Yankovconferense 17 Nov 2005

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MINISTRY OF DEFENSE OF THE REPUBLIC OF BULGARIA
AFCEA-SOFIA CHAPTER CONFERENCE
MOD POLICY FOR DEFENSE ACQUISITION SYSTEM
IMPLEMENTATION
Presented by Col. Nikolay Yankov, Director of
the Armaments and Equipment Policy Directorate,
MOD 25 November 2005 Sofia
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Agenda

• Bulgarian Defense Acquisition System
• Defense Acquisition Strategy
• The Acquisition Cycle
• Procurement Policy
• Procurement and Acquisition Procedures
• MOD/ Defense Industry Relations
• Researches and Technologies
• Offset
• NATO Capability Areas Key Modernization
  Projects

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Bulgarian Force Management System
The Environment

• Vision
• Environmental Factors
• External
• Missions
• Allies
• Other
• Internal
• People
• Policies and Strategy
• National Security Concept
• Defense Policy
• National Military Doctrine
• Resources

Force Management
Required Operational Capabilities
Eight Force Imperatives
Doctrine
IDRMS
Acquisition
Structure
Personnel
Equipment
Training
Sustainment
Readiness
Infrastructure
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Defense Acquisition System (DAS) - Outline

• DAS is an integrated (MOD and GS) management
  system that translates required operational
  capabilities (ROCs) into affordable, reliable,
  and sustainable armaments, equipment, services,
  and infrastructure
• DAS planning, design, development, testing,
  contracting (procurement), production, deployment
  (fielding), integrated logistics support,
  disposal of systems, equipment, infrastructure,
  materiel or services to support military missions
• Main objective - to affordably develop, procure,
  and manage materiel, services and infrastructure
  to meet validated Mission Needs Statements
• DAS is based on a life-cycle management model
  that systematically manages the entire life of
  armaments, equipment, and infrastructure from
  concept development to disposal. The system
  establishes organizational responsibilities to
  manage the acquisition processes that produce
  products to provide operational capabilities
• DAS is to be fully integrated and linked with the
  other two systems of the Force Management System
  and with the existing logistics system

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Defense Acquisition System Elements

• MOD, GS Three Services Structures
• AEPD, Procurement Management Directorate,
  Military Infrastructure Directorate, Military
  Standardization, Quality and Codification
  Directorate, Agencies, etc.
• J-4, J-6, A-4, L-4, N-4, etc.
• Non-establishment Organizations
• Defense Acquisition Council
• Interagency Coordination Council (ETEC) on RD
• ETECs on Armaments, C4IEW and Military
  standardization
• Legal and Documentary Base

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Leading and Support Structures
Organizations Involved in the Acquisition Process
GOVERNMENT Council of Ministers
Minister of Defense
Defense Council
Defense Acquisition Council
Chief of GS
Deputy Minister
Council of Chiefs of Staffs
Armaments Equipment Policy Directorate
Chiefs of Services
Military Standardization, Quality Codificat.
Directorate
???
Services Military Councils
Departments (Js)
Departments (Js)
Procurement Management Directorate
Military Infrastructure Directorate
Executive Agencies
L-4
N-4
A-4
Others
Decision Maker
Coordination and/or Integration
Leading Organization
LEGEND
Support organization
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Defense Acquisition Council - responsibilities

• Reviews, integrates, coordinates, and recommends
  all Acquisition System products and related
  issues
• Approves All Acquisition Proposals and
  Procurement and disposal plans valued at under 1
  million BGN
• Advices the Minister of Defense and Dep. Minister
  in development and enforcement of Acquisition
  System policies and procedures
• Identifies problems/issues in the respective
  functional specialties of members and proposes
  solutions to the Deputy Minister
• Recommends initiation or redirection of new
  project feasibility studies
• Recommends to Dep. Minister and the Defense
  Council
• Alternatives (when starting new acquisition
  project)
• Approval/disproval or changes to Acquisition
  Proposals, Procurement Plans, and Disposal Plans
• Methodologies for process improvement
• Objectives for the new acquisition projects
• When to review status of ongoing projects, etc.

