AF BBP Tool Basics

1. AF BBP Tool Basics Air Force Better Buying Power (BBP) Tool Basics UPDATED 6 March 2014 NEXT • Who? This tool is meant for your use as a Government acquisition professional • What? The BBP Tool is a Living Document with 11 fundamental BBP Practices and over 90 associated Techniques • Includes techniques applicable to sole source and competitive acquisitions • Why? The tool was created to aid AF personnel in understanding and implementing the concept of BBP and the DOD BBP initiatives primarily related to contract formation • It is also a means to collect and share great ideas and innovative BBP techniques being used across the Air Force • Latest updates reflect initial collaboration with Program Management community to incorporate additional techniques related to the new DOD BBP 2.0 • When? The tool is ready for you to use NOW! • Training links still being identified and populated • Additional techniques being added

2. AF BBP Tool Basics AF BBP Tool Basics • Tool Tutorial • Run in PowerPoint Slideshow Mode • Use buttons to navigate, slides will not advance by any other means • If printing, choose to print in “pure black and white” for best results • Escape key will exit the slideshow at any time • What Can You Do? • Share the Tool! Tell others about it • Suggest additional techniques, links, or examples using the link on the technique pages PREVIOUS NEXT

3. BBP Menu Air Force Better Buying Power Practices Menu 1. Manage Affordability/ Efficiency Throughout Life Cycle 2. Use Contract Type/ Incentives Effectively 7. Be an Informed Buyer of Commercial Items 3. Enhance Competition 8. Conduct a Rigorous Cost/Price Analysis 4. Enhance Tradecraft of Services 9. Employ Innovative Profit/Fee Analysis Techniques 5. Optimize Use of Small Business 10. Use DCAA/DCMA Services Effectively 6. Leverage Buying Power 11. Conduct Effective Contract Negotiations

4. Manage Affordability/ Efficiency Throughout Life Cycle 1. Manage Affordability/ Efficiency Throughout Life Cycle Techniques: 1. Conduct Cost/Capability Analysis 5. Use Multi Year Approach When Appropriate 2. Utilize Affordability Assessments 6. Effective Use of Performance Based Logistics (PBL) 3. Conduct Program Level Should-Cost 4. Consider Program Should-Cost Results in Negotiations See all BBP Practices to help achieve program affordability Back to BBP Menu

5. Effective Contract Type/ Use of Incentives 2. Use Contract Type/ Incentives Effectively Techniques: 1. Analyze Optimal Contract Type 5. Creation of Effective FPIF Construct 6. Creation of Effective CPIF Construct 2. Avoid Use of Time & Materials 3. Avoid Use of Award Fee 7. Schedule Fixed Fee Payments to Incentivize Performance 4. Use of Objective Performance/ Schedule Incentives Back to BBP Menu

6. Enhancing Competition 3. Enhance Competition Techniques: 1. Move Beyond Market Research to Market Intelligence 7. Obtain Necessary Data Rights Up Front, Via Competition 2. Newly Held Prime Competition (Item that was not Previously Competed) 8. Effective Data Management on Existing Contracts 9. Reduce Reliance on Sole Source IDIQs 3. Ensure Competitions Allow Adequate Time for Submission of Optimal Number of Offers 10. Develop Alternate Sources for Sole Source Items 4. Effectively Maintain Competition on Multiple Award IDIQ Contracts 11. Major Component Breakout (Sole Source Acq) 5. Increase Focus on Cost/Price in Competitions 12. Review Subcontractor Level Competitions in Sole Source Acquisitions 6. Use Open Architecture to Provide Gov’t with Ability to Compete Future Sub-Systems 13. Avoid Use of Sole Source Bridge Contracts Back to BBP Menu

7. Enhance Tradecraft of Services 4. Enhance Tradecraft of Services Techniques: 1. Structure Performance-Based Requirements to Foster Contractor Efficiencies 4. Limit Use of Award Fee 5. Transition from Incumbent Contractor to New Contractor after a Source Selection 2. Utilize On/Off Ramps for MAC IDIQs 6. Utilize an Established Task Order Proposal Evaluation Method 3. Limit Use of Time & Materials See BBPP 3, Enhance Competition, for more ideas See BBPP 5, Optimize Use of Small Business, for more ideas Back to BBP Menu

8. Increase Small Business Opportunities 5. Optimize Use of Small Business Techniques: 1. Communicate Early and Often with the Small Business Office and Industry about Future Requirements 4. Determine Optimal NAICS and PSC Codes 5. Motivate Prime Contractor to Increase Use of Small Businesses through Profit/Fee Incentives 2. Market Intelligence from a Small Business Perspective 3. Use AF Enhanced 5 Year Utility Tool Back to BBP Menu

