DEPARTMENT OF DEFENSE

1
DEPARTMENT OF DEFENSE
2006 Installation Management Institute

• COMPETITIVE SOURCING PROGRAM
• 9 January 2006
• Ms. Annie Andrews
• Assistant Director, Department of Defense Housing
  and Competitive Sourcing
• Office of the Deputy Under Secretary of Defense
  (Installations and Environment)

2
Agenda

• The Administration
• OMB
• Statistics
• The Circular
• DoD
• Congress
• DoD(IG) GAO
• Statistics

3
The Bush Administration
Impact on Competitive Sourcing

• Presidents Management Agenda (PMA)
• Objective Improve Management Performance of
  Government
• Five Initiatives
• Strategic Management of Human Capital
• Competitive Sourcing
• Improved Financial Performance
• Expanded Electronic Government
• Budget and Performance Integration

4
The Latest From OMB

• Our Competitive Sourcing Stop Light is Red
• Director Met with Deputy Secretary of Defense
• Regarding DoD Program
• Lack of Competitions Based on Competition Plan
  in the Budget
• Army Projected Announcements
• FY 05 5, 400
• FY 06 8,400

5
The Revised Circular
Major Requirements Eliminated

• Conditions for Government and Contract
  Performance of CAs
• AKA Direct Conversions
• MEO Team Requirements
• As-Is Organization TPP - QASP
• Transition Plan For Possible Transition to
  Contract
• Technical Leveling of MEO
• Independent Review
• Administrative Appeal
• Post-MEO Performance Review

6
The Revised Circular

• Purpose Establishes Federal Policy for CAs
• Supersedes
• OMB Circular Number A-76 (Revised 1999)
• Supplemental Handbook to OMB Circular A-76
  (Revised 2000)
• OFPP Policy Letter 92-1, Inherently Governmental
  Functions (23 Sep 92)
• Authority
• Reorganization Plan No. 2 of 1970 (31 U.S.C.
  1111)
• Executive Order 11541
• Office of Federal Procurement Policy Act (41
  U.S.C. 405)
• Federal Activities Inventory Reform Act of 1998
  (31 U.S.C. 501 note)
• Three-Page Circular with Attachments
• Attachment A Inventory
• Attachment B - Public-Private Competition
• Attachment C - Calculating Public-Private
  Competition Costs
• Attachment F Acronyms and Definition of Terms

7
The Revised Circular
Terminology Changes
NEW TERM or TERMS TO USE OLD TERM or TERMS NOT TO USE
Activity Function
Contest Administrative Appeal
Agency Cost Estimate In-house Cost Estimate
Agency Performance In-house Performance, Government Performance
Agency Tender Management Plan, In-house Offer, Government Bid
Agency Tender Official MEO Certifying Official
DCAMIS CAMIS
COMPARE win.COMPARE2
Competition Number CAMIS Number
Competition Title CAMIS Title
Competitive Sourcing Official 9.a. Official
Conversion Differential Minimum Conversion Differential
Fee-for-Service Agreement Interservice Support Agreement (ISSA)
Final Performance Decision Final Cost Comparison Decision, Win
First Period of Full Performance First Full Performance Period
Performance Decision Tentative Cost Comparison Decision, Win
8
NEW TERM or TERMS TO USE OLD TERM or TERMS NOT TO USE
Post Competition Accountability Post-MEO Review
Previous Circular Old Circular, RSH
Private Sector or Public Reimbursable Price (Line 7) Contract or ISSA Price (Line 7)
Public-Private Competition Study, A-76 Study, Initiative, A-76 Initiative
Public Reimbursable ISSA Provider
Selected Provider, Selected Source Winner
Solicitation Closing Date Bid Due Date, Bid Opening Date
Source Sector
Standard Competition Cost Comparison, Study
Standard Competition Form (SCF) Cost Comparison Form (CCF)
Streamlined Competition Streamlined Cost Comparison, Study
Streamlined Competition Form (SLCF) Streamlined Cost Comparison Form (CCF)
Not longer applicable or used Affected Parties
" Administrative Appeal Authority
" Core Capability
" Direct Conversion
" Independent Review (IR)
" Independent Review Official (IRO)
" Preferential Procurement Programs
9
The Revised Circular
Policy Statement