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Expert Technical-Economic Council (Armaments)

• Supports the Technical Working Groups for
  development or direct procurement of new items
  (to exclude C4IEW equipment)
• Supports Armaments Policy Director, Procurement
  authorities, Project Managers and Defense
  Acquisition Council with technical expertise
• Develops specifications and SOW
• Develops equipment acceptance criteria
• Develops risk assessment
• Assists in analysis/translation of MNS into
  project tasks, performance objectives, cost
  estimates feasibility studies for new items
• Researches worldwide technology trends
  equipment that may meet MNS requirements
• Considers proposals and recommend solutions for
  technical disposal (demilitarization) actions
• Assists in the assessment of Acquisition Projects

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Legal and Documentary Base

• Public Orders Law
• Regulation on the Terms and Conditions for
  Contracting Special Procurement Orders
• Defense Acquisition Strategy
• Life Cycle Management Regulation
• RD Activities Regulation
• Quality Assurance Regulation
• Tests and Evaluations Regulation

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Acquisition System Products

• Defense Acquisition Strategy
• Acquisition Proposals for
•     Research and Development and New Items
•     Materiel and Services
•     Capital Investments
•     Disposal
• Procurement Plans and Execution
• Disposal Plans and Execution

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Defense Acquisition Strategy- outlines

• Goal To provide a comprehensive vision,
  supporting the Armed Forces requirements,
  development of defense technologies, defense
  industry and the country's economy.
• Basic Objective To create conditions for the
  development of procedures and management of
  defense products, services and infrastructure, in
  reply to the approved reports for determination
  of the necessities of the Mission.
• Assists in considering of National and
  International issues, related to the business
  practice in the field of Defense Acquisition.

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How the Acquisition System Works?

• RD for procurement of new items. New Items
  Acquisition Proposals
• Acquisition Proposals for projects are reviewed
  and approved by the Defense Acquisition Council
• Acquisition projects are managed by Project
  Managers
• Projects are acquired by contracts planned,
  executed, and administrated by the Procurement
  Management Directorate
• RD for new concepts and technologies (by
  Advanced Defense Research Institute and
  Interagency Expert Coordination Council)
• Program Managers plan the funding of Acquisition
  Proposals
• Technical Data Packages Specifications for new
  items and RD Statements of Work are prepared (by
  Project Managers, the Expert Technical Economic
  Councils, J-4, J-6 and AEPD)
• New items and technology are tested and evaluated
  by the Executive Agency for Test Control
  Measurement
• Obsolete or excess materiel is disposed by
  Executive Agency for Management of MOD State
  Property

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Project Life-Cycle Management Model
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Life Cycle Cost Model

• Research Development Cost
• Feasibility study(s), Planning Management
• Engineering Development of Specifications
• Test(s) Evaluation
• Acquisition Cost
• System/Equipment
• Technical Data Training Package(s)
• Supply support, Spares Test equipment
• Other costs (Facilities, PHST, Project office
  etc.)
• In-Service Cost
• Maintenance
• Personal Training
• Operating Consumables
• Disposal Cost
• Preparation for sale
• Demilitarization
• Environmental
• PHST

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Procurement Policy and Procedures

• Public Orders Law
• Regulation on the Terms and Conditions for
  Contracting Special Procurement Orders
• Decision of the Minister of Defense on
  contracting a company to execute an investment
  project (to include an offset agreement)
• Requirements and criteria for candidates for
  contractors of the priority investment projects.
  This document details the sequence for starting
  and conducting a procedure, as well as the
  criteria for assessing the offers.
• Participation documents

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Role of Scientific Studies and Technologies

• Access to the highest defense technologies
• Investment in the defense studies and
  technologies
• Development and support to the defense industry
• Prioritization
• Cooperation between scientific organizations,
  industries and the Armed Forces
• Cooperation with NATO RD Organizations
• MOD RD Policy

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How Modernization Could Support National Economy?

