funding be

considered as Federal funding in any case of an item that ,but for contractor IR&D funding ,would be considered to have been developed solely at government expenses .

– Section 825 . Extension of sunset date for certain protests of task and delivery Section 825 . Extension of sunset date for certain protests of task and delivery order contractsorder contracts . .

• Extends from May 27, 2011 to September 30, 2016 the authority for interested Extends from May 27, 2011 to September 30, 2016 the authority for interested parties to lodge GAO protests on task and delivery order decisions by DoD.parties to lodge GAO protests on task and delivery order decisions by DoD.

• Civilian agency contracts are not covered under the protest extensionCivilian agency contracts are not covered under the protest extension

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– Section 845. Requirement for entities with facilities clearances that are not under Foreign Ownership Section 845. Requirement for entities with facilities clearances that are not under Foreign Ownership Control or Influence risk mitigation.Control or Influence risk mitigation.

• Requires the Secretary of Defense to Requires the Secretary of Defense to develop a plan to ensure that covered entities with facility clearances but not under foreign ownership control or influence risk mitigation procedures maintain policies and procedures that meet requirements under the national industrial security program.

• Requires the Secretary to consider Requires the Secretary to consider whether or not such entities should be required to establish government security committees similar to those required for companies that are subject to foreign ownership control or influence mitigation measures.

– Section 863. Requirement for the acquisition of services.Section 863. Requirement for the acquisition of services.

• Requires the Secretary of Defense to ensure that each of the military departments and defense agencies has a Requires the Secretary of Defense to ensure that each of the military departments and defense agencies has a process in place to identifying, assessing, reviewing , and validating requirements for the acquisition of services .process in place to identifying, assessing, reviewing , and validating requirements for the acquisition of services .

– Section 893. Contractor business systems.

• Explicitly applies a materiality standard in the definition of a “significant deficiency” which would be the basis for a Explicitly applies a materiality standard in the definition of a “significant deficiency” which would be the basis for a determination of system inadequacy in the provision.determination of system inadequacy in the provision.

• In the event of a system or systems deficiency, limits the total of withholds to no more than 10 percent of payments In the event of a system or systems deficiency, limits the total of withholds to no more than 10 percent of payments under covered contracts. under covered contracts.

• A fixed-price contract is not a covered contract , but unlike under the DoD rule, there is no dollar value threshold in A fixed-price contract is not a covered contract , but unlike under the DoD rule, there is no dollar value threshold in the definition of a covered contract (THIS IS LIKELY TO BE AMENDED). the definition of a covered contract (THIS IS LIKELY TO BE AMENDED).

• Requires a DoD official to work directly with a contractor to develop a corrective action plan for significant Requires a DoD official to work directly with a contractor to develop a corrective action plan for significant deficiencies and requires any withholds to be reduced if the contractor agrees to adopt the corrective action plan deficiencies and requires any withholds to be reduced if the contractor agrees to adopt the corrective action plan and follows it.     and follows it.     

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• Deal pending on FY11 CR.Deal pending on FY11 CR.

– Fully funds DoD through September 30. Fully funds DoD through September 30. – Short-term CR in place until midnight April 15. Short-term CR in place until midnight April 15. – Passage of long-term CR in House and Senate expected by tomorrow night. Passage of long-term CR in House and Senate expected by tomorrow night. – FY11 Defense base appropriations bill down $18 billion from request ($531.1 billion to $513 FY11 Defense base appropriations bill down $18 billion from request ($531.1 billion to $513

billion) billion)

• Debt ceiling vote enters the picture (May 15) . Debt ceiling vote enters the picture (May 15) .

• Timing of FY 12 budget and appropriations process uncertain. Timing of FY 12 budget and appropriations process uncertain. – HASC marking on schedule.HASC marking on schedule.– Further defense cuts by Congress in FY12 request likely.Further defense cuts by Congress in FY12 request likely.– No cuts to Defense FY12 request reflected in Ryan FY12 budget resolution, but Gates’ Efficiency No cuts to Defense FY12 request reflected in Ryan FY12 budget resolution, but Gates’ Efficiency

cuts of $178 Billion (with services reinvestment of $98 Billion) over the FYDP assumed. cuts of $178 Billion (with services reinvestment of $98 Billion) over the FYDP assumed.