9. Leverage Buying Power 6. Leverage Buying Power Techniques: 1. Employ Tenets of Strategic Sourcing 5. Use Pricing Matrices When Appropriate 2. Partner With Other Locations/Activities/ Services to Combine Buys 6. Contract Provisions for Price Breaks 7. Establish Corporate Positions 3. Utilize Existing Contracts 8. Review of Prime’s Use of Buying Power Leverage 4. Leverage Other Requirements To Improve Negotiation Posture Back to BBP Menu

10. Effective use and analysis of commercial items 7. Be an Informed Buyer of Commercial Items Techniques: 1. Perform Robust Market Research 9. Obtain Other Than Cost or Pricing Data for Commercial Services Not Sold in Substantial Quantities 2. Market Leverage Analysis (Prime/Sub Level) 10. Ensure Consistent Application of Contractor’s Business Model 3. Technical Review of Commerciality 4. Challenge Commerciality of Sole Source “Of a Type” Commercial Items When Appropriate 11. Direct Engagement With Subs When Needed 5. Obtain Relevant Sales Data 12. Use of Improvement Curve to Consider Impact of Changes in Material Quantities 6. Thorough Review of Catalog Prices 13. Analyze Cash Flows for Commercial Items 7. Terms & Conditions Review 8. Obtain Cost Data For “Of A Type” Items (Prime/Sub Level) When Needed to Determine a Fair and Reasonable Price) Back to BBP Menu

11. Innovative Cost/Price techniques 8. Conduct a Rigorous Cost/Price Analysis Techniques: 1. Obtain and Review Prime’s Actual Cost from Previous Buys 8. Get a Good Technical Evaluation 9. Use of Navy Price Fighters for Specialized Technical Expertise 2. Obtain and Review Top 3-5 Suppliers’ Actual Cost from Previous Buys 10. In-Depth Review of Sustaining Engineering 3. Conduct Price Analysis (In addition to Cost Analysis) 11. In-Depth Review of Improvement Curves for Labor 4. Leverage Recent Cost Based Negotiations 5. Conduct FAR/DFARS Should-Cost 12. Use of Improvement Curve to Consider Impact of Changes in Material Quantities 6. In-Depth Subcontractor Cost Analysis When Appropriate 13. Understand Proposal Factors 7. Joint Review of Sub With Prime Back to BBP Menu

12. Innovative Profit/Fee Analysis 9. Employ Innovative Profit/Fee Analysis Techniques: 1. Review of Prime’s Profit for Subcontractors 5. Analyze Contractor’s Realized Profit 6. Element-Specific Risk Analysis 2. Review of Subcontractors’ Profit 7. Reward for REAL Cost Efficiency 3. Calculate Internal Rate of Return to Evaluate Fee on Cost Type Contracts 4. Use DOD Performance-Based Payment (PBP) Tool to Evaluate Profit when using PBPs Back to BBP Menu

13. Effective Utilization of DCAA/DCMA Services 10. Use DCAA/DCMA Services Effectively Techniques: 1. Joint Proposal Walkthroughs 6. Obtain Appropriate Service from DCAA 2. Use of DCMA Integrated Cost Analysis Teams (ICATs) 7. DCAA Support on Commercial Buys 8. Early Engagement from DCAA FLAs to Troubleshoot Issues 3. Use of DCMA FPRRs 4. DCMA Support on Competitive Buys 5. DCAA/DCMA Support in Negotiations Back to BBP Menu

14. 11. Effective Contract Negotiations Techniques: 1. Develop Negotiation Strategy 4. Trade off Cash Flow for Better Deal with Performance Based Payments 2. Carefully Construct First Offer 5. Trade off Cash Flow for Better Deal - Commercial Items 3. Establish Major Subcontract Negotiation Expectations 6. Use of Flat Spot to Resolve Difficult Issues See BBP Technique 10.5, DCAA/DCMA Support in Negotiations Back to BBP Menu

