Defense Contract Management Agency

Defense Contract Management
Agency
Presented By:
Mr. Timothy Callahan
Executive Director of Contracts, DCMA
19 June 2014
Proprietary and Confidential
Agenda
•
DCMA Mission, Scope and Authorities
•
Strategic Plan FY14/15 Priorities
•
•
•
Affordability
•
Audit Readiness
Contract Administration
•
Cost Recovery Initiative
•
Business Systems
Cost and Pricing
•
Forward Pricing Rate Agreements
•
CACP/DACO Re-alignment
•
Small Business
•
Workforce Development
Proprietary and Confidential
2
DCMA Mission, Vision, and Values
Mission
We provide Contract Administration Services to the Department of Defense
Acquisition Enterprise and its partners to ensure delivery of quality products and
services to the warfighter; on time and on cost.
Vision
DOD’s leading experts in Quality Assurance; Cost, Schedule, and Supply Chain
Predictability; and Contract Administration; enabling our partners to achieve
contract objectives.
Values
Integrity – Committed to the highest standards of ethical and moral behavior at all times.
Service – Working for the benefit of our nation and putting professional responsibilities
before self-interests.
Excellence – Committed to exceptional performance in everything we do.
Proprietary and Confidential
3
DCMA is a Team Member…
…In the Defense Acquisition Community
Secretary of Defense
Under Secretary
of Defense
(AT&L)
Assistant
Secretary of Defense
(Acquisition)
Chairman
Joint Chief of Staff
Buying Commands
Army
Navy
Combat Support Agency
Air Force
Marines
DCMA
Contract Administration
DLA
Historical Perspective — Service PROs/DCAS to DLA (1990) to DCMA (2000)
Proprietary and Confidential
4
Organizational Chart
Independent
Assessment
Ms. Diana Graff
Director
Lt. Gen. Masiello
Diversity and
Inclusion
Mr. George Braxton
General
Counsel
Human
Capital
Ms. Sharron
Philo
Ms. Kathleen
Butera
Financial &
Business
Operations
Ms. Pamela
Conklin
Mobilization Assistant
Brig Gen Wade Smith
Sr. Enlisted Advisor
CMSgt Rita Green
Information
Technology
Corporate
Support
Aircraft
Operations
Contracts
Engineering
& Analysis
Quality
Assurance
Mr. Jacob
Haynes
Mr. Martin
Jakim
CAPT Drew
Swenson
Mr. Timothy
Callahan
Ms. Karron
Small
Mr. Michael
Shields
International
RDML Deborah Haven
Current as of 6/6/21/14
Chief of Staff
Col Steven Buetow
Equal Opportunity
Dr. Larry Ross
Chief Operating Officer
Ms. Marie Greening
Special Programs
Mr. James Norris
Proprietary and Confidential
Portfolio
Management
& Integration
Mr. Joseph
Sweeney
Worldwide Acquisition Impact
DCMA Headquarters –
Fort Lee, VA
Regional Headquarters
International CMOs
Special Programs
DCMA Western Region:
Headquarters – Carson, CA
DCMA Central Region:
Headquarters – Chicago, IL
Contract Management Offices:
Contract Management Offices:
Boeing Huntington Beach, CA
Denver, CO
Lathrop, CA
Lockheed Martin Denver, CO
Lockheed Martin Sunnyvale, CA
Los Angeles, CA
Palmdale, CA
Phoenix, AZ
Raytheon, Tucson, AZ
Santa Ana, CA
NPO (NASA Product Operations),
Fort Sam Houston, TX
Bell Helicopter, Forth Worth, TX
Boeing, St. Louis, MO
Chicago, IL
Dallas, TX
Dayton, OH
Detroit, MI
Huntsville, AL
Lockheed Martin, Forth Worth, TX
Twin Cities, MN
AIMO (Aircraft Integrated Maintenance
Operations), St. Augustine, FL
DCMA Special Programs
Special Programs East
Special Programs South
Special Programs West
