DDTP Post Award Conference

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Understanding the Letter of Obligation (LoO)
DDC J-3/J-4-TO MEO Team
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The Letter of ObligationOverview

• Introduction- J-3/4 Operations Division
• What is the LoO?
• What's included in the LoO?
• What are the MEO Obligations?
• Who maintains the LoO File?
• When to change the LoO?
• How to change the LoO?
• Changes to the MEO?
• Why document changes?
• MEO success or failure?

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Operations Division

• Primary Mission Current Operations Support to
  DDC Depots
• Monitor workload and metrics
• Be the entry point for the Depot into the DDC HQ
  for any operational issues
• Establish a relationship with Depot Commander and
  Deputy
• Provide technical assistance and on site visits
  as required
• Facilitate mission, staffing, and space
  management issues
• Coordinate Kitting, DEPMEDs, and UGR projects
• Additional Missions
• OCONUS stand ups
• Depot re-competitions
• Technical support to Contracting office
• Contracting office or KO equivalent for MEO
  Depots

Supporting Business Planning Customer Service
Areas until Established
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J-3/4 Operations DivisionOrganization (Corporate
Support)

• Distribution Network nuances
• 2 SDPs
• 5 OCONUS Depots supported by Foreign National
  Workforce
• 6 MEO Operated Depots
• 7 Contractor Operated Depots
• 1 Contractor Owned/Operated Depot (Commercial
  WMS)
• 4 Depots to undergo initial A76

Operational support across multiple time zones
and international date line
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The Letter of ObligationWhat is the LoO?

• OMB Circular A-76 defines the MEO Letter of
  Obligation as a formal agreement that an agency
  implements when a standard or streamlined
  competition results in agency performance (e.g.,
  MEO)
• GAO has previously stated in B-293590.2 et al.,
  The letter of obligation is not a mutually
  binding legal relationship between two signatory
  parties there is no contractual legal
  relationship between the MEO and the agency.
• The Contracting Officer (CO) establishes the MEO
  LoO with an official responsible for performance
  of the MEO

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The Letter of Obligation Whats included in the
LoO?

• The CO incorporates appropriate portions of the
  solicitation and the agency tender
• Section C of Solicitation (Performance Work
  Statement)
• Management Plan (Agency Tender Technical
  Proposal)
• Most Efficient Organization
• Preliminary Planning, Analysis Recommendations
• Technical Performance Plan
• Technical Plans
• Quality Control/Customer Satisfaction Plan
• Mobilization, Sustainment, Disaster Recovery
  Plan
• Transition Plan
• In-House Cost Estimate (Agency Cost Estimate)

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The Letter of Obligation What are the MEO
Obligations?

• The LoO documents that the MEO has won the
  competition and is now obligated to perform, as
  offered and accepted by DLA, to the prescribed
  standards
• Meet performance levels and operate within your
  bid
• Additionally, the MEO is obligated to
• Comply with Government performance monitoring
  activities, including quality assurance,
  maintenance of contract files, recording actual
  costs, documentation of past performance, and
  Government reports
• Notify DDC of any changed conditions that would
  warrant material changes to this obligation,
  including scope, workload, actual inflation, and
  actual wage rates
• Comply with all requirements that are a condition
  of being a Government employee

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The Letter of Obligation Who maintains the LoO
file?

• At DDC, the Contracting Officer Equivalent (KOE)
  is responsible for maintaining the official LoO
  files for MEOs
• The LoO is not a contract, so a Contracting
  Officer is not required to administer the LoO
• The local Contracting Officer Representative
  (COR) provides on-site government surveillance
  through the quality assurance evaluators (QAEs)
  and reports performance information and
  deficiencies to the KOE

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The Letter of Obligation When to Change the LoO?

• Changes to government requirements included in
  PWS
• Changes in workload
• Changes in APLs
• Increased level of effort due to regulatory or
  other policy guidance changes
• Requirements not included in the scope of PWS
• Customer-driven
• Overlooked

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The Letter of Obligation How to Change the LoO?

• Notification of PWS Change
• DDC J-3/4 PWS Team provides clarifications and/or
  interpretations of government requirements in the
  PWS
• MEO notifies DDC J-3/4 PWS Team if they believe
  the Government has effected a change in the PWS
  that has not been identified in writing and
  signed by the KOE
• Amendment/Modification to the LoO
• DDC J-3/4 PWS Team determines whether a potential
  change in government requirements is 1)
  currently in the scope of the PWS, 2) a new
  government requirement, or 3) outside the scope
  of the PWS
• When there is a change in government
  requirements, the DDC J-3/4 PWS Team will publish
  an amendment/modification to the MEO's LoO

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The Letter of Obligation Changes to the MEO?

• Once the amendment/modification to the LoO is
  published, the MEO submits a Change Request to
  the DDC J-3/4 Depot Team requesting additional
  resources and funding
• DDC J-3/4 Depot Team and MEO Team provides
  corporate support and assists with labor and
  non-labor cost estimates
• DDC J-3/4 MEO Team prepares the funding package
  for staff coordination and approval
• DDC will provide additional funding to the MEO
  and adjusts the Agency Cost Estimate and MEO
  Spending Plan
• When there is no change in government
  requirements), DDC may still increase the MEO
  spending plan to prevent unacceptable mission
  degradation through an Application of Funds
  (results in overspend)

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The Letter of Obligation Why Document Changes?

• OMB Circular A-76 requires the MEO LoO to be
  maintained
• Accurately assess MEO performance and cost
• Document MEO past performance
• Option Years determination
• Award Term Plan Years Determination
• High Performing Organization justification

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The Letter of Obligation MEO Success or Failure?

• Success
• MEO meets performance standards and operates
  within the Bid (as adjusted for approved changes)
• Developing an MEO weighted score card to more
  realistically assess performance and cost similar
  to contractors
• Evolving process from lessons learned
• Need to establish policy decisions point for
  option and award year determinations
• Failure
• If the MEO fails to perform, it runs the risk
  that the MEO will be declared in default and the
  work re-competed
• Need to establish decision points and timelines
  for re-competition
• Business case analysis (cost of new study versus
  current costs)

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Questions?
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