• Participation of Bulgarian Defense Companies in
  the process of modernization of the Bulgarian
  Army (as contractors or sub-contractors)
• Production of new defense articles
• Cooperation with leading world companies
• Economical growth by applying offset agreements

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Bulgarian Defense Industry Capabilities

• Small arms and light weapons
• Dual-use items such as radios, communication
  means, radars, optical devices
• Clothing and personal equipment, NBC protection
  equipment, camping equipment, special food
• Spare parts, life-cycle support and equipment
  overhaul

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BU Defense Industry Profile
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BU Defense Industry Profile
(Cont.)
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BU Defense Industry Profile
(Cont.)
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BU Defense Industry Profile
(Cont.)
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Offset Policy

• Offset - performance of a compensatory (offset)
  agreement according to Paragraph 1, art. 15 of
  the Additional Regulations of the Law on the
  Public Procurement.
• Contracting special procurement orders with a
  compensatory (offset) agreement may be applied
  when the following conditions are met
  simultaneously
• Contractors are foreign companies
• The total value of the order is over 10 million
  BGN, without VAT
• A procedure for a procurement order with a
  compensatory (offset) agreement may be also
  applied to orders with a value of over 5 million
  BGN, after analysis by the Minister of the
  Economy regarding the possibilities to conclude a
  compensatory agreement.
• Special procurement orders with a compensatory
  agreement are contracted after conducting a
  procedure through negotiations.

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NATO Required Essential Operational Capabilities
(EOC), according to MC 400/2

• Effective C2
• Timely Force Availability
• Effective Engagement
• Survivability and Force Protection
• Effective Intelligence
• Deployability and Mobility
• Logistics Sustainability

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NATO Transformation Objective Areas

• Effective Engagement
• Joint Maneuver
• Enhanced CIMIC
• Information Superiority
• Network Enabled Capability
• Expeditionary Operations
• Integrated Logistics

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NATO Main Capability Areas, proposed by Assistant
Secretary General (Defense Investment)

• Information Superiority
• Deployment, Mobility Sustainment
• Precision Strike, Distributed OPS Coherent
  Effect
• Force Protection Survivability
• Joint Intelligence, Surveillance Reconnaissance
• Network Enabled Capability

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Key Modernization Projects and How Do They Match
Main NATO Capability Areas
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Key Modernization Projects and How Do They Match
Main NATO Capability Areas
(Cont.)
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Major Challenges

• To execute simultaneously
• Plan 2015 (BAF transformation and modernization)
• Agreed NATO Force Goals in timely manner
• All 11 priority investment projects (approved by
  the Government)
• Peace-keeping operations and war on terrorism
• Limitations
• Limited defense budget up-to 2.6 of GDP
• International Monetary Fund (capital investment
  limitations)
• Government guaranteed loans not allowed (Ministry
  of Finance limitations)
• MOD pays VAT on all procurements
• Law of Public Orders (requires 80 offset which
  drains defense budget)
• Government sends BU contingents abroad, but does
  not provide addit. funding
• The total Force Management System is still in a
  process of implementation, testing and evaluation
  (since Jan 1st 2005)

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Conclusion

•  Bulgarian MOD is aware of the challenges, posed
  by the limited resources. All necessary steps are
  taken to avoid delays in modernization.
•  Bulgarian MOD and the General Staff have a clear
  vision for future BAF Force structure and a sound
  plan for future force integration. It matches to
  the best extend NATOs capability requirements.
• Good program management and flexibility in
  program implementation and prioritisation is a
  must and critical pre-condition for success. MOD
  will continue the implementation, testing and
  improvement of a modern acquisition system.
• Some of the existing problems come from outside
  MOD. MOD will have to work closely with other
  governmental institutions to assure proper
  financial mechanisms for accomplishing
  modernization plans.

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THANK YOU FOR THE ATTENTION