DCMA Eastern Region:
Headquarters – Boston, MA
Contract Management Offices:
Atlanta, GA
Baltimore, MD
Boeing, Philadelphia, PA
Boston, MA
Garden City, NY
Hartford, CT
Lockheed Martin, Marietta, GA
Lockheed Martin, Moorestown, NJ
Lockheed Martin, Orlando, FL
Manassas, VA
Orlando, FL
Philadelphia, PA
Raytheon, Tewksbury, MA
Sikorsky Aircraft, Stratford, CT
Springfield, NJ
APO (Aircraft Propulsion Operations),
Hartford, CT
NESO (Naval Special Emphasis
Operations), Philadelphia, PA
International Contract Management Offices:
DCMA Americas – Ottawa, Canada
DCMA Northern Europe – RAF Wyton, United Kingdom
*DCMA Southern Europe – Wiesbaden, Germany
*DCMA Middle East – Kuwait City, Kuwait
*DCMA Afghanistan – Kabul, Afghanistan
DCMA Pacific – Atsugi, Japan
* Includes Contingency Contract Administration (CCAS) Operations
Proprietary and Confidential
6
Scope of Work and Span of Control
Data for 1QFY14
SCOPE
of
WORK
SPAN
of
CONTROL
Total Contract Amount
Obligated Amount
Active Contractors
Active Contracts
Unliquidated Obligations Amount
ACAT I (IAC, IC, ID) and II Programs
Aircraft per Year (FY13)
Flying Hours (FY13)
Government Property Value
Progress Payments
Performance-based Payments
6,577.5B
$1,860B
20,001
347.6K
$223B
193
1,569
20,516
$155.6B
$15.6B
$15.7B
Civilians On-board
Military (Active Duty - 429), (Reserve - 119)
Operational Directorates
Locations
Contract Management Offices
Budget Authority
Reimbursable Target
11,441
548
3
740+
47
$1.35B
$125.5M
Proprietary and Confidential
7
Operational Overview
Lines of Service
 Contract Administration Support and Services
 Contractor Purchasing System Reviews
Hours of Effort
per Line of Service
 Cost and Pricing Services
 Property Management & Plant Clearance
Services
 Small Business Support
 Contract Termination Services
 Quality Assurance Services
Quality Assurance
Services (34%)
Engineering &
Manufacturing Services (17%)
Contract Administration
Support & Services (20%)
 Contract Safety Services
 Transportation Services
 Engineering and Manufacturing Services
Quality Assurance Svcs (34%)
Contract Admin Support & Services (20%)
Engineering & Manufacturing Svcs (17%)
Cost & Pricing Svcs (12%)
 Supply Chain Support
Major Program Support (5%)
Earned Value Management (3%)
Property Mgmt & Plant Clearance Svcs (3%)
Transportation Svcs (2%)
 Earned Value Management
Aircraft Operations Svcs (1%)
Supply Chain Support (1%)
Industrial Base Analysis Svcs (1%)
Contractor Purchasing Sys Reviews (1%)
Small Business Support (1%)
Contract Safety Services (1%)
 Major Program Support
 Industrial Base Analysis Services
 Aircraft Operations Services
Contract Termination Svcs (<1%)
1QFY14 data
Proprietary and Confidential
Contracts Directorate (DCMA-AQ)
As of 20140521
Plan & Perf Assess Division
WENDY LAUGHLIN
(804) 734-1515
AQA
Executive Director
TIMOTHY P. CALLAHAN
(804) 734-0500
Deputy Executive Director
SALLEE JUSTIS
(804) 734-0501
Executive Assistant
CINDY ROBINSON
(804) 734-0657
Contracts Policy Division
STACY STRICKLAND
(804) 734-0488
AQC
Operations Support
Budget JERRY KOTVASZ
(804) 734-0458
Exec Services BEN KELLEY (804) 734-0461
Personnel JIM LEROY
(804) 734-0471
Business Ops Center
ANDREW OBERMEYER
(804) 734-0494
AQB
Cost & Pricing Center
RON YOUNGS
(703) 530-3675
AQK
Cost & Pricing Policy Division AQD
JOAN SHERWOOD
(804) 734-0480
DAR Council
AQCD