• Per DoD (Robert Hale), no supplemental planned for LibyaPer DoD (Robert Hale), no supplemental planned for Libya– $550 million so far. $550 million so far. – Reprogramming the option of choiceReprogramming the option of choice

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FY11 and FY12 budget processFY11 and FY12 budget process

FY11 defense budget detailsFY11 defense budget details

• Major cuts and omissionsMajor cuts and omissions– $9 billion across the O&M accounts$9 billion across the O&M accounts– $2 billion – JSF$2 billion – JSF– $2 billion – civilian pay freeze $2 billion – civilian pay freeze – $2 billion - rescissions of prior year funding$2 billion - rescissions of prior year funding– No funding for second JSF engine No funding for second JSF engine

• Some adds Some adds – $350 million - defense health care$350 million - defense health care– $20 million – cyber security pilots $20 million – cyber security pilots

FY10 FY11 PB FY11 CR FY12 PB

Base $507.4B $531.1B $513.0B $538.2B

MilCon $ 23.3B $ 18.7B $ 16.6B $ 14.8B

OCO $162.0B $159.0B $157.8B $118.0B

Total $692.7B $708.8B $687.4B $671.0B

• GAO protest and Court of Federal Claims decisionsGAO protest and Court of Federal Claims decisions– Impaired objectivity (GAO Alion decision – January 2006).Impaired objectivity (GAO Alion decision – January 2006).– Biased ground rules.Biased ground rules.– Unequal access to information.Unequal access to information.

• Acquisition Advisory Panel report – January 2007Acquisition Advisory Panel report – January 2007– ““Uniform regulations providing guidance to contracting officers and contracting agencies could Uniform regulations providing guidance to contracting officers and contracting agencies could

help to reduce the frequency of failures to identify and mitigate OCIs.”help to reduce the frequency of failures to identify and mitigate OCIs.”– Recommendation for uniform guidance and the use of standard contract clauses and policies Recommendation for uniform guidance and the use of standard contract clauses and policies

prescribing use.prescribing use.– OFPP advanced notice of proposed rulemaking following the AAP construct on March 26, 2008. OFPP advanced notice of proposed rulemaking following the AAP construct on March 26, 2008.

• DSB Task Force: Creating an Effective National Security Industrial Base DSB Task Force: Creating an Effective National Security Industrial Base for the 21for the 21stst Century – July 2008 Century – July 2008

– ““Clusters of these conflicts (OCI’s in the product and service provider side) in a market area are Clusters of these conflicts (OCI’s in the product and service provider side) in a market area are not inherently resolvable through firewalls or similar mitigations. Recusals and other structural not inherently resolvable through firewalls or similar mitigations. Recusals and other structural solutions are necessary.” solutions are necessary.”

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Organizational Conflicts of InterestOrganizational Conflicts of Interest

• Proposed broad DFARS rule published on April 22, 2010.Proposed broad DFARS rule published on April 22, 2010.

• Narrow final DFARS rule published on December 29, 2010. Narrow final DFARS rule published on December 29, 2010. – Implements section 207 of WSARA for Major Defense Acquisition Programs.Implements section 207 of WSARA for Major Defense Acquisition Programs.

• OFPP about to issue proposed rule updating FAR 9.5.OFPP about to issue proposed rule updating FAR 9.5.– Likely to incorporate case law and GAO decisions in three broad areas. Likely to incorporate case law and GAO decisions in three broad areas.

• Impaired objectivity.Impaired objectivity.• Biased ground rules.Biased ground rules.• Unequal access to information.Unequal access to information.

– Expected to allow more flexibility than DFARS rule for impaired objectivity cases. Expected to allow more flexibility than DFARS rule for impaired objectivity cases. – Impact on existing agency practices unclear. Impact on existing agency practices unclear. – OCI within the confines of a program vs. OCI within an agency across programs. OCI within the confines of a program vs. OCI within an agency across programs.

• Industry consensus on issue remains difficult to achieve.Industry consensus on issue remains difficult to achieve.– Northrop Grumman opposed to any mitigation, for example. Northrop Grumman opposed to any mitigation, for example.

