![NASA Contracting: Where Are We Going? Bill McNally Assistant Administrator for Procurement National Aeronautics and Space Administration www.nasa.gov [email_address] Project Management Challenge February 9, 2011](https://image.slidesharecdn.com/mcnally-111021145908-phpapp01/85/Mc-nally-1-320.jpg)
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- 1. NASA Contracting: Where Are We Going? Bill McNally Assistant Administrator for Procurement National Aeronautics and Space Administration www.nasa.gov [email_address] Project Management Challenge February 9, 2011
- 2. Overview The President’s March 4, 2009, Memo on Contracting Improving Acquisition NASA’s Procurement Tenets NASA’s Strategic Acquisition Framework Challenges
- 3. President’s Memo – Highlights Focus of the Memo Strive for an open and competitive process Agencies must have the flexibility to tailor contracts to carry out their missions and achieve policy goals Preference for fixed price type of contracts Appropriate use and oversight of cost type contracts Agencies must have sufficient capacity to manage and oversee the contracting process from start to finish Inherently governmental functions must be performed by the Agency and not outsourced (use of support contractors) Not a huge issue at NASA
- 4. Improving Government Acquisition Administration’s goal is to save $40 billion a year through better acquisition practices Ending contracts that are no longer essential Recruiting the acquisition workforce necessary to negotiate more favorably priced contracts and manage costs more effectively Developing strategic acquisition approaches to leverage buying power Increasing the use of technology to control contracts Reengineering ineffective business processes and practices OMB Memorandum of July 29, 2009
- 5. Reduce “High Risk Contracting Authorities” Using FY 2008 achievements as a baseline Reduce by at least 10% the share of dollars obligated through new contracts in FY 2010 that Are awarded noncompetitively Receive only one bid or Are cost reimbursement or Time and Material
- 6. Acquisition Savings Plan Develop a plan to save 7% on contract spending by the end of FY 2011 Save 3.5% of baseline contract spending in FY 2010 Save 3.5% of baseline contract spending in FY 2011 Plan must identify both projected savings and steps to achieve savings Each Center submitted its Savings Plan to implement the memorandum NASA submitted its Savings Plan to OMB on November 2, 2009
- 7. Acquisition Savings Plan (Cont’d.) Highlights of NASA’s Plan: Utilize Strategic Acquisition approach Improve Cost Estimating and EVM Restructure contracts Improve Cost/Price analysis and negotiations “ Living Plan” being managed by HQ Office of Procurement, Program Operations Division Discussed at procurement leadership meeting to achieve cross-fertilization of ideas, peer reviews, standardization Semi-annual call to NASA Centers for update Progress briefed to OMB on November 8, 2010
- 8. Procurement Tenets Purpose August 1, 2008, the Procurement Tenets memo was signed by the Chief Acquisition Officer endorsing the Tenets and expecting the NASA Centers to start using them 85% of NASA’s budget is obligated for procurements so NASA must maximize its buying power The Procurement Tenets are a set of principles for a NASA way of doing business with the objective of increasing NASA’s Return on Investment The Procurement Tenets are ancillary to the other Federal and Agency regulations, policies, and core values. Implement based on the circumstances for each acquisition
- 9. Procurement Tenets – Purpose (Cont’d.) Each Tenet shall be addressed by Headquarters, project, program, and contract managers in their acquisition and procurement strategies, processes, and procedures
- 10. The Nine Procurement Tenets Integrated Strategies : involve all functional authorities early and throughout the planning process Turn Contract Upside-Down : in the planning process, determine the right number of prime contracts and understand the supply chain of a requirement Maximize and Optimize Competition : establish and take advantage of a competitive environment to meet NASA requirements Requirements : clearly specify what is to be acquired; zero-based approach in developing requirements Streamline : remove non-value added steps and requirements that do not support the desired outcomes
- 11. The Nine Procurement Tenets (Cont’d.) Performance Incentives : use to enhance desired outcomes Merge NASA’s and Industry’s Core Expertise : define NASA and industry’s role with research, design, development, and integration for projects Common NASA Contracts and Strategies : common face to industry ; a NASA contract: not a Center or mission directorate contract Contract Cost : reduce the cost and cost risk for procurements; move towards Firm Fixed Price contracts after development and on repetitive service contracts
- 12. Contract Type Reducing Cost and Cost Risk for Procurements Cost risk for each requirement shall be properly allocated between NASA and industry Competition and the cost of managing contracts are enhanced by the appropriate allocation of cost risk Development Phase: NASA takes cost risk Use appropriate tools to manage contracts Production and Operations Phases: industry assumes risk Firm Fixed Price Industry earns appropriate profit for assuming cost risk
- 13. Contract Type (Cont’d.) NASA’s Culture of Award Fee Because so much of what we do is development, Award Fee has become ingrained In the past, some things with little or no cost risk were done Award Fee – comfort zone Moving to Firm Fixed Price – where no high risk or uncertainty Shift contract to Firm Fixed Price as soon as possible The President’s Memo and the Tenets are pointing us in the same direction. NASA also applies an Agency acquisition strategy framework to manage its high risk environment.
- 14. IEMP * IEMP implements requirements Training Structure, award, monitor, and manage contracts Collect data to assess contract performance Training Contract Management * Acquisition Policy * (1000.0, 7120.4, 7120.5, 7123.1, FAR, NASA FAR Sup.) Project Management * Cost Estimating * Other… Planning, execution, and performance assessment (cost, schedule, technical) Key decision points (entry and exit criteria and metrics) CADRe (LCCE) Training Disciplined cost estimating processes Cost Analysis Data Requirements (CADRe) (ICE) Training * Directly addressing GAO High Risk List Policy Implementation Agency Acquisition Strategy GAO High Risk List NASA Contract Management
- 15. Strategic Acquisition Framework Acquisition Strategy Planning Meeting (ASP) Aligns decision with the budget cycle Generates approval for a new or substantially changed program or major project, triggered by Agency requirements or legislative direction Acquisition Strategy Meeting (ASM) Validates that program level acquisition strategy can be supported by budget, schedule, and manpower Ensures that first order program planning is in place (WBS, budget, risk assessment, schedule, etc.) Validates make/buy rationale and any partnership decisions
- 16. Strategic Acquisition Framework (Cont’d.) Procurement Strategy Meeting (PSM) Ensures that specific acquisitions are ready to proceed Focus is on procurement process, not strategic planning
- 17. Challenges Executing affordable, world-class missions – for NASA and for industry implementing high risk contracts Developing thorough understanding of technical requirements Establishing credible cost estimates and sufficient life-cycle budgets to meet mission objectives Avoiding over-commitment to new initiatives Controlling costs through committed, strong program management
- 18. Challenges (Cont’d.) Reducing Procurement Cost and Risk Improve the analysis behind our strategy and business decisions (contract type, conducting source selections, etc.) Must get back into analysis of the cost, risk, marketplace in choosing contract type, conducting competitions, and other strategy decisions Improving Cost/Price Analysis Must ensure paying fair and reasonable price for services/supplies procured Reduces risk for sustainable protest in competitions
- 19. NASA’s Procurement Tenets are in line with the President’s and OMB’s Memos and guide us in meeting the Agency’s challenges.
Editor's Notes
- #21: NASA Presentation Sign-Off Page