Breakout Session # 1104 Christopher W. Webster, Acquisition Tech Solutions, CACI

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

2. Net-Centric Contracting Breakout Session #1104 Christopher W. Webster, Acquisition Tech Solutions, CACI Rodney F. Matsushima, CPCM, Fellow, President, CSI John F. Qua, Capt, SC, USN Date April 26, 2004 Time 1630 - 1730 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

3. Introduction • Presenters • Agenda • Background – Net-centric Warfare • Why is Net-Centric Contracting Important? • What is Net-Centric Contracting? • How do we manage Net-Centric Contracting? • Conclusions and Recommendations NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

4. The Challenge “We must take the battle to the enemy, disrupt his plans, and confront the worst threats before they emerge.” George W. Bush 01 June 2002 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

5. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

6. Network Centric Warfare • Network-Centric Warfare derives its power from the strong networking of a well-informed but geographically dispersed force. • The enabling elements are a high-performance information grid, access to all appropriate information sources, weapons reach and maneuver with precision and speed of response, value-adding command-and-control (C2) processes--to include high-speed automated assignment of resources to need--and integrated sensor grids closely coupled in time to shooters and C2 processes. • Network-centric warfare is applicable to all levels of warfare and contributes to the coalescence of strategy, operations, and tactics. • It is transparent to mission, force size and composition, and geography. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

7. Speed of Command • Speed of Command is the process by which a superior information position is turned into a competitive advantage. It is characterized by the decisive altering of initial conditions, the development of high rates of change, and locking in success while locking out alternative enemy strategies. It recognizes all elements of the operating situation as parts of a complex adaptive ecosystem and achieves profound effect through the impact of closely coupled events. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

8. Self-Synchronization • Self-Synchronization is the ability of a well-informed force to organize and synchronize complex warfare activities from the bottom up. The organizing principles are unity of effort, clearly articulated commander's intent, and carefully crafted rules of engagement. Self-synchronization is enabled by a high level of knowledge of one's own forces, enemy forces, and all appropriate elements of the operating environment. It overcomes the loss of combat power inherent in top-down command directed synchronization characteristic of more conventional doctrine and converts combat from a step function to a high-speed continuum. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

9. Cebrowski’s Axioms • The shift in focus from the “platform” to the “network” • The shift from viewing “actors” as independent to viewing them as part of a continuously adapting business ecosystem • The importance of making strategic choices to adapt or even survive in such changing ecosystems NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

10. Business and Cebrowski’s Axioms • The shift from platform to network is what enables the more flexible and more dynamic (and profitable) network-centric operation. Therefore, the construction of high-quality networks is their top priority. • The shift from viewing partners as independent to viewing partners as part of a continuously adapting ecosystem increases speed and profitability in both sales and production. Therefore, they have developed high-speed sensor grids and automated command-and-control systems closely coupled with their transaction grids. • The key to market dominance lies in making strategic choices appropriate to changing ecosystems. Simply pursuing operational effectiveness while adhering to an obsolete strategy is a formula for failure. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

11. Shift to Net-Centric operations • Central to these developments is the shift to network-centric operations, which are characterized by information-intensive interactions between computational nodes on the network. Whether these interactions are focused on commerce, education, or military operations, there is "value" that is derived from the content, quality, and timeliness of information moving between nodes on the network.12 This value increases as information moves toward 100% relevant content, 100% accuracy, and zero time delay--toward information superiority. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

12. Web Services Web Resources 3rd Party Marketplaces Business Partner Network FPDS-NG Industry/ Government Enterprise systems Org.-specific Ts&Cs Past Performance FAR/DFARs FedBizOpps eLibrary Portal — (Single Sign-on), (eAuthentication), (Security), (Privacy) Busness Workflow: Powered by Common Horizontal Business Language Integration Busness Intelligence eProcurement Strategic Sourcing Contract Management Buy Side Sell Side Pre-Award Proposal Preparation Spend Analysis Streamlined Processes Shopping Basket Purchase Cards Leveraged Buying Catalogs Award Post-Award Sub-Contracting Negotiations Infrastructure Notional Ecosystem - Digital Procurement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

13. Why is Net-Centric Contracting Important? • Procurement software platforms are evolving toward seamless interoperability • The “big A” is a system-of-systems • The movement toward Net-Centric contracting is inevitable • Data standards driving process changes • The role of the contracts professional is changing • Technical skills + functional skills • Systems Thinking • Acquisition “ecosystem” • Technology portfolio NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

14. What is Net-Centric Contracting? • “Net-Centric Contracting is a business process which: • Exploits the union of enterprise information and interoperability • Produces and administers business arrangements • Connects sensors, acquirers, and suppliers • Operates across the Acquisition Domain.” • Maintains fundamental tenets of contracts NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

