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Breakout Session # 604 Colonel David Simms, USAF Date April 26, 2004

Other Transactions Reaching the Future of Defense. Breakout Session # 604 Colonel David Simms, USAF Date April 26, 2004 Time 4:30 p.m. – 5:30 p.m. Breakout Session Outline. Background Case studies: Two Evolved Expendable Launch Vehicle Systems (EELV)--Lessons Learned

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Breakout Session # 604 Colonel David Simms, USAF Date April 26, 2004

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  1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  2. Other Transactions Reaching the Future of Defense Breakout Session # 604 Colonel David Simms, USAF Date April 26, 2004 Time 4:30 p.m. – 5:30 p.m. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  3. Breakout Session Outline • Background • Case studies: • Two Evolved Expendable Launch Vehicle Systems (EELV)--Lessons Learned • Future Opportunities • Future Combat Systems, DARPA, NGA • New role--trusted advisors NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  4. Background • Federal Agencies encouraged to use innovation (e.g. FASA, IMPAC)--1990s • DoD Non-procurement instruments • Grants • Cooperative Agreements • Other Transaction Agreements NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  5. Grants and Cooperative Agreements • Governed by DoD Grant and Agreement Regulations, DoD 3210.6-R • Legal instruments to provide Federal assistance for a public purpose • Grants--little involvement between parties • Cooperative Agreement--substantial Government involvement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  6. Other Transaction Agreements (OTAs) • DoD instrument other than…carrying out research or prototype projects • Goal: Broaden DoD’s technology and industrial base • Allow development through OTAs that reduce Federal barriers • Encourage non-defense firms to participate in defense research; or certain prototypes NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  7. OTA Authority and Usage • Section 845 of P.L. 103-160 augmented 10 U.S.C. 2371 • USD (AT&L) authorized OTAs for certain prototype projects (December 1996) • Usage: • OSD reports 2001--323 OTAs; 2002--397; and 2003--177 • Resource: OT Guide for Prototype Projects www.acq.osd.mil/dp/dsps/ot/dspsot.htm NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  8. OTA Authority Basics • Research authority is permanent • Prototype projects must be directly related to DoD weapons/components - May use physical or virtual model to eval. Tech/Manuf. Feasibility/mil. utility - OTA authorized follow-on production, when trad. Ktr provided 1/3 cost share on prototype - P.L. 108-136 Authority extended (30 Sep 08) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  9. Prototype Statutory Direction • Directly relevant to DoD weapon and: • Involves a non-traditional defense Ktr., or • Contractor or consortium invests at least 30% share of total cost of project, or • Agency Senior Procurement Executive determines OTA appropriate for innovative business arrangements • Can’t duplicate existing DoD research NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  10. OTA Benefits to Government • Reduces federal investment/oversight • Promotes contractor IR&D investment; • Commitment to schedule completion • Used for both cost and fixed price requirements—encourages competition • Allows Agreement’s Officer to start with a clean sheet, while learning from past NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  11. OTA Benefits to Contractors • Encourages traditional non-defense and/or small business competition/market research • OTA can be patterned after company commercial agreements • Not subject to procurement regulations—possible advance payments, and protect contractor proprietary information (min. 5 yrs) • Expectations: legally binding, best value, win-win for both parties NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  12. Case Study: Two Evolved Expendable Launch Vehicle (EELV) Systems • Two different vehicles and manufacturing/launch infrastructure developed under OTAs • Delta IV (McDonnell Douglas/Boeing) • Based on Delta family learning and new Rocketdyne engine • Atlas V (Lockheed Martin Astronautics/LM Space Systems Company) • Based on Atlas family learning and new Russian engine NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  13. EELV Program Schedule Current FY95 96 97 98 99 00 01 02 03 04 05 06 07 08 08 MS I OIPT MS II • 1st Flights (Commercial / Military) • Boeing FY03/03 • LMA FY02/06 Restructure Complete LCCV Pre-EMD EMD 15 Months 4 Contracts Development 2 Other Transactions 17 months 2 Contracts Initial Launch Services 2 Contracts To FY 11 Buy I To FY 09 Buy II CFI RFP RFP To FY ?? Buy III TAILORED SRRs TAILORED PDRs DDR TCDR DCR Pre-EMD - Pre-Engineering & Manufacturing Development LCCV - Low Cost Concept Validation TCDR - Tailored Critical Design Review SRR - Systems Requirements Review RFP - Request for Proposal PDR - Preliminary Design Review CFI - Call For Improvements DDR - Down-select Design Review MS – Milestone DCR – Design Certification Review NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  14. 