15. 1.1 Conduct Cost/Capability Analysis • Cost/Capability Analysis is a reporting requirement of the Air Force Requirements Oversight Council (AFROC) for analysis of alternatives (AOA), capability development document (CDD) and capability production documents (CPD) to improve the understanding of the effects of operational capability requirements on cost and cycle time • Spending a large % of budget to get the last few % of key performance parameters value is not always the “BEST VALUE” • Provides a framework to quantify program requirements changes to cost, schedule and performance that will result in the overall best value • Yields comparisons of cost and capability of a range of options within the tradespace • Informs affordability decisions by showing the optimization among many alternatives • Designed to provide the user with value of an alternative to a gap coupled with how much the user will have to pay to close the gap • Works best when used at the earliest point before the Initial Capabilities Document (ICD) is developed; then throughout lifecycle • Iterative process beginning with a robust conceptual tradespace based on identified gaps • Designed to identify the value or benefit of a solution to a capability gap coupled with the cost of that solution • Stakeholders include warfighters, program manager, cost estimator, system engineer, and operations research analyst AFI 10-601, Operational Capability Requirements Development Air Force Memorandum, Implementation of Contractual and Requirements Sufficiency Cost/Capability Briefing to AFROC

16. 1.2 Utilize Affordability Assessments • An Affordability Assessment is a determination that the Life Cycle Cost (LCC) of an acquisition program is in agreement with the long-range investment and force structure plans of the DoD • Interim DoD Instruction 5000.02 (Nov 2013), Enclosure 8, establishes the concepts and approaches for developing any applying affordability constraints as part of life-cycle investment analysis, decision making and management • Assessing life-cycle affordability of new and upgraded systems is crucial for establishing fiscal feasibility of the program, informing Analyses of Alternatives, guiding capability requirements and engineering tradeoffs, and setting realistic program baselines to control life-cycle costs and help instill more cost-conscious management in the DoD. • Consider including the Affordability Constraint in competitive RFPs to remind industry of affordability as a requirement and to ensure proposed solutions are affordable AT&L Memo: Should Cost and Affordability DAU: Affordability Assessment Achieve Affordable Programs LCMC Case: Using Affordability Target in RFP Defense Acquisition Guide, Chapter 3.2

17. 1.3 Conduct Program Level Should-Cost • Should-Cost is more than looking at data - it is looking at processes as well • Mgt tool to proactively target cost reduction and drive productivity improvement • Covers all Government & contract program costs throughout entire life-cycle • Goes beyond the FAR/DFARS Should-Cost, which is aimed at the immediate contract • May include results from FAR/DFARS Should-Cost Review • Used for program execution versus the Will-Cost used to support budgeting and programming • Requires understanding of cost drivers; may solicit help from AF Cost Analysis Agency, DCAA & DCMA. Consider hiring Navy Price Fighters for assistance as well. • When looking for prime contractor savings, remember to look at subcontract level as well • Should-Cost Savings = savings below budgeted numbers, so using any of the BBP techniques in this tool can help you achieve Should-Cost savings DAU Hot Topic Presentation on Should-Cost 3/13 SAF/AQ Memo: Expectations Regarding Should Cost… 8/13 AT&L Memo: Should Cost Management in Defense Acquisition 10/13 SAF/AQ Implementation of Should-Cost Management 10/13 SAF/AQ Should-Cost Guidance and Business Rules SMC Should-Cost Process Guide FAR vs BBP Should-Cost Article BBP Success - F-22 AT&L Cost Consciousness Brochure

18. 1.4 Consider Program Should-Cost Results in Negotiations • While this technique may seem obvious, in practice, the program Should-Cost results are not always relayed to the team who will be conducting sole source negotiations • As part of the fact-finding and evaluation process, the negotiation team should review the Should-Cost results to determine what can be used to effect savings on the instant contract • Technical review of proposal to ensure that it is consistent with (and does not exceed) Government requirements as adjusted based on programmatic Should-Cost • PM may need to interface with contractor counterparts to be sure the Government’s minimum requirements are clearly understood • In addition, remember that this BBP tool includes a host of techniques that can be used to save on the instant contract Achieving Should-Cost Savings in Negotiations

19. 1.5 Use Multi-Year Approach When Appropriate • A multi-year contract is a special contracting method that allows purchase of supplies or services for more than 1, but not more than 5, program years • Multi-year contracting has the potential to capture cost savings based on economies of scale and the workload stability afforded to the contractor • May provide contractors incentives to: • improve productivity via investment in capital facilities/equipment, and advanced technology • conduct production and capitalization planning in a manner more consistent with commercial practices • Because of level of approvals required, early planning is essential when pursuing this course of action AFFARS Multi-Year Guide