TOM RUCKDASCHEL (ACTING)
(804) 734-0505
CPSR Group
KAREN ZINN
(214) 670-9351
AQBC
PA, FP, & IC Group
STEVE TRAUTWEIN
(703) 530-3203
AQKA
Bus Proc, Ana, & Dev Division AQI
KEVIN CONNEEN
(804) 734-0483
Property Branch
TOM RUCKDASCHEL
(804) 734-0505
Plant Clearance Group
KATHERINE BURKE
(617) 753-3130
AQBP
DA, T, & R Group
MICHAEL PAULINI
(224) 625-9171
AQKC
FIRM Center
SHAWN MAPEL
(804) 734-0482
AQII
Finance & Payment Branch AQCF
MARY SHERIDAN
(804) 734-2458
Terminations Group
PAUL SLEMONS
(678) 503-6351
AQBT
CACO\DACO Group
SEAYANNE SHELEY
(617) 753-3407
AQKD
Procurement Division
TARA PETERSEN
(804) 734-0487
AQP
Property Group
CYNTHIA THRAILKILL
(937) 656-3154
AQBY
CIPR Team
GEORGE MATRAY
(718) 354-3767
Procurement Center
AMANDA PARKER
(804) 734-1534
AQCP
Financial Cap Group
PAUL REUBEN
(703) 530-3249
AQPW
Small Business Division
TATIA EVELYN-BELLAMY
(804) 734-0506
AQS
Small Business Center
TATIA EVELYN-BELLAMY
(804) 734-0506
AQSC
Int Contracts Director
CAT IGNACIO
(804) 734-1148
DCMAI
CMO Contracts Director
LEONA FITZPATRICK
(804) 416-9079
DCMAO
SP Contracts Director
KATHLEEN MILLER
(804) 734-0156
Proprietary and Confidential
DCMAS
AQKDO
AQKF
Strategic Management Plan FY14/15
Proprietary and Confidential
USD AT&L Priorities
• Priorities for 2014
• Support On-going Operations
• Achieve Affordable Programs
• Improve Efficiency
• Strengthen Industrial Base
• Strengthen the Professionalism of the Acquisition
Workforce
• Protect the Future
• There will be a Better Buying Power 3.0
Proprietary and Confidential
11
DCMA Strategic Management Plan FY14-15
• 10 Business Priorities each
with supporting goals
• Organized by the balanced
scorecard:
•
Acquisition Enterprise
•
Policy & Processes
•
Human Capital
•
Stewardship
• Focused more on shorter term
goals than the multi-year plan
• FY14-FY15 Execution plan
published
• Business Priorities:
1. Affordability
2. Predictability
3. Reliability
4. Business Process Engineering
5. Recruit
6. Hire
7. Develop
8. Retain
9. Internal Audit Readiness
10. Audit Readiness Service
Provider
Proprietary and Confidential
Business Priority: Affordability
• Alignment: Acquisition Enterprise
• “Enhance DoD buying power by increasing affordability”
• Six supporting goals:
•
Establish an Agency-wide capability to support timely reviews of Disclosure Statement
revisions
•
Support enterprise pricing with the expertise of the Integrated Cost Analysis Teams
(ICAT) and improving/expanding efforts on Should Cost Reviews
•
Improve and expand efforts from the CACO/DACO/Cost Monitors on forward pricing
and Boards of Review
•
Enhance the real time information for rates/business systems status in Contract
Business Analysis Repository (CBAR)
•
Reduce the backlog of overage accounting issues and final overheads to enable timely
settlement of contract cost entitlements
•
Support the Service Acquisition Review Board (SARB) initiatives to improve the
tradecraft in acquisition of services
Goal Leader: Contracts Directorate
Proprietary and Confidential
13
Business Priority:
Audit Readiness Service Provider
• Alignment: Stewardship
• “Support our DoD customers in their efforts to attain and sustain a
clean audit opinion on their financial statements”
• Four Supporting Goals:
•
Assert audit readiness to OSD FIAR Directorate
•
Assert audit readiness to DoD customers for which DCMA is Contract Pay Service
