Breakout Session 1710 Bradley Niese, Contract Specialist Exploration Systems Procurement Office

2. An Acquisition Overview: NASA’s Next Human Spacecraft, Project Orion Breakout Session 1710 Bradley Niese, Contract Specialist Exploration Systems Procurement Office NASA Johnson Space Center K. Lee Pagel, Manager Exploration Systems Procurement Office NASA Johnson Space Center April 25, 2007 2:40 – 3:40 pm

3. Agenda • Introduction • Project Overview • Project Objectives & Goals • Acquisition Strategy • Progressive Competition Down-Selection Process • Contract Structure Formulation • Rewarding Performance Incentives • Cost & Price Information • Technical Resources Information • Other Acquisition Innovations • Lessons Learned & Best Practices • Questions

4. Introduction A Bold Vision for Space Exploration • Complete the International Space Station • Safely fly the Space Shuttle until 2010 • Develop and fly the Crew Exploration Vehicle no later than 2014 (goal of 2012) • Return to the Moon no later than 2020 • Extend human presence across the solar system and beyond • Implement a sustained and affordable human and robotic program • Develop supporting innovative technologies, knowledge, and infrastructures • Promote international and commercial participation in exploration

5. Introduction • NASA Exploration Systems Mission Directorate (ESMD) is responsible for implementing the Vision for Space Exploration (VSE) • ESMD created the Constellation Program office which is responsible for managing and integrating the projects necessary to accomplish the VSE, including Project Orion

6. Introduction

7. Project Overview

8. Project Overview • The Crew Exploration Vehicle (CEV) is NASA’s next generation human spacecraft • Will provide human and cargo transportation to Low Earth Orbit and the Moon • CEV has been named “Orion” • Lockheed Martin has been awarded the Prime contract for Orion • Diverse Government and Industry project management team

9. Project Overview NASA’s Next Human Spacecraft: Orion (CEV) Ares I (CLV)

10. Project Overview Spacecraft Adapter – structural transition to launch vehicle Launch Abort System – emergency escape during launch Orion consists of four functional modules Crew Module – crew and cargo transport Service Module – propulsion, electrical power, fluids storage NASA Reference Illustration

11. Project Objectives & Goals

12. Project Objectives & Goals • Definitive end to the Design, Development, Test and Evaluation (DDT&E) phase of the contract • Isolate and track recurring cost of production • Incorporate lessons learned from previous NASA development programs • Maximize use of existing technology

13. Project Objectives & Goals • To utilize effective incentives during each stage of the project life cycle • To award a contract for a realistic price • To minimize life cycle cost • To structure the contract to accommodate ability to evolve throughout the project life cycle

14. Acquisition Strategy

15. Acquisition Strategy • Orion was a Phased Acquisition Using Progressive Competition (NASA FAR Supplement 1852.217-72) • Progressive Competition Background: • Type of down-selection strategy for a phased acquisition • Single solicitation is issued for all phases of the program • Initial phase contracts are awarded • Contractors for subsequent phases are expected to be chosen through a down-selection from the preceding phase contractors • Progressively fewer contracts are awarded in each phase until a single contractor is chosen for the final phase

16. Acquisition Strategy • NASA’s Planning for the Phased Acquisition • Decision to use down-selection strategy must be made prior to release of initial solicitation • Rationale documented in acquisition plan must address all phases of the acquisition • When using down-selection, both the initial and all subsequent phase(s) are considered full and open competition • Down-selection should not be used if a direct link cannot be made between successful performance in the preceding phase and successful performance in a subsequent phase

17. Acquisition Strategy • NASA’s Implementation of the Phased Acquisition: • Utilized two-phases • Considered to be a diligent and cost effective investment • Phase 1 contracts awarded to Northrop Grumman and Lockheed Martin • Phase 2 down-select was awarded to Lockheed Martin for DDT&E of initial CEV with options for production and sustaining engineering of future CEVs

18. Acquisition Strategy • NASA’s Results from the Phased Acquisition: • Great amount of insight gained through the “learning curve” inherent with this approach • Provided insight into successful Phase 1 offerors, how they were organized, technical approaches, business practices, etc., streamlining and speeding the Phase 2 evaluation process • Source Selection Authority gained unique insight into performance as a result of Phase 1, and it served as a notable element of the Past Performance Evaluation in Phase 2 • Captured lessons learned from Phase 1 specifically those pertinent to source selection procedures

19. Acquisition Strategy • Phase 2 Contract Structure Formulation • Started with project goals and objectives in mind which drove to the resultant contract structure • Contract built around three contract schedules • Schedule A- DDT&E • Schedule B- Production • Schedule C- Sustaining Engineering and Operations Support • Each schedule was uniquely structured to accomplish the project goals • Will provide NASA with maximum flexibility to achieve successful project requirements during each phase of the project life cycle