20. 1.6 Effective use of PBL • Include performance incentives promoting behaviors and outcomes that benefit both the customer and supplier • Contract length is commensurate with payback period for supplier’s investments • Contracts are typically multi-year or multiple year (i.e., 5 years with additional option or award term years), with high confidence level for exercising options/award term years based on successful contractor performance • Pricing model is based on mutual self-interest • Typical pricing model does not provide the supplier with a “given” profit margin; supplier has the potential to earn increased profit through incentive structures based on their ability to reduce overall costs and/or achieve performance target • Pricing model needs to be reflective of varying demand • Contractor should not profit solely because of Government inability to accurately forecast demand • Establish pricing arrangement that allows the customer/supplier to gain/share benefits from reduced supplier costs and process improvements • Optimal pricing models are typically fixed price where supplier is inherently incentivized to reduce costs to drive profit margin while attaining set performance levels • Cost-cutting targets are inherent if a fixed price model is used; the more the supplier cuts costs the more margin they make; contract price adjustments are made at pre-defined periods Performance Based Logistics Community of Practice OASD(L&MR) PBL Guidance Memo

21. 2.1 Analyze Optimal Contract Type • The focus of this technique is using the contract type that best incentivizes the contractor for your effort • Do not use a contract type just because it is what you used previously • Answer the following questions: • Why am I using this contract type? • Does the contract type “fit” the type of work being performed? • Are there areas that need to be incentivized, and how does the selected contract type incentivize the contractor? • What is the level of risk associated with cost over/under runs? Performance? • The contracting officer should give particular consideration to the use of fixed-price incentive (firm target) (FPIF) contracts, especially for acquisitions moving from development to production • Review cost history: FPIF contracts should be considered in production programs where actual costs on prior FFP contracts have varied by more than four percent from the costs considered negotiated • SEE DFARS PGI 216.403-1 Contract Type/Incentive Contracting on PCE 50th CONS Training Contract Types AFMC Training Selecting Contract Types USD(AT&L) Note Questioning FP in EMD

22. 2.2 Avoid Use of Time & Materials • T&M is the least preferred contract type - SAF/AQ: “T&M should be avoided” • Contractor has a negative incentive to be efficient: profit is earned for every hour worked • Government surveillance is required to ensure that contractor is using efficient methods/effective cost controls • Use T&M contract type only when extent/duration of work cannot be accurately estimated • Justify why no other contract type can be used, specifically CPFF term when contractor has approved accounting system • Structure contract to limit T&M portion and convert to alternate contract type when possible • Complete required D&F on each contract or order (See DFARS 216.6 and AFFARS 5316.6) • Requirements definition should be as specific as possible to support alternate methods of addressing contract risk/unknowns in lieu of T&M • Question prime use of T&M subcontracts on cost-type prime contracts Alternatives to T&M Training DPAP Class Deviation-Approval for T&M GAO-07-273 DoD's T&M Contracts AF Acquisition Business Rules of Engagement

23. 2.3 Avoid Use of Award Fee • Cost overruns on CPAF contracts have led to congressional action • GAO-06-66 “The DoD Has Paid Billions in Award and Incentive Fees Regardless of Acquisition Outcomes” • Award-fee criteria were subjective, broad, and related more to program management responsiveness than desired cost/schedule/fee outcomes • Routinely paid most of the available fee • Abused ‘rollover’ to give the contractor additional opportunities to collect previously unearned fee • Paid significant amounts of fee for only ‘satisfactory’ performance • National Defense Authorization Acts for 2007 and 2009 as well as changes to FAR 16.4 and DFARS 216.4 have demonstrated a preference for other incentive types. If using award fee the following apply • Award fees must be tied to identifiable interim outcomes, discrete events or milestones, as much as possible • The D&F for award-fee contracts shall be signed by the head of the contracting activity or designee no lower than one level below the head of the contracting activity • Utilize the adjectival rating and associated description as well as the award-fee pool earned percentages shown in FAR 16.401(e)(3)(iv) • Incentivize performance through other contract means (e.g. sustainment metrics, special payment arrangements, etc.) See technique 2.4. Use of Objective Performance/ Schedule Incentives DoD Incentive Contracting Guide Contract Type/Incentive Contracting Breaking Away from Award Fees

24. 2.4 Use of Objective Performance/Schedule Incentives • All incentive contracts must incorporate a cost incentive • In addition to the cost incentive, we can structure incentive contracts to also include performance and/or schedule incentives to achieve Government programmatic objectives • Only incentivize performance above the requirement • Don’t reward the contractor just for meeting contract requirements • Be sure to pay attention to the potential interaction among cost, performance, and schedule incentives • Structure a multiple incentive arrangement to preclude unintended consequences, such as unacceptable cost overruns that result from chasing after performance-related incentives • Ensure that the award dollars associated with performance incentives are commensurate with the value of the performance improvement • To avoid poor performance (e.g., late deliveries), consider use of a negative performance incentive DOD Incentive Contracting Guide Incentive Contracting by Ralph Nash Multiple Incentive Training