Provider
•
Complete initial Statement on Standards for Attestation Engagements (SSAE No. 16)
examination
•
Complete final Statement on Standards for Attestation Engagements (SSAE No. 16)
examination
Proprietary and Confidential
DoD Mandate to Improve Financial
Management and Auditability
Proprietary and Confidential
15
Service Provider
Department of Defense
•
Reporting Entity:
(appropriated budget)
DCMA
USAF
• Service Provider:
(stewardship of delegated funds)
Army
Navy
ODOs*
DCMA - Contract Pay
* Other Defense Organizations
DCMA is pursuing a single audit opinion
to preclude audits by each RE Customer
SSAE #16 - “Reporting on Controls at a Service Organization”
Proprietary and Confidential
Process / System Mapping
• Events with Financial Statement impacts - Outcomes
 Obligations (new, modified, close-out)
 Accruals (receipt/acceptance without invoice)
 Payables (receipt/acceptance with invoice)
 Disbursements (outlay)
 Receivables (recoupment/demands)
• Will also require asserting to systems
in which the work is performed
e Tools
WAWF
MOCAS
GAO Federal Information System Controls Audit Manual
(FISCAM)
Proprietary and Confidential
Process
Contract Pay End-to-End Process
(DCMA SSAE No. 16 Scope)
Commitment &
Obligation
Distribute
Funding
**
Sub-Process
Purchase
Requisition
**
Receipt &
Acceptance
Receive/Accept
Goods/Srvcs at
Destination
**
Receive/Accept
Goods/Srvcs at
Source
00
Validate Funds
**
Disallow Costs
00
Contract Award
**
Calculate EOM
Accrual
00
Invoice
Entitlement
Invoice
Processing
00
Commercial
Invoices
00
Contract
Financing
00
Erroneous
Payment Check
00
Receive &
Obligate
Funding
00
Issue Orders &
Adjustments 00
Pre-Validation
Planned
Disbursement
Matched to
Recorded
Obligation
00
Payment
Authorization
00
Authorize
Disbursement
Processing 00
Erroneous
Payment Check
00
SSAE No. 16
Component
DCAA
Reporting &
Accounting
DFAS
DCMA
Reconciliation
& Contract
Closeout
Certification &
Balancing
00
Treasury
Reporting
**
Resolve
Payment
Discrepancies
**
Erroneous
Payment Check
00
EOM Reporting
**
Notice of Last
Action Process
**
Payment File
Generation &
Release
00
Research &
Resolve
NULOs/UMDs
**
Calculate EOM
Payable
00
Tri-Annual
Review 
**
Debt
Management
00
GL Posting
**
Commitments &
Obligations 
**
Contract Input
00
Validate Inputs
& Funding
00
Disbursing &
Posting
Expenditure
EOM Accrual
GL Posting &
Reversal
**
EOM Payable
GL Posting
**
Disbursements/
Disbursing
Expenditures
Reporting
&
**
Reconciliation
00
Adjustments
Financial**
Contract
Closeout
00
Funds
ReconciliationMOCAS
00
Deobligate
Excess/
Remaining
Funds
00
Full Termination
Settlement
00
Partial
Termination
Settlement
00
Funds
ReconciliationComponent
**
Demand/
Recoup Funds
**
GL Posting
**
Reporting
**
Proprietary and Confidential
End Result
• Sound processes that:
 have detecting and preventive controls (properly designed)
 produce the expected outcome (operating effectively)
 are documented and have evidence of execution
(properly posted)
• Result: an “unqualified” audit
and a state of audit readiness
Proprietary and Confidential
Contract Administration Services
Proprietary and Confidential
Contract Administration & Support
Services
Functions
Mission
Provide contract administration support and
advice on all contract related matters and
improve the overall contracting mission.