• Revised Circular
• The longstanding policy of the federal government
  has been to rely on the private sector for needed
  commercial services. To ensure that the American
  people receive maximum value for their tax
  dollars, commercial activities should be subject
  to the forces of competition.
• Previous Circular
• Achieve Economy and Enhance Productivity
• Competition enhances quality, economy, and
  productivity
• If private sector performance of a CA is
  permissible, a cost comparison between public and
  private sector performance is required
• Retain Governmental Functions In-House
• If functions are so intimately related to the
  public interest, government performance is
  mandated and the functions are inherently
  governmental
• Inherently governmental functions are not in
  competition with private sector
• Rely on the Private Sector
• Government shall rely on the private sector for
  commercial services
• The government shall not start or perform a
  commercial service

10
Policies (Summarized)
The Revised Circular

1. Identify Government Performed Activities as
   Commercial or Governmental
2. Perform Inherently Governmental Activities with
   Government Personnel
3. Use Public-Private Competitions to Determine
   Government Performance
4. Apply the FAR and Circular for Public-Private
   Competitions
5. Comply with Procurement Integrity, Ethics,
   Standards of Conduct, 18 USC
6. Designate Agency CSO with Agency Responsibility
   to Implement Circular
7. Require Accountability of Officials in Annual
   Performance Evaluations
8. Centralize Oversight, Allocate Resources, Post
   Best Practices
9. Develop Government Cost Estimate Using COMPARE
10. Track Execution of Competitions via DCAMIS
11. Assist Adversely Affected Federal Employees (5
    C.F.R. Parts 330/351)
12. Do Not Perform Work as a Contractor or
    Subcontractor the Private Sector

11
Scope (Summarized)
The Revised Circular

1. Applies to Federal Agencies (Military Departments
   Now Under DoD)
2. May Exempt CAs Performed by Government From
   Contract Performance
3. May Deviate From Circular With Prior Written OMB
   Approval - DoD CSO
4. Requires Public-Private Competition Before
   Government Can Perform New Requirement,
   Segregable Expansion, or Previously Contracted CA
5. Identify Competition Savings in DoD Budget
6. Does Not Alter Any Law, Executive Order, Rule,
   Regulation, Treaty, or Internal Agreement
7. Does Not Provide Interpretation of Noncompliance
   as a Substantive or Procedural Basis to Challenge
   Action or Inaction Except as Stated
8. Permits DoD CSO to Determine of Applicability of
   Circular During Declared War or Military
   Mobilization

12
Inventory Process
The Revised Circular

• Inventory Requirements
• Three Inventories and Summary Due Annually to OMB
  by June 30
• FAIR Act Commercial Activities
• Non-FAIR Act Commercial Activities
• Inherently Governmental
• Categorize Activities - Inherently Governmental
  or Commercial
• Commercial Activity Reason Codes
• Restricted from Contract Performance (DoD CSO)
• Suitable for a Streamlined or Standard
  Competition
• Subject to an In-Progress Streamlined or Standard
  Competition
• Performed by Government Personnel as a result of
  competition
• Pending Agency Approved Restructuring Decision
• Restricted From Contract Performance by
  Legislation
• Challenge Process

13
Preliminary Planning
The Revised Circular

• Scope Activities of Activities to be Competed
• Package Activities for Competition
• Assess Availability of Workload Data and
  Collection Process
• Calculate Baseline Costs of Activities
• Select the Type of Competition
• Schedule the Milestone Dates for the Competition
• Determine Roles, Responsibilities, Availability
  of Participants
• Appoint Competition Officials
• Agency Tender Official
• Human Resource Advisor
• Contracting Officer
• PWS Team leader
• Source Selection Authority