15. Characteristics of Net-centric Contracting • It operates within and is supported by the business ecosystem • It is sustained and managed by cross-functional governance using an enterprise-wide anthology of directives and standards • It utilizes business intelligence to collaborate and enable efficient sourcing • It uses interoperable technologies, enterprise architecture, and a horizontal business language NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

16. Characteristics of Net-centric Contracting (continued) • Empowers the seamless interaction of sensors, acquirers, and suppliers • Congruent with the axioms of Net-Centric warfare • It is self-synchronizing • Steadfastly maintains the bedrock principles of contracting NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

17. How do we manage Net-Centric Contracting? • Managing the contracting process • Solid Regulatory Framework • Incorporation of “e” processes • DO NOT deconstruct the FAR • Managing the vast amount of digital information • Fusion of data • MUST have a blueprint consistent with the vision • Well planned infrastructure and architecture • Managing people and organizations • Cross Functional Governance • Actors and people interchangeable NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

18. What does Enterprise Architecture consist of? Governance, Principles and Standards Operational Views: • Business goals, processes and activities • Data and information exchanges Vision, Mission & Goals Business Architecture System Views: Applications and systems that process information and data Data Architecture Sequence Security Application Architecture Technical Views: IT infrastructure and technology standards Technology Architecture Technology Architecture NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

19. The Way Ahead…BSM Organization Headquarters Cross Lead Center Staff D/DD Demand & Supply Alignment Performance Specialist Financial Services Liaison Business Analyst Supplier Operations Customer Operations Customer Facing Customer Account Specialist Demand Planner Demand Data Maintainer Readiness and ICT Support Market Analyst Business Analyst WSSM Supplier Facing Supply Planner Purchasing Specialist Product Specialist Purchasing Support Technician Supplier Support Supply Data Maintainer Business Analyst Supplier Capability Analyst Resolution Specialist Pricing Strategist Supplier Relationship Manager Supplier Relationship Manager Distribution Cross Lead Center Staff NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

20. Business Process Flows with Critical Issues and Stabilization Dates Regulatory Reporting PR6 Develop Develop DPACS/DIBBS/PACE/ECF Supply Demand Plan Plan PR5 DIBBS Solicit Create PR PACE Award AWARD Process DELIVERY DELIVERY Source ORDER ORDER Order ORDER ORDER Fill Order OF4 Asset Management SHIPMENT Deliver TBD Receive Order SHIPMENT SHIPMENT Goods FI1 INVOICE Pay Vendor Bill BILL BILL Customer PAYMENT PAYMENT General OF2 Process Ledger RETURN Returns NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle” Issue = Critical Issue impacting or stopping the business process

21. DLA Transformational Initiatives • Business Systems Modernization (BSM): • Reengineering SCM Processes – Best Commercial & Government Practices • COTS IT Systems: ERP – SAP; APS – Manugistics • Customer Relationship Management (CRM): • Collaborative Demand Planning with Major Customers • Customer Cells at Lead Defense Supply Center • Performance Based Agreements • Strategic Material Sourcing for Competitive Items: • Grouping Items for Long-Term Contracts with Performance Based Metrics • Strategic Supplier Alliances and Long-Term Corporate Contracts with Major OEMs for all Sole Source Parts Across Systems/Services • Supplier Relationship Management with Major Suppliers • Collaborative Supply Planning and Performance Reviews • SRMs and Integrated Supplier Teams at Lead Defense Supply Center Collaborative Planning & Sharing Information 2 Ways End-to-End in the Supply Chain NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

22. Recommendations and Solutions • Data Type Definitions DTDs) for digital contracts • Capture digital contracts information in a process-oriented, unambiguous way to enable processing by various computer programs • Organize the business content of digital contracts into interchangeable components • Provide an exchange mechanism for digital contracts transactions (e.g. not EDI) • Acquisition Digital Architecture • BMMP framework, acquisition-specific • Electronic Federal Acquisition Regulation Supplement • Address electronic issues, KEEP the basics NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

23. Critical Success Factors • Quorum of Agencies and Industry to ensure recognition of the problem and acceptance of new rules and new standards • Any new standard will be open vice proprietary • no $$$ paid for access • Willingness to codify e-contracting standards in an EFARS • Strong foundation for the cb-XML standard (eb-XML) • Planning for and Ease of implementation NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

24. Next Steps • Designate a responsible organization to adopt a content standard for Digital Contracting • DPAP Data Forum? • Charter a commission to author an Electronic FAR Supplement (EFARS) • Obtain Industry input and buy-in • Set-up Web-based registries to engender collaboration for the new content profile(s) (cb-XML) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”

25. Questions ! • POCs • Chris Webster • Rodney Matsushima, CPCM • John Qua, Capt, SC, USN NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management within the Business Cycle”