8/02 7/03 2/02 Atlas V Evolution NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  15. 9P218064 Delta IV Medium Delta IV Heavy Delta IV Medium+ Delta II792X (4,2) (5,2) (5,4) Delta III 4-m fairing (Delta III) 5-m fairing Modified Delta III second stage Stretched Delta III second stage tanks RL10B-2 RL10B-2 Common booster core IsogridfirststageLO2 tank 4 GEM 60s RS-68 main engine 2 GEM 60s RocketdyneRS-27mainengine 4,971 kg (10,960 lb) 8,292 kg (18,280 lb) 8,120 kg (17,900 lb) 10,430 kg (23,000 lb) 7,980 kg (17,600 lb) 11,475 kg (25,300 lb) 23,040 kg (50,800 lb) LEO 1,799 kg (3,965 lb) 3,810 kg (8,400 lb) 4,210 kg (9,285 lb) 5,845 kg (12,890 lb) 4,640 kg (10,230 lb) 6,565 kg (14,475 lb) 13,130 kg (28,950 lb) GTO GTO: 185 km by 35,786 km, 28.7 deg inclination (Delta II/Delta III)or 27 deg inclination (Delta IV) Delta IV Evolution NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  16. EELV Development in 4 Years • OTAs contained milestones/criteria for “best effort” to complete each system and infrastructure to launch East/West Coast • Air Force investment--$500M/OTA; Ktrs--majority investment/responsibility • Commercial/government common manufacturing and launch process • Awarded FAR 12 Initial Launch Services • Development completed for both systems • AF had validated system requirements NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  17. FAR 15 Weapon hardware Huge RFP/Kt Review of acctg., purchases, rate agmt. Elaborate pay sched GFP mgt./CDRLs Gov’t mgt./verify quality product EELV FAR 12 Commercial Service Streamlined contract GAAP—insight on contractor format Fast pay/cashflow No GFP No DD 250 Contingency/backup FAR 15 meets FAR 12 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  18. Results? • First launches—satellites hit the customer’s bull’s eye in space • Met life cycle cost savings goal(25-50%) • Commonality/standardization, lean manufacturing and operations, and environmental protection • Developed 2 launch vehicle families NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  19. EELV Lessons Learned • Adapted commercial market downturn by restructuring OTAs and FAR 12 contracts • 50% reduction from COMSTAC forecast • Boeing Delta IV changed to Government launch focus only • FAR 12 commercial contracting viable? • Understand T&Cs and obtain training on intellectual property protection, GAAP, and commercial item financing NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  20. 98 GSO 98 Hvy LEO 03 GSO 03 Hvy LEO NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  21. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  22. EELV Lessons Learned (Con’t) • Establish authority, clear understanding between parties on what is auditable • Conduct open information exchanges early in the source selection planning • Jointly draft a streamlined RFP • Notify Congress of awards (DD 2759) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  23. EELV Lessons Learned (Con’t) • Define role of parties under a commercial acquisition • Ktr owned launch infrastructure on AFB • Leases and Licenses • Safety and security liabilities • AO and DCMA; who administers what? • Can OTA system development goals be linked to a FAR based commercial service contract? NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  24. Future Opportunities • Future Combat Systems (FCS) • DARPA research projects • National Geospatial-Intelligence Agency (NGA)--National Technology Alliance (NTA) Program NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  25. Future Opportunities—FCS Network • System Dev./Demo (SDD) Phase OTA • $130M obligated; $14.9B ceiling • TACOM awarded 5/03 to Boeing as USArmy’s Lead Systems Integrator (LSI) • Linking 23 ACAT 1 programs • DCMA Boeing St Louis Lead CMO • Potential sub work in networks, training, lethality, manned integration systems, etc. • http://home.rd.dcmdw.dcma.mil FCS NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  26. Future Opportunities--DARPA • Other Transactions for Prototypes (845's):(Other Transaction) www.darpa.mil/cmo/pages/845.htm NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  27. Future Opportunities--NTA Program • History: NPIC-DMA-NIMA-NGA—NTA • FY04—40 prototypes; valued $40M • Technology Areas: • Geospatial Intelligence—imagery, maps, and environmental data—visualize terrain • Info Processing, Analysis and Mgt. (IPAM) • Digital Tech Infrastructure (DTI) • Chemical, Bio, Radiological Defense • Contacts: 703-735-3076/58 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  28. New role—trusted advisors • Experience as OTA agreements officer • Flexibility to customer defined reqmts. • Be the best—demonstrate it • Keep your ego in check—as enablers • Think strategically—see connections • Give honest, well-researched advice • Practice core values--integrity NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

  29. Briefing sources • DAU continuous learning OTAs for Prototype Projects www.clc.dau.mil • DoD Grant/Agrmt Regs (DoD 3210.6) • Other Transactions Guide for Prototype Projects, January 2001, OSD (AT&L) • COMSTAC forecast charts from EELV • Talk by Ralph Shrader, July 2002, NCMA World Congress and The Trusted Advisor by David Meister NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

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