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Organizational Conflicts of InterestOrganizational Conflicts of Interest

• Major DoD insourcing effort in 2008—2010.Major DoD insourcing effort in 2008—2010.– Increase funding for approximately 33.4K new civilian manpower authorizations, 10,000 of which are for the Defense Increase funding for approximately 33.4K new civilian manpower authorizations, 10,000 of which are for the Defense

acquisition workforce.acquisition workforce.

• DTM 09-007 “Estimating and Comparing the Full Costs of Civilian and Military Manpower and DTM 09-007 “Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support” posted February 2, 2010Contract Support” posted February 2, 2010

– Methodology biased in favor of Government performance.Methodology biased in favor of Government performance.– Individual employee focused rather than capability focused.Individual employee focused rather than capability focused.– Expires on September 30, 2011.Expires on September 30, 2011.

• Gates abandoned policy in August 9 Efficiency InitiativeGates abandoned policy in August 9 Efficiency Initiative– ““The savings did not pencil out.” The savings did not pencil out.” – SecArmy reservation of insourcing decision authority on 02-03-11SecArmy reservation of insourcing decision authority on 02-03-11

• New OFPP proposed policy letter pending on work reserved for Federal employees New OFPP proposed policy letter pending on work reserved for Federal employees imminent.imminent.

– Inherently Governmental Functions, Critical Functions, and Critical Positions per section 321 of the FY09 NDAA. Inherently Governmental Functions, Critical Functions, and Critical Positions per section 321 of the FY09 NDAA.

• Hill looking to move to a more stable, balanced policy on blended workforce Hill looking to move to a more stable, balanced policy on blended workforce

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Insourcing Sea Change?Insourcing Sea Change?

• Performance-based Logistics.Performance-based Logistics.

– DoD views evolving.– Section 805 of the FY10 NDAA on PSI/PSM .

• Hill interest in O&S and life cycle cost management increasing. Hill interest in O&S and life cycle cost management increasing.

– Implementation of mandates in WSARA section 202 on life cycle competition Implementation of mandates in WSARA section 202 on life cycle competition • Driving sustainment efficiencies into early program decision-makingDriving sustainment efficiencies into early program decision-making

– Long-awaited LMI study on depot issues sent to Congress in February.Long-awaited LMI study on depot issues sent to Congress in February.• Interest from House Armed Services Committees in moving beyond the traditional debate but no concrete Interest from House Armed Services Committees in moving beyond the traditional debate but no concrete

proposals yet. proposals yet. • Industry proposing changes including moratorium on 50-50.Industry proposing changes including moratorium on 50-50.

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Systems Support and Depot PolicySystems Support and Depot Policy

FY12 budget process underway. FY12 budget process underway. – HASC FY12 NDAA committee markup to be finished on May 11 with floor action from May 23-June HASC FY12 NDAA committee markup to be finished on May 11 with floor action from May 23-June

3 (open rule).3 (open rule).– Additional policy provisions with market impact likely.Additional policy provisions with market impact likely.

• Congressional oversightCongressional oversight– SASC Readiness Subcommittee.SASC Readiness Subcommittee.

• OFPP OCI proposed ruleOFPP OCI proposed rule..

• OFPP revised policy letter on work reserved for Federal employees.OFPP revised policy letter on work reserved for Federal employees. – HASC considering action to move to a more rational, integrated approach based on IGF, Critical HASC considering action to move to a more rational, integrated approach based on IGF, Critical

Functions, Critical Positions framework and restarting A-76. Functions, Critical Positions framework and restarting A-76.

• Revision of December 3 proposed rule on contractor business systems Revision of December 3 proposed rule on contractor business systems audits.audits.

– Examination of DCAA/DCMA policies and procedures by Congress.Examination of DCAA/DCMA policies and procedures by Congress.

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What’s Next?What’s Next?

What you can do?•Lead by your actions.•Stay informed on the issues.•Have opinions, and engage in the discussion.•Participate in continuous learning. •Demonstrate your competency by getting

certified.•Be a “chief courage officer”•Resist cynicism and skepticism.•Participate in your NCMA chapter – Be a Leader!

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Engage in your profession!