14
Announcements, Notifications, Cancellations
The Revised Circular

• Start Date
• Public Announcement Publicizing the Start of a
  Competition
• FedBizOpps Notice DoD Template
• End Date
• Public Announcement Declaring Competitions End
  or Cancellation
• Initial Performance Decision
• Performance Decision
• Cancellation of Competition
• FedBizOpps Notice DoD Template
• Congressional Notifications DoD Only
• Two Types of Notifications Made Prior to Public
  Announcement
• Before Commencing a Competition (Start Date)
• Upon Performance Decision (Performance Decision
  Date)
• Cancellation of Competition Requires CSO Written
  Approval
• Cancellation of Solicitation Does Not Cancel a
  Competition

15
Streamlined Competition
The Revised Circular
Time Limit 90-135 Calendar Days

• Basis for Performance Decision Streamlined
  Competition Form (SLCF)
• SLCF Preparation Firewalls Certifications
  Required
• Agency Cost Estimate Basis MEO or Incumbent
  Organization
• Private Sector Cost Basis Solicitation or
  Market Research
• Public Announcement of Performance Decision
  (Contests Not Permitted)
• Post Competition Accountability (e.g., LOO,
  Performance Cost Tracking)

16
DoD Position
Streamlined Competition

• Must Consult with OSD Office During Preliminary
  Planning
• Market Research Parameters
• Not Permitted to be the Basis for a Performance
  Decision
• If Incumbent Source is Private Sector (Contracted
  CAs)
• To Convert Government Performed Activity to
  Contract
• Conversion Differential Not Included Regardless
  of Incumbent Source
• May Retain Current Source But Cannot Convert With
  Market Research
• Solicitation
• Required to Have Actual Private Sector Offer to
  Change Sources
• Convert Government Performed Activity to Contract
  (Law)
• Convert Contracted Activity to Government
  Performance (Policy)
• Conversion Differential Included Regardless of
  Incumbent Source
• May Retain or Convert Source With Solicitation

17
DoD Position
Streamlined Competition

• MEO Requirement
• Must Be Basis for All Agency Cost Estimates
• Streamlined Competition Policy Under
  Consideration
• Threshold Consistent with 8014
• 10 DoD civilians for Government Performed CAs
• NOTE
• FTE CME ? Contractor Employee Position

18
Standard Competition
The Revised Circular

• Time Limit of 12-18 Months

19
Standard Competition
The Revised Circular

• DCAMIS Tracking During Competition
• Teams (PWS, MEO, SSEB)
• Written Appointments Made After Start Date By
  Competition Officials
• PWS MEO team members andadvisors eligible for
  RoFR
• SSEB members and advisors are ineligible for RoFR
• Solicitation Developed Issued
• All Information Released to Prospective Service
  Providers Equally
• Performance Periods Can Exceed 5 Years (OMB
  Transition Memo)
• Must Include Compliance Matrix (DoD policy)
• DoD Cannot Use Tradeoff Source Selection Process

20
Standard Competition
The Revised Circular

• Agency Tender
• Must Be Developed As Required by Solicitation and
  Revised Circular
• Partnering with Industry Solicitation Required
  to Obtain Partner
• No Satisfactory Private Sector Source
• DoD CSO Involvement Required
• Performance Decisions
• DoD Not Permitted to Base Decision on Other Than
  Low Cost
• Adjusted Baseline Costs
• COMPARE Import to DCAMIS

21
Post Competition Accountability
The Revised Circular

• Post Best Practices and Lessons Learned on Share
  A-76!
• Continued Execution Tracking of Each
  Public-Private Competition in DCAMIS
• Performance Monitoring The Same Regardless of
  Source
• Air Force Cost Tracking Tool (Extension of
  COMPARE)
• High-Performing Organizations
• Follow-on Competition
• Terminations
• Based on Failure to Perform
• Notification, Termination, and Temporary Remedies
• Based on Reasons Other Than Failure to Perform
• Not Renewing Option Years
• Temporary Remedies