25. 2.5 Creation of Effective FPIF Construct • Do not use a "default" set of share ratios/ceiling for every acquisition • Conduct an analysis of the likelihood of overrun at the cost element level • For Example, FFP negotiated subcontracts will not overrun/underrun • Overhead cost is affected by business base risk • Greater cost risk warrants more shallow share lines • e.g. 80/20 versus 70/30 • Don’t focus only on target cost/target profit • The geometry – share ratio(s) and ceiling price – is what creates the incentive • Determine how much profit is appropriate at the Point of Total Assumption • ALWAYS graph the incentive arrangement as a visual check that the arrangement makes sense Incentive TrainingIncentive Contracting by Ralph Nash Graphing ToolBreaking Away from Award Fees Incentivizing Contractor PerformanceContract Pricing Ref Guide Vol IV, 1.3.1

26. 2.6 Creation of Effective CPIF Construct • This is not about using a "default" set of share ratios for every acquisition • Answer the following questions: • How did I develop the incentive structure? • What is the Range of Incentive Effectiveness • What does the geometry look like on a graph? • Steep share lines with a narrow Range of Incentive Effectiveness on a CPIF contract is counter‐intuitive • We use a cost type contract when risk is relatively high • Greater cost risk warrants more shallow share lines • Do not use different share ratios above and below target unless the contractor is assuming appropriate level of risk in both circumstances • Split share lines are only justified when Target Cost (TC) is not considered to be in the middle of likely cost outcomes Incentive TrainingIncentive Contracting by Ralph Nash Graphing ToolBreaking Away from Award Fees Incentivizing Contractor PerformanceContract Pricing Ref Guide Vol IV, 1.3.1

27. 2.7 Schedule Fixed Fee Payments to Incentivize Performance • Under CPFF contracts, the Contracting Officer may choose to associate payment of portions of the fixed fee with events of importance to the Government instead of paying out a standard percentage of fee with every cost voucher • Per FAR 52.216-8, specify in the Schedule how fixed fee will be paid • Remember to take required withholds into account • When establishing a fee payment schedule to incentivize performance, timing of payment of fixed fee is dependent on the contractor's accomplishment of specific tasks or events • Technique can be used to focus the contractor’s attention on the aspects of performance which are particularly important to the Government • For example, tie a substantial portion of fee to delivery of acceptable draft and final reports

28. 3.1 Move Beyond Market Research to Market Intelligence • Market research under FAR 10.001(3) is primarily used to determine available sources, commercial items and practices of firms • Market intelligence refers to a deeper understanding of the marketplace than results from simple market research • How much spend are different sources receiving from the government customers? • How are other government agencies purchasing the items? • Do other government customers currently have the same requirements? • In addition to FedBiz Ops Sources Sought Synopsis and internet searches, consider: • Direct communication with contractors • Industry days • Streamlined RFI forms to aid analysis • Site visits • Dun & Bradstreet reports Note: refer to BBP Practice 5, Enhancing Use of Small Business, for ways to maximize Small Business participation in the acquisition. ACE Market Research Market Intelligence Webinar Customer Training on Market Research AFMC Market Research Training DAU CLE 028 Market Research for Engineering and Technical Personnel ESG Market Intelligence Training Competition Library

29. 3.2 Newly Held Prime Competition(Item That Was Not Previously Competed) • Transition the acquisition from a sole source to a competitive environment • Note: refer to BBP Practice 5, Enhancing Use of Small Business, for ways to maximize Small Business participation in the acquisition • Revisit requirements • Can they be rewritten to encourage competition and eliminate roadblocks to competition? • Conduct robust market research, industry days, RFI with industry involvement • Break out restrictive requirements from the overall effort and compete the remainder

30. 3.3 Ensure Competitions Allow Adequate Time for Submission of Optimal Number of Offers • To maximize competition, competitive Requests for Proposals should be open no less than 30 days • Begin with 30 day minimum • Extend proposal due date if needed to allow offerors time to prepare proposals • Consider using a Draft RFP during the acquisition process in order to give contractors a longer period of time to review the Government’s intent • Recognize that if (non-commercial) solicitations allowed less than 30 days for proposal submission, and only one offer was received, DFARS 215.371-2 will require resolicitation for at least an additional 30 days • Be cognizant of DoD regulations regarding one offeror competitions • See DFARS 215.371

