National Contract Management Association Aerospace and Defense Contract Management Conference 2008

2. National Contract Management AssociationAerospace and Defense Contract Management Conference 2008 Lt Gen Don Hoffman Military Deputy, Assistant Secretary of the Air Force (Acquisition)

3. NCMA Vision • NCMA will lead and represent the contract management profession. Our vision is that enterprises will succeed through improved buyer-seller relationships based on common values, practices, and professional standards • Professions have certain elements: • Education, Training, and Experience • Common Values, Ethical Standards, and Accountability • True Professions Police Themselves • If you believe government and industry contracting personnel are all professional, then …

4. Blackwater May have Fudged Numbers to Get $100M in Contracts July 29, 2008 Federal No-Bid Contracts On Rise Use of Favored Firms A Common Shortcut August 22, 2007 Ex-Army officer admits taking bribes for Iraq contracts Tue June 10, 2008 U.S. Air Force community center project in Germany over budget, behind schedule The Associated Press Published: July 8, 2007 Army accepts Gansler Commission report on contracting; commits to action Nov 01, 2007 Contract bias leads Air Force to discipline 5 Apr. 18, 2008 12:00 AMThe Arizona Republic July 11, 2008 Patrick/Shaw AFB Hearings Shoddy standards blamed for electrocutions in Iraq … You need to explain that to Congress and the Media 3

5. There’s always “the rest of the story,” but … • A contracting “professional” is always in the middle • They need to be the safety valve

6. DoD Contracting Workforce • Workforce Strength (22,345) • Military (3,523) • Civilian (18,822) • Average Years of Service = 18.3 • Average Age of Force = 47.6 years “DoD must hire, develop, and retain people with the right skills needed now and for the future” 5

7. The Challenge Of Expeditionary Operations • Unprecedented Landscape, Not Only For Contracting, But In The Role Of Contractors • DoD Performing Non-traditional Roles • We Can’t Let Down Our Guard On The Homefront

8. Strategic Sourcing • OMB, DoD, Air Force focus area • Commodity councils have saved $Bs • Installation Acquisition Transformation (IAT)

9. Installation Acquisition TransformationThe Case for Change • 71 buying organizations supporting installations and numerous field agencies • Inconsistent use of skilled contracting resources • Redundant procurement of similar commodities • Does not leverage scale to drive efficiencies • Strain on buying activities with deployed contracting officers The current structure strains the ability of the Installation Contracting community to effectively perform its mission 8

10. 71 Buying Activities 3,322 Personnel 71,000 Contract Actions $13B Installation Spend $2B GPC Spend Old: CONUS Installation Contracting Bolling AF Legal Services Agency AF Medical Support Agency AF Medical Operations Agency AF Pentagon Communications Agency Pentagon AF Personnel Ops Agency AF Ops Group Andrews AF Flight Standards Agency AF Review Boards Agency ANG Readiness Center Office of Special Investigations AF Weather Agency AF Communications Agency AF Inspection Agency AF Safety Center AF Nuclear Weapons and Counterproliferation Agency AF Historical Research Agency AF Logistics Management Agency AF Manpower Agency AF Personnel Center AF Services Agency AFC2ISRC AF Global C4ISR Integration Ctr* AF Security Forces Ctr AF News Agency AF CE Support Agency Orlando AF Agency for Modeling and Simulation AF Center for Environmental Excellence AF Technical Applications Ctr Current as of October 2007

11. AFMC Selected as Lead MAJCOM 5 Geographic Based Regional Centers Contracting Presence at Each Installation Enables Realization of Strategic Sourcing Improves Customer Support New: CONUS Installation Contracting Current as of October 2007

12. Services Contracts • AF has 39 acquisition programs currently executing over $1B • 24 programs are services contracts • 20 post award contracts totaling $81.3B • 4 pre-award programs totaling $16.6B • Requires solid solicitation, source selection, and post-award contract management

13. Services Delegation Tiers • Basic (<$100M) • Responsibility: Acquisition Strategy Plan through Admin • Qualification: Statutory/Regulatory • Silver (<$500M) • Responsibility: ASP with status reporting beginning with Requirements Document (OSD-like notification process) • Qualification: Probationary based on regular PEO/CM oversight and real-time, joint definition of success • Gold (<$1B) • Responsibility: SSA, Award Fee Plan, and FDO (ASP & Acq Plan at PEO) • Qualification: 1-2 years demonstrated success with programs under $500M • Platinum (<$1B) • Responsibility: Full spectrum • Qualification: Demonstrated pro-active full-spectrum Services management and oversight for everything <$1B

14. Social and Economic Goals Strengthen focus on socio-economic responsibilities Air Force needs to improve on meeting Small Business Goals For example, in our new IAT initiative, AF is committed to increasing small business opportunities and performance AF “Beyond Goals” Strategy SECAF direction is in place Small Business in CYBER direction is in place Small Business Solution Center is in place AF is committed to improve prime and sub-contracts opportunities – achieve 23% 14

15. How are we doing? • In FY06, USAF hit or exceeded internal goals across all categories, except SDV: • SB - $8.8B • SDB - $3B • HUBZ - $637M • WOB - $1.3B • SDV - $240M • HBCU/MI - $81.8M G G G Y R Data Source: J001 EA1 for FY02-06 14

16. G R R R R How are we doing? • In FY07, USAF missed internal goals across all categories except WOB, even though total acquisition dollars increased in every category: • SB - $9.0 B • SDB - $3.0B • HUBZ - $762M • WOB - $1.37B • SDV - $298M • HBCU/MI - $254M Data Source: J001 EA1 for FY02-06 15

17. Other DoD Contracting Trends • Fixed price development • More objective fee structure • Incentivize appropriate outcomes • Proper use of time and material contracts • Increasing competition of indefinite delivery-indefinite quantity contracts • Increased oversight of undefinitized contract actions 16

18. Questions?