•
Provide pre-award support
•
Identify potential performance risks
throughout the entire lifecycle of the contract
•
Support contract negotiations
•
Negotiate and execute ACO mods
•
Monitor contract performance
•
Review and process progress payments,
vouchers, and invoices
•
Contract closeout
•
Cost Accounting Standards compliance
•
Resolve contract disputes
Impact
•
•
•
$15.6B in progress payments managed (1Q14)
$15.7B in performance based payments (1Q14)
579,614 closed in FY13
Proprietary and Confidential
21
Impact of Disapproved Business Systems
and Inadequate Disclosure Statements
• Business Systems
•
•
FAR Parts 9 and 16 address contractor responsibility and business systems adherence
necessary to perform government contracts
•
Key Business Systems include: Accounting, Material Management Accounting Systems,
Estimating, Earned Value Management, Purchasing, Property
•
To be determined responsible, a prospective contractor must have the necessary
organization, experience, accounting, operational controls, and technical skills, or the ability
to obtain them…
•
FAR 16.301-3 Limitations
• A cost-reimbursement contract may be used only when the contractor’s accounting
system is adequate for determining costs applicable to the contract or order
Disclosure Statements
•
Contracting officers shall not award a CAS-covered contract until a written determination
that Disclosure Statement is adequate – unless waived by head of Agency
DCMA approves/disapproves
Proprietary and Confidential
22
Business Systems
•
DFARS CBS Timelines
 10 days for determination after receipt of audit/functional specialist report
 Initial determination if one or more significant deficiencies
 Final determination if no significant deficiencies
 30 days for contractor response to initial determination
 30 days for final determination after receipt of contractor’s response
•
Legacy determinations and reports
 Reports dated prior to May 18, 2011
 Findings may or may not be considered significant deficiencies under the new rule
 Policy included in DCMA-INST 131, CBS
•
Procedures for addressing legacy determinations and issuing final determinations
•
Business system status guidelines – Approved, Disapproved, Not Evaluated, & Not Applicable
 Not Evaluated systems in the Contract Business Analysis Repository (CBAR) eTool
Aug 2012
Sep 2013
Apr 2014
2875
993
692
Proprietary and Confidential
Business System Rule
• Contractor Business Systems must provide reliable
information for decision making (FY2011 NDAA)
• Interim Rule - 18 May 2011; Final Rule - 24 Feb 2012
• Rule covers six contractor business systems
• Challenge is consistent and timely determinations
• Business System Review Panel for proposed disapprovals
• Timeliness Standards established in Policy
System
Disapprovals
Withhold
(count of CAGES)
Accounting
Estimating
Earned Value Management
Material Management and Accounting
Property
Purchasing
Total
51
13
13
0
17
17
111
$36.2 M
$12.6 M
$95.2 M
$0
$25.0 M
$0.6 M
$169.6 M
Proprietary and Confidential
24
Subcontract Management
• Significant Shift in Subcontract Content of Major Programs
• 20 years ago Prime was 70-80% and Subs were 20-30%
• Today Primes are 20-30% and Subs are 70-80%
• Supply Chain Management Concerns
•
•
•
•
Single Points of Failure
Detection and Avoidance of Counterfeit Parts
Specialty Metals Sourcing
Contractor Purchasing System Reviews
• Cost and Pricing Issues
• Privity of Contract and Proprietary Information
• Audit Access and Field Pricing Support
• Commercial Item Determinations and Pricing
Proprietary and Confidential
25
Cost and Pricing Services
Proprietary and Confidential
Cost and Pricing Services
Mission
Establish the right price for Department
Requirements
Functions
•
•
•
•
•
•
Provide field pricing assistance
Establish forward pricing and final indirect rates
Monitor contractor indirect costs
Perform overhead should cost reviews
Provide support to negotiations
Provide specialized support (pensions, financial
capability reviews and commercial pricing)
• Maintain Contract Business Analysis Repository
(CBAR) for DoD
Impact
•
•
•
•
•
11,390 Field Pricing Support cases - CY13
4,000 negotiations - CY13
690 Contractor Sites with FPRA/FPRR
3 Overhead Should Cost reviews - CY13
992 Financial Capability Reviews – CY 13
Proprietary and Confidential
27
28
Proprietary and Confidential
Cost and Pricing
• Successes:
•
•
•
•
•
Enterprise cost & pricing capability yielded in excess of $6B in cost recovery, savings,
and/or avoidance
Conducted deep-dive overhead should cost reviews & provided mobile proposal
pricing/surge support