31. 3.4 Effectively Maintain Competition on Multiple Award IDIQ Contracts • Agencies should allow all multiple award contract holders a fair opportunity to compete for all orders to ensure long term competition will result in market-driven fair & reasonable prices. • Provide RFP language that states/stipulates all vendors must be qualified to perform all requirements at the basic contract level • Vendors should be encouraged to propose on all orders issued thereunder to the maximum extent practical • Avoid multiple long-term options on orders • To the extent possible, emphasize price as a criterion for award of fair opportunity orders, e.g. through use of LPTA process • Establish On/Off Ramps; see BBPP 3, Enhance Tradecraft of Services • Consider establishing an objective evaluation approach to minimize Task Order protest risk; see BBPP 3, Enhance Tradecraft of Services AFMC Training Multiple Award Task Orders/Delivery Orders/Fair Opportunity AFMC Training Multiple/Single Award IDIQs, Options, and Over and Above Work

32. 3.5 Increase Focus on Cost/Price in Competitions • Make price a meaningful factor in best value source selections • Consult a pricing subject matter expert for recommended approaches on how to meaningfully establish the Total Evaluated Price (TEP) for each offer • Within RFP, clearly define how price reasonableness will be evaluated during source selection

33. 3.6 Use Open Architecture to Provide Government with Ability to Compete Future Sub-Systems • Pursue system designs which allow for existing components to be integrated with other future developed components • May represent a software/hardware breakout, or may apply to the actual system design • Open architecture allows Government to develop competitive strategies to achieve savings • Reduces OEM lock on the entire requirement • May allow for increased Small Business participation • Facilitates incremental delivery of new capabilities • Ensure that RFP/contract requires developed components need to be open-ended to enhance interoperability with existing and future components • Ensure appropriate data rights clauses are included in resulting contract DAU Training Open Systems Architecture and Technical Data Rights Contracts Perspective of Open Architecture

34. 3.7 Obtain Necessary Data Rights Up Front, via Competition • Obtain appropriate data rights "up front" to the maximum extent practical to support future competitions of follow-on requirements, components of the system, modifications to the system, etc. • All acquisitions should address a data rights strategy • Look for portions of the acquisition not tied to restrictive data. These are candidates to be broken out for competition. The data rights strategy should address those areas of the acquisition which ARE tied to restrictive data, and should determine what data is required to enable meaningful competition in those areas. • When contractors provide enhancements, obtain data rights to those enhancements (Keep the Government's data rights current) • At a minimum, every acquisition should include Government Purpose Rights to applicable data AF Contracting Central Data Acquisition Training HILL AFBI 63-103 Data Acquisition SAF/GCQ Data Rights Boot Camp SAF/GCQ Data Rights November 2012 Webinar Product Data Acquisition Website BBP Success - KC-46

35. 3.8 Effective Data Management on Existing Contracts • Analyze and understand the data rights to which the Government is contractually entitled • This will influence the range of possible sustainment strategies for the system • Data deliverables must be reviewed for unjustified or non-conforming markings • Ensure data delivered under the contract is correctly marked in accordance with the terms of the contract • It is the Government's responsibility to challenge any incorrect markings with respect to data deliverables • Challenges must be made timely in order to protect the Government’s rights AF Contracting Central Data Acquisition Training SAF/GQC Data Rights November 2012 Webinar Product Data Acquisition Website AFIT SYS 110 Fundamentals of Data Management SAF/GCQ Data Rights Boot Camp

36. 3.9 Reduce Reliance on Sole Source IDIQs • This will increase the likelihood of identifying alternate sources for supplies or services that don't have to have a sole source designation • Contractors don't have an incentive to control costs on large dollar sole source IDIQs

37. 3.10 Develop Alternate Sources for Sole Source Items • Market Intelligence (See Related Technique) • Seek feedback from industry on ballpark cost magnitudes, technical concerns, impediments to competition, etc. • Need a clear specification or other requirement description that’s sufficient for industry to respond to Synopses/RFIs.  For items such as engines and other components, it may be necessary to obtain the specification information  from the Prime or from a third-party contractor • Data rights issues may need to be resolved before a usable document can be released publicly • After receiving responses to SSS/RFI, further industry discussions may be necessary • Business Case Analysis (or similar) • Government (with assistance from prime where applicable, e.g. subcontracted items) analyze all of the information received and develop a BCA or similar evaluation of alternatives • Weigh costs, technical and other program impacts (e.g., combat capability, logistics, sustainment, test, training), risk areas, and present recommended course(s) of action • If funding not already budgeted, this would support funding requests to implement • Depending on timelines, costs, technical issues, etc., requires careful planning and monitoring • Can be lengthy process to design, develop, test, qualify, produce and field an alternate source’s product

