DEPARTMENT OF DEFENSE

1. 2006 Installation Management Institute DEPARTMENT OF DEFENSE 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 • President’s 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

9. The Revised Circular 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 Policy Statement

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

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

12. The Revised Circular Inventory Process • 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. The Revised Circular Preliminary Planning • 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. The Revised Circular Announcements, Notifications, Cancellations • Start Date • Public Announcement Publicizing the Start of a Competition • FedBizOpps Notice – DoD Template • End Date • Public Announcement Declaring Competition’s 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. The Revised Circular Streamlined Competition 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. The Revised Circular Standard Competition Time Limit of 12-18 Months

19. The Revised Circular Standard Competition • 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. The Revised Circular Standard Competition • 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. The Revised Circular Post Competition Accountability • 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. The Revised Circular Calculating Competition Costs • 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 - (703) 805-2635 - Joni.Dowling@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. Whining 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 Don’t Like It

35. QUESTIONS?