Emerging Trends in Procurement: Crisis or Opportunity? And the NCMA Response

1. Emerging Trends in Procurement:Crisis or Opportunity? And the NCMA Response Andrew C. Obermeyer, CPCM, Fellow Member, Board of Directors National Contract Management Association

2. The Acquisition Workforce Has Changed • Years of downsizing (1990’s) • Human capital strategies have not kept up with evolving demand • Different set of expectations, e.g. business advisor • Evolving gap in replacing the retiring professionals • Inadequate investment in training

3. Acquisition Workforce Demographics - Age

4. Acquisition Workforce Demographics - Education

5. College Graduates - 2005 It will take about a generation to reverse the ratio of highly skilled workers between the U.S. and India and China. When the generation of engineers and scientists that sent the man to the moon retires, who is going to replace them?” Academic Disciplines & Employment Trends’Applied Information Management Institute, Jan 2006 3,500,000 3.2M 3.1M Graduates 3,000,000 College Engineering 2,500,000 2.0M 2,000,000 1,500,000 1,000,000 600k 500,000 300k <100k 0 China United States India

6. Raytheon Company Employee Population Profile 5,000 4,500 4,000 3,500 3,000 Number of Exempt Employees 2,500 2,000 1,500 1,000 500 0 <1 1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 45+ Years of Service Age: Under 25 26-35 36-45 46-55 56-65 66-75 76-85 Strategic Target Areas The Emerging Competition For Talent Targeted College Hires Targeted Experienced Hires

7. The Nature of What Government Buys Has Changed • Offloading simple transactions • Larger, more encompassing services • Complex IT, communications, and weapons systems • Accelerated fielding to serve the war fighter • Emphasis on logistical support

8. AALPS AVCATT BATES ACTF ADLER C-5 AWACS C-17 C-130 AFATDS A2C2S ATACMS ACS APKWS BSM BFT CBS F/A- 22 BCS3 BSTF ASAS Blackhawk ADOCS AMDWS APACHE CBRNRS TRAINING ACTF AVCATT CBS IEWTPT SECOMPI SOLDIER-CATT TACSIM WARSIM FIOP C2PC LOGISTICS AALPS C-5 C-17 C-130 MILES XXI PEGASYS SE-CORE GIG C2 ADOCS ADSSI AFATDS AMDWS A2C2S ASAS BCS3 BFT C2PC DMS-A DTSS FAAD-C3 FBCB2 GCCS-A IDM IMETS JC2 TAIS PAFCS MCS MIP AIR DEFENSE ATACMS MEADS SLAMRAMM SHORAD JLENS LLAPI MOB/SUR STEPS MOUT-OIS CHINOOK MANEUVER APACHE APKWS JCM DMS-A IBS IEWTPT DTSS LFC2IS Engineer Vehicle MAGIS FAAD-C31 MCTIS FBCB2 MOUT-OIS LOGISTICS BSTF CLOE PLS MSD FIREFINDER (Q37) MOB/SURV BSM BLACKHAWK CBRNRS CHINOOK Engineer vehicle HMEE REBS MONGOOSE GBS INTEL ACS JTAGS TES UAV-CL IV-b GCSS-A Command and Control FIOP GIG LFC2IS SIMACET TBMCS TCO TELEPORTS GCCS-A FIRE SUPPORT ADLER FIREFINDER-Q37 GMLRS HIMARS PROFILER PHOENIX MLRS GMLRS FIRE SUPPORT BATES F/A-22 NFCS TSV INTEL AWACS IBS MAGIS MCTIS MTS NGATS PKI MILES XXI HIMARS MTS HMEE NFCS IDM JCM IMETS JC2 NGATS JLENS JTAGS PATRIOT LLAPI PEGASYS MCS TES SLAMRAMM SHORAD Profiler Mongoose PAFCS MSD MEADS SIMACET Soldier System MIP UAV-CL IV -b PHOENIX MLRS REBS PLS TAIS SOLDIER-CATT SE-CORE TCO WARSIM TSV TBMCS TACSIM SECOMPI Internal Interfaces ExternalSystems and Interfaces Future Combat System (FCS) AMPS/JMPS AAFARS CAMEL DCGS-A CHIMS FMTV FIREFINDER (Q36) NETWORK ADSI BVTC CLOE DCTS GPS JTRS1 JTRS5 JWARN LFED MC4 NCES PKI STEPS TELEPORTS WIN-T Logistics AAFARS CAMEL FMTV HEMTT HMMWV HMMWV M1114 HIPPO LHS FUEL FARM LWP MAINTENANCE TRUCK/FRS PLST TEP TC-AIMS II SOLDIER HSTAMIDS LLDR MK VII RADIAC SET Soldier to FCS CID Soldier to Soldier CID MGV ACSW CED FCS–Non FCS CID HTI-FLIR LIGHTWEIGHT120MM cannon (Pending) MFCS MK-44 PROPHET JCAD JSLSCAD JBPDS JBSDS C2 AMPS/JMPS Sentinel FRS HEMTT MANEUVER LAND WARRIOR SOLDIER SYSTEM HMMWV M1114 LETHALITY ACSW AIRBURST MUNITION ACSW KE MUNITION ACSW TRAINING MUNITION CKEM Electronic Time Fuse EXCALIBUR MACS MOFA NON-LETHAL 155mm PGMM Training Unique Ammo MK-44 AMMO 30 mm AIRBURST MK-44 AMMO 30 mm KE MK-44 AMMO 40 mm AIRBURST MK-44 AMMO 40 mm KE MRM/ERM HMMWV HIPPO UAV CL IV ASTAMIDS / EO/IR Tactical SIGINT PAYLOAD UAV –SAR/GMTI LHS FUEL FARM FIRE SUPPORT FIREFINDER (Q36) IMS NLOS-LS UGV ARV(L) JAVELIN MULE GSTAMIDS INTEL DCGS-A CHIMS TRAINING ATIA CCTT CTIA DLS OneSAF OneTESS Land Warrior LWP TC-AIMS II TEP PLST Sentinel

9. The Working Conditions Have Changed • Compelling urgency – everything is accelerated in fight against terrorism • Doing business in the battle space • Deployment of personnel leaves home force shorthanded • Unprecedented level of support needed for hurricane Katrina response • Constant threat of oversight and second-guessing decisions • High media attention

10. The Acquisition Rules Have Changed • Years of acquisition reform (1990’s) • Commercial items and complex services • Larger task orders with less transparency • Organization conflicts of interests • Interagency contracting • More outsourcing (competitive sourcing) • Expanded socio-economic programs • Buy American and Buy America

11. The Supply Base Has Changed • Industrial base consolidation • Partnerships and teaming • Global competition has increased • Strategic sourcing • More eBusiness • More competition at 2nd and 3rd tier • Increased OCI challenges

12. Domestic Economics - Debt, Medicare, Social Security, Supplementals, Trade Balance Threat Changes - Asymmetric warfare (bio, cyber, IEDs); world-wide terrorism; weapons proliferation; rogue nuclear states New Missions - Homeland defense; missile defense; counterinsurgency; stability and reconstruction Warfighting Changes - Netcentric Warfare; Systems-of-Systems; Joint and coalition operations Defense Budget Shifts - From Equipment to Personnel, O&M and Homeland Security Technological Changes - Integrated data; open-sources; bio, nano, robotics, high-energy lasers, etc. Industrial Changes - Horizontal & vertical integration; commercial high-tech advances Globalization - Rapid spread of Technology; multinational firms; foreign competition Acquisition Workforce - Aging; wrong skill mix; training needs; competition for skilled people Recent “Scandals” - Druyun, Cunningham, Abramoff, etc. National Imperatives Driving Changes

13. This All Adds Up To Risk! • There is more work, it is more complex, and it must be acquired faster than ever. • Workforce downsizing, expert class retiring, while expectations and oversight increases. • Rules are more flexible, actions are less transparent.

14. 1. The Federal acquisition workforce remains a major challenge. • Shortage of skilled labor is not unique to our profession, industries or employers. • Cannot replace ‘brain drain’ fast enough. • Workload will remain. • Training funds get cut routinely. • Alternative workforce solutions required. • Eliminate barriers to hiring external candidates. • Eliminate barriers to re-hiring annuitants. • Increase use of alternative work arrangements and compensation plans. • Increased telework.

15. 2. The political pressures on the Federal procurement system will increase short term. • Mission will not be reduced soon. • Replacing war equipment and materials. • Aging systems (refueling tankers, etc.) • Insatiable appetite for improved warfighting technologies. • Dozens of contracting oversight bills in committees. • Increased attention on blended or multi-sector workforce. • Attention on GSA Administrator, SBA effectiveness, NASA IG, HUD Administrator, DHS acquisition organization and DoD systems acquisitions.

16. 3. Financial pressures will force discretionary budget reductions beginning in next five years. • The Fiscal Wake-Up Tour being conducted by the Comptroller General. • We spent less of our budget on defense in 2006 than in 1986 or 1966, as a % of GDP • Discretionary spending is down from 67% in 1966 to 38% in 2006. • Budget deficits of $928 billion in last two years. • Rising entitlement (health care) costs is the main cause. “Saving Our Future Requires Tough Choices Today” GAO-07-739CG April 4, 2007

17. 4. Regulatory changes likely: • Reduce number of contracts awarded non-competitively. • Eliminate practice of Lead Systems Integrator (LSI). • Increase use of fixed-price contracts. • Increase small business contracting goals. • Restrictions on contracting with entities in tax default. • Guidance on use of award fees. • Emphasis on using hybrid contracts containing multiple incentive types. • Restrictions on outsourcing, new requirements to in-source. • Increase acquisition workforce development programs.

18. NCMA Strategic Objectives 2007-2008 • Develop the Next Generation of Contract Management Professionals • Increase Professional Advocacy • Reach More People in the Federal Contracting Community • Develop professional standards

19. Develop the Next Generation of Contract Management Professionals • Introduce undergraduate students to the CM profession and involve them in NCMA by offering student memberships, student chapters, and student programs