22
Calculating Competition Costs
The Revised Circular

• Compliance with Attachment C Required
• DoD A-76 Costing Manual STATES DoD Policy
• Revised Circular Takes Precedence For Differences
• Policy Clarification IS an OSD Responsibility NOT
  a Component Responsibility or Within the Purview
  of a Consultant
• Questions or Policy Clarification is Via DoD A-76
  Costing Help Desk at www.compareA76.com
• Completed COMPARE Upgrade in May 2005
• New Tax Rate Table
• New Contract Administration Policy
• Costing Changes Under Discussion
• Fringe Benefit Cost Factor Update
• Contract Administration Determination
• Overhead Clarification

23
What Has Congress Done For You Lately?

• FY 06 Defense Appropriation Act Signed 30 Dec 05
• Section 8014
• Impact on Process from FY05 Language None
• Section 8021 (was 8022)
• Impact on Process from FY05 Language None
• Authorization Bill to President on 3 Jan 06
• Major Rewording and Revamping of 10 USC 2461 and
  2462
• Impact on Competition Process None
• Change Terminology Consistent with Revised
  Circular
• BRAC
• Evaluate Case-by-Case

24
What Has DoD Done For You Lately?

• A-76 Working IPT
• Letter of Obligation
• Award Fee
• MEO Partnering
• DCAA Assistance for Cost Realism Requirement
• Policy Report Issued
• Baseline Costing Policy
• CNA Report on Overhead Published
• Major System Upgrades
• Compliance with DITSCAP Requirements
• COMPARE 2.1
• DCAMIS
• SHARE A-76!

25
What Has DoD Done For You Lately?

• Policy Pending
• Health Care Costing (8014)
• DCAMIS Guidance
• Regulations
• Revised DoDD 4100.15 Coordinated But . . .
• Revised DoDI 4100.33 Under Development
• Future Priorities
• DoD A-76 Costing Manual
• Handbooks
• Preliminary Planning
• Post-Competition Accountability

26
What Training Is Available?

• Defense Acquisition University Courses
• Point of Contact
• Ms Joni Dowling - [phone] -
  Joni.Dowling_at_dau.mil
• Overview On-Line
• Preliminary Planning
• Acquisition Actions In Public-Private
  Competitions
• Agency Tender Development
• Post Competition Accountability
• Costing DoD lead on development
• DLA Post Competition Accountability Training
• Navy Training

27
What Have the DoD(IG) and GAO Done For You Lately?

• DoD(IG)
• Lackland Base Operating Support Cost Comparison
• Legal Assistance for MEO Team
• DFAS Retired Military and Annuitant Pay Cost
  Comparison
• Overhead
• DoD Competitive Sourcing Program Sufficient
  Resources
• Standardized Training for Competitive Sourcing
  Program Offices
• Minimum Training Standards for Competition
  Officials
• Include Key Personnel Clause in Consultant
  Contracts
• DCAMIS
• Clarify DCAMIS Guidance on Record Review and
  Validation,
• Entering Phase-in Costs, and Capturing
  Competition Costs
• GAO
• Issue Guidance for Evaluation of Health Benefits
  (Section 8014)

28
DoD Competitive Sourcing Program Execution Trends
(FY 97 Dec 05)

• Completed Competitive Sourcing Initiatives
  1,149 (97,639 positions)
• Army Completed Competitive Sourcing Initiatives
  207 (32,360 positions)
• 497 Cost Comparisons (Army 147)
• 596 Direct Conversions (Army 42)
• 56 Streamlined Cost Comparisons (Army 23)
• Completion Times
• 35 months for Multi-function Cost Comparisons
  (Army 40)
• 20 months for Single-function Cost Comparisons
  (Army 25)
• 21 months for Streamlined Cost Comparisons (Army
  17)
• 14 months for Direct Conversions (Army 8)
• Small Business Awards
• 77 Cost Comparisons (Army 21)
• 293 Direct Conversions (Army 34)
• 1 Streamlined Cost Comparison (Army 1)