38. 3.11 Major Component Breakout (Sole Source Acquisitions) • In the area of sole source major weapons systems, consider component breakout in order to capture additional sources • May be able to compete the breakout items • May be able to get a better deal with the component manufacturer • May be able to direct work to small Business • May be able to use threat of breakout as negotiation leverage with prime • For aircraft buys, consider breaking out engines, tires, system engineering, etc. • Consider breaking out integration role from major components and/or hardware • Component breakout may increase Government admin costs (e.g., managing multiple contracts), but will generally result in lower overall program cost if thoughtfully implemented

39. 3.12 Review Subcontractor Level Competitions in Sole Source Acquisitions • This applies to sole source prime efforts and addresses two considerations: • (1) Is the prime competing subcontracted items to the maximum extent possible? If not, provide concerns to DCMA • (2) Determine fair and reasonable price. Did the prime conduct a valid competition for the items designated as competitive? How was price considered in the competition? If price was not the determining factor in the competition, did the Government agree the trade-off between price and non-price factors was in the Government's interest? • Purpose is not to direct prime contractor/subcontractor relationships but enhance competition at the sub level AFLCMS Subcontract Material Analysis Briefing DAU Training on WSARA

40. 3.13 Avoid Use of Sole Source Bridge Contracts • Begin planning stages for follow-on acquisitions no later than 36 months prior to expiration of existing contract • For services acquisitions greater than $100M use predictive scheduling tool to assist with planning • Engage industry on the development phase of the acquisition to allow participation in the development of requirements and solicitation • Perform site visits at potential vendor sites to determine if facilities are adequate to meet the needs of the requirement Predictive Scheduling Tool Training

41. 4.1 Structure Performance-Based Requirements to Foster Cost Efficiencies • Include clear efficiency criteria in requirements documents • Build efficiency objectives in the surveillance plan and measure at time of surveillance • Note: See BBP 2.4, Use of Objective Performance/Schedule Incentives AFMC Training on Acquisition Planning

42. 4.2 Utilize On/Off Ramps on MAC IDIQs • The possibility of being removed from the pool of competitors motivates contract holders to consistently provide good performance and a good value • Plan for on/off ramps to continually refresh the competitive base, and/or remove poorly performing or no longer qualified contractor • Clearly articulate on/off ramp requirements in solicitation, and on what basis they'll be utilized, and utilize when appropriate

43. 4.3 Limit Use of Time & Materials • T&M is the least preferred contract type - SAF/AQ: “T&M should be avoided” • Contractor has a negative incentive to be efficient: profit is earned for every hour worked • Government surveillance is required to ensure that contractor is using efficient methods/effective cost controls • Use T&M contract type only when extent/duration of work cannot be accurately estimated • Justify why no other contract type can be used, specifically CPFF term when contractor has approved accounting system • Structure contract to limit T&M portion and convert to alternate contract type when possible • Complete required D&F on each contract or order (See DFARS 216.6 and AFFARS 5316.6) • Requirements definition should be as specific as possible to support alternate methods of addressing contract risk/unknowns in lieu of T&M • Question prime use of T&M subcontracts on cost-type prime contracts Alternatives to T&M Training DPAP Class Deviation-Approval for T&M GAO-07-273 DoD's T&M Contracts AF Acquisition Business Rules of Engagement

44. 4.4 Limit Use of Award Fee • Cost overruns on CPAF contracts have led to congressional action • GAO-06-66 “The DoD Has Paid Billions in Award and Incentive Fees Regardless of Acquisition Outcomes” • Award-fee criteria were subjective, broad, and related more to program management responsiveness than desired cost/schedule/fee outcomes • Routinely paid most of the available fee • Abused ‘rollover’ to give the contractor additional opportunities to collect previously unearned fee • Paid significant amounts of fee for only ‘satisfactory’ performance • National Defense Authorization Acts for 2007 and 2009 as well as changes to FAR 16.4 and DFARS 216.4 have demonstrated a preference for other incentive types. If using award fee the following apply • Award fees must be tied to identifiable interim outcomes, discrete events or milestones, as much as possible • The D&F for award-fee contracts shall be signed by the head of the contracting activity or designee no lower than one level below the head of the contracting activity • Utilize the adjectival rating and associated description as well as the award-fee pool earned percentages shown in FAR 16.401(e)(3)(iv) • Incentivize performance through other contract means (e.g. sustainment metrics, special payment arrangements, etc.) See technique 2.4. Use of Objective Performance/ Schedule Incentives DoD Incentive Contracting Guide Contract Type/Incentive Contracting Breaking Away from Award Fees