Closed 656 (out of 705) aging CAS issues with costs demanded or negotiated of
$787,933,347
Implemented policy change requiring DCMA to review disclosure statement changes
(vice DCAA)
Developed and implemented plan requiring CMOs to hold Stand Down Days with
DCAA to settle final overheads prior to the statute of limitations
• Hot Topics:
•
•
•
Significant volume of aging disclosure statement submissions, final overheads and
CAS non-compliances
Executive compensation ceiling changes will increase complexity and number of
forward pricing and final rates proposals
Budget uncertainty continues to complicate forward pricing rate forecasting
Proprietary and Confidential
29
Small Business Support
Proprietary and Confidential
Small Business Support
Mission
Foster business innovation, new
technology, and promote private enterprise
Impact
•
83 Mentor Protégé agreements ($56M)
resulting in 1,250 jobs created
•
63 PTACs provide basic assistance to
small businesses in marketing to
government
Functions
• Conduct subcontracting plan reviews at large
businesses with contracts over $650K
• Provide analysis and recommendations on
subcontracting plans at contract award
• Provide analysis and recommendations on
commercial plans and ensuing reports
• Negotiate Master Subcontracting Plans
• Negotiate and manage Comprehensive Plans
under the DOD test program
• Review prime contractors’ mentor-protégé
agreements, track progress, and develop ROI
report for Congress
• Conduct reviews of Procurement Technical
Assistance Centers (PTAC)
Proprietary and Confidential
31
Comprehensive Small Business
Subcontracting Program (CSP)
•
DoD Test Program for Negotiation of Comprehensive Small
Business Subcontracting Plans ends December 31, 2014
•
DCMA’s Role:
•
•
Negotiates annual CSPs on behalf of DoD in coordination with Departments and
Agencies
•
12 contractors with over 8,000 individual contracts
•
Transition Plan needs to be developed
•
Possible migration to use of Master Subcontracting Plans
National Defense Authorization Act
•
House – Extend 3 Years – Improve Data Analysis
•
Senate – Extend to 30 Sep 2015 – Increase Opportunities
Proprietary and Confidential
32
Workforce Development
Proprietary and Confidential
DCMA Workforce
• BRAC 2005 moved DCMA Headquarters to Fort Lee
• Move completed by September 2011
• Less than 25% of DCMA staff made the move
• Headquarters functions and support impacted
• HQ budget being reduced by 20% by FY2019 per SECDEF
• Attrition of 600 to 800 employees per year
• 50% of workforce has less than 5 years with DCMA
• Workforce Competency – Not just a DCMA issue
• DPAP will be conducting a Competency Assessment
• DCMA conducting in-house training
• DAU stood up College of Contract Management
• Contracting Officer Warranting Process
• CORB – Contracting Officer Review Board
• COAT – Contracting Officer Assessment Tool
Proprietary and Confidential
34
LEVEL II
AQ Course Status With CCM
Job Task &
Gap Analysis
AQ Functional
Community
Training
Infrastructure
Development
Course
Analysis
-CACO/DACO Duties
-TCO Duties
-Property Officer
Duties
-Plant Clearance
Officer Duties
Course
Development
Course
Release
Course Pilot
CMC 100 (Intro to Contract Administration)
CMC 200 (Contract Financing)
CMC 210 (Contract Closeout)
CMC 220 (Advanced Contract Administration)
CMC 230 (ACO Business Fundamentals)
CMC 240 (Cost Accounting Standards)
CMP 200 (Integrated Cost Proposal Evaluation)
CMP 210 (Cost Monitoring)
CMP 220 (Cost Accounting Standards)
CMP XXX (Development of Indirect Rates)
Estimate Incremental
Launch of Pilots in 2nd
Qtr FY15
Legend
Green – Mission tasks/KSAs, Learning Objectives provide training roadmap
Purple – Completed CCM tasks, not yet funded for Course Development
Blue – On contract with CCM
Red – FY14 work contracted/planned for CCM contract
Black – Transitioned to DAU/CCM complete
Estimate
Late FY15
Proprietary and Confidential
35
How to Find Us (www.dcma.mil)
Policies
E-Tools
Access
CAS Directory
CMT Finder
HQ, Regions
& CMOs
Proprietary and Confidential
36
Questions
Proprietary and Confidential
Contact Us
www.watkinsmeegan.com
Tysons, VA
Bethesda, MD
8000 Towers Crescent Drive
Suite 950
Tysons, VA 22182
P: 703.761.4848
6720-B Rockledge Drive
Suite 750
Bethesda, MD 20817
P: 301.654.7555
Annapolis, MD
Herndon, VA
888 Bestgate Road
Suite 401
Annapolis, MD 21401
P: 410.571.7766
13665 Dulles Technology Drive
Suite 220
Herndon, VA 20171
P: 703.885.8190
lunchandlearn@watkinsmeegan.com
Proprietary and Confidential
Presenters
Timothy Callahan, Executive Director of Contracts
Defense Contract Management Agency
timothy.callahan@dcma.mil
804.734.0500
Proprietary and Confidential