20. Acquisition Strategy • Schedule A- DDT&E • DDT&E and initial production • Cost Plus Award Fee • Incorporates both completion form and indefinite delivery / indefinite quantity (IDIQ) • Completion Form for DDT&E • IDIQ for operations support and initial flight spares • Schedule A ends upon delivery and flight of the initial production variant CEV • Provides for a definitive end to DDT&E • End item award fee using milestone based evaluation periods • Schedule A contains option for Schedules B & C (Production and Sustaining Engineering)

21. Acquisition Strategy • Schedule B- Production • Future production and refurbishment of CEVs following Schedule A • IDIQ Cost Plus Incentive Fee leading to Fixed Price Incentive Delivery Orders • IDIQ arrangement permits: • Negotiating prices for vehicles as knowledge base continuously matures (e.g. capturing learning efficiencies, economies of scale, etc.) • Flexibility to deal with changes in manifest and program direction • Incentivizing each delivery order uniquely based on current needs of the program (i.e. schedule, cost, etc.) • Permits NASA to isolate recurring cost of production

22. Acquisition Strategy • Schedule C- Sustaining Engineering and Operations Support • Sustaining engineering and operations to support each variant produced under Schedule B • Concurrent with Schedule B • Covers the scope of any non-recurring costs during production and operations support • IDIQ Cost Plus Award Fee Task Orders • IDIQ arrangement permits NASA flexibility to control effort as needed depending on manifest, budget, etc.

23. Acquisition Strategy • Focus on Rewarding Performance Incentives • Milestone based that incentivize successful outcomes • Maximize return on investment for the Government and contractor • Contract Incentives: • Schedule A DDT&E is end-item based, milestone driven award fee • Schedule B Production is incentive fee per delivery order • Schedule C Sustaining Engineering is award fee per task order

24. Acquisition Strategy • Schedule A- End Item Award Fee • Interim evaluation periods based on scheduled project milestones (e.g. SDR, PDR, CDR, test flights, first human launch, etc.) • Milestones established to incentivize schedule performance • All award fee determinations are considered interim except for the last award fee determination, which is final • Schedule B- Incentive Fee • IDIQ arrangement permits NASA to incentivize each delivery order uniquely based on current needs of the program (i.e. schedule, cost, etc.) • Based on completion of each delivery order • Schedule C- Award Fee • Follows traditional NASA standard award fee structure for services • Based on completion of Task Orders • Evaluations occur every 6 months

25. Acquisition Strategy • Cost & Price Information • Obtained two cost models: Government Provided (standardized) & Offeror Provided (customizable) • Models were Microsoft Excel based • RFP defined standard labor categories to which offerors mapped their internal labor categories • Hours priced out in cost model were converted from Full Time Equivalents (FTE) proposed in the Technical Resources Volume • Cost and resources data requested at the highest level possible to keep evaluators focused but still permit a comprehensive evaluation

26. Acquisition Strategy • Technical Resources Volume • Contained all proposed resources and the basis of estimate • Emphasis placed on understanding of the requirements, efficiencies proposed, and a comprehensive basis of estimate • Bridges the cost volume with the technical and management volumes • Facilitated the cost realism analysis • Organized by Work Breakdown Structure (WBS) which allowed proposal evaluators to focus in on their pertinent areas of expertise • Very positive feedback from both offerors on this approach

27. Acquisition Strategy • Other Acquisition Innovations • External Review Teams and Independent Consultants • Early release of Draft Statement of Work and Draft Data Deliverable Documents • Industry Day and Pre-proposal Conferences • Electronic based Bidders Library • Utilized a web-based management information system to share non-source selection sensitive information with the offerors and coordinate reviews across the Agency • Approach at Oral and Written Discussions

28. Lessons Learned & Best Practices

29. Lessons Learned & Best Practices • Refined Requirements • Requirements definition speeds every aspect of source selection • Requirements must “earn their way” into contract: Number of Data Deliverables, Project Reviews, etc. • Focus on performance outcomes and allow Industry to determine best way to achieve desired outcome • Allow and encourage industry to suggest alternatives • Use commercial practices if it’s available and better • Allow adequate time for meaningful discussions • Final Proposal Revision format should include full proposal resubmission, not just a “delta” volume • Technical Resources Volume facilitates traceability from technical and management volumes to the cost volume

30. Summary

31. Summary • Through innovative acquisition planning and source selection techniques, NASA has a contract that provides the coverage and flexibility needed in an advanced development and production effort.

32. Questions