45. 4.5 Transition from Incumbent Contractor to New Contractor after a Source Selection • Plan for adequate transition time • Consider workload complexity; relevant DCMA impact; integration requirements; both phase in and phase out workload • Have recompetition support package sufficient to cover several months of operation • Use Associate Contractor Agreements (ACA)for offerors and incumbent which include measurable transition plan milestones that hold contractors accountable in meeting them (i.e. withholding payments) – See AFFARS IG5317.9000 • Require Phase In Plans as an attachment to Tech Proposals (will become attachment to the contract) • Phase In Plans should include such key criteria such as milestones, subcontract agreements, workforce, security, and inventory responsibilities, reporting, and key processes, Phase In. • Consider including “phase out” requirements in the PWS, to facilitate the next transition Sample PWS Transition LanguageTransition Sample Clause Transition Lessons Learned Briefing

46. 4.6 Utilize an Established Task Order Proposal Evaluation Method • Include Task Order evaluation methodology for future fair opportunity competitions in basic IDIQ RFP/contract • Define Task Order evaluation criteria (Technical, Past Performance and Price) in the basic contract evaluation methodology • When appropriate, and to achieve best results, assign weights to Technical, Past Performance and Price Evaluation factors, and include focus areas that may be used, such as SB participation (see DESP III M3 Task Order Evaluation Method) • Allow for the assignment of weights to evaluation criteria based on specific Task Order requirements • Include Excel Spreadsheet for fair opportunity TEP calculations, which accounts for evaluation criteria weights and focus areas, if utilized • Methodology utilized should reflect the specific Task Order requirements, keeping in mind the best value continuum from LPTA to trade-off given the Task Order requirements (e.g. complexity, and when greater expertise/experience is desired) Sample TO Evaluation: DESP III

47. 5.1 Communicate Early and Often With the Small Business Office and Industry about Future Requirements Air Force Long Range Acquisition Estimate (LRAE) Planned Small Business OpportunitiesFedBizOpps SB Events Small Business Program Training DAU CLM 059 Small Business Program for Program Managers • Work with AF Small Business Specialist, Industry, and AF requirements community to maximize Small Business (SB) Participation which impact AF SB goals • PM populate AF Long Range Acquisition Estimate (LRAE) one year in advance of RFP if over $24M OR six months in advance of RFP for actions between $1 M and $24M • Invite Small Business Office to initial planning meeting and obtain SBO review of synoptization/ initial Request for Information (RFI) to Industry when acquisition is > $3K but < the SAT but not planned for SB performance, or, greater than $650K • Obtain input from SBO and industry related to 2012 NAICS and PSC code and size standard • Work with SBO to disseminate information about a planned acquisition to the SB industrial base & hold one-on-one discussions with small businesses and requirements personnel • Use new FedBizOpps SB Events site to announce meetings and industry days; see link below

48. 5.2 Market Intelligence from a Small Business Perspective Market Research in the Learning Center DAU CON 260A The Small Business Program, Part A • Market Intelligence (MI) requires broader approaches to best reflect the rapidly changing technological/industrial base • Do not limit research to sources sought synopsis • Conduct internet searches to understand the marketplace, identify industrial capability/capacity, available commercial technology, and determine potential sources and their financial viability • Formulate searches to identify requirement drivers and technology gaps that need to be addressed in formulation of the requirements • Address previous acquisition history at your location and other locations • Do not rely solely on previously accomplished market research, validate results, broaden investigation, look for new approaches and understand changes in the marketplace

49. 5.3 Use AF Enhanced 5 Year Utility Tool AF Version of DOD MaxPrac (5 year utility) OSD SB MaxPrac Training • MaxPrac provides visibility into DOD-wide spend for High Opportunity Targets (HOT) (less than half the average DOD SB achievement), Accessible (SB > 1% awards), and Inaccessible (SB < 1% awards) Markets • Gives insight into small business capacity in the market • For every AF FY13 requirement, make an assessment of HOT, Accessible Markets, and Inaccessible Markets using data driven tools & analysis • The SB Office personnel may be able to assist and guide the Program Management Office in this analysis

50. 5.4 Determine Optimal NAICS and PSC Codes 2012 NAICS Site • For Enterprise-wide buys, take an integrated look at the requirements and industrial base to determine the optimal North American Industry Classification System (NAICS) and Product/Service Code (PSC) (and NAICS size standard/aircraft exceptions) • Multiple technological requirements and performance locations significantly increase performance complexity • Make the selections that optimize competition opportunities • Consider consolidating requirements to foster technological innovation and build in cost efficiencies