Note Competitions Completed Under Previous
Circular
29
DoD Cost Comparison Execution Trends (FY 97
Dec 05)

• Completion Data for 497 Cost Comparisons
  impacting 82,937 positions
• 27 Contract Decisions 135 cost comparisons --
  26,720 positions (32)
• 72 In-house Decisions 356 cost comparisons
  54,234 positions (65 )
• 22 Cost Comparisons Resulted in No Satisfactory
  Source
• 107 cost comparisons impacting 18,294 positions
• 30 of In-house Decisions
• 218 Large Cost Comparisons (100 positions)
• 29 Contract Decisions 68 In-house Decisions
• 279 Small Cost Comparisons
• 26 Contract Decisions 74 In-house Decisions
• 228 Disputes 15 Reversals
• 176 Administrative Appeal Process Led to 10
  Reversals
• 52 GAO Bid Protests Led to 5 Reversals
• 38 Average Competition Manpower Savings
• Civilian Reductions in Force (RIF) Resulting from
  A-76
• 3,328 Permanent Employees out of 82,937 Spaces
  Competed

30
ARMY Cost Comparison Execution Trends (FY 97
Dec 05)

• Completion Data for 147 Cost Comparisons
  impacting 30,604 positions
• 27 Contract Decisions 41 cost comparisons --
  12,163 positions (32)
• 72 In-house Decisions 104 cost comparisons
  17,560 positions (65 )
• 17 Cost Comparisons Resulted in No Satisfactory
  Source
• 25 cost comparisons impacting 5,413 positions
• 24 of In-house Decisions
• 79 Large Cost Comparisons (100 positions)
• 33 Contract Decisions 65 In-house Decisions
• 68 Small Cost Comparisons
• 22 Contract Decisions 78 In-house Decisions
• 77 Disputes 3 Reversals
• 58 Administrative Appeal Process Led to 3
  Reversals
• 19 GAO Bid Protests Led to 0 Reversals
• 47 Average Competition Manpower Savings
• Civilian Reductions in Force (RIF) Resulting from
  A-76
• 717 Permanent Employees out of 30,604 Spaces
  Competed

31
Announced vs Canceled vs Completed

• 1,728 Announced Initiatives with 134,937
  positions
• 258 Army with 37,346 positions
• 33 Cancellation Rate
• 579 with 37,298 positions (28)
• 19 Army Cancellation Rate
• 51 with 4,986 positions (12)
• 67 Completion Rate
• 1,149 with (97,639 positions (71)
• 80 Army Completion Rate
• 207 with 32,360 positions (83)
• Previous Circular

32
Competitions Under Revised Circular

• 47 Announced with 3,402 positions
• 8 Army with 1,596 positions
• 14 Initiatives Currently In-Progress
• 3 Army with 1,596 positions
• 30 Completed with 335 positions (All Streamlined)
• 5 Air Force Conversions to Contract
• 5 Army Conversions to In-house
• 8 DoDEA Retention of In-house
• 12 DCMA Retention of In-house
• 3 Initiatives Cancelled with 110 positions
• 0 Army

33
Competitions In-Progress Under Revised Circular

• Total Initiatives 14 (2,957 positions)
• 11 Standard Competitions with 2,813 positions
• 3 Army with 1,596 positions
• 3 Streamlined Competitions with 144 positions
• 2 DoDEA
• 1 Navy (military)

34
Misconceptions and Complaints Continue

• It Takes Too Long
• It Is Too Difficult
• It Is Too Adversarial
• It Results in Poor Providers
• It Costs Too Much
• I Dont Like It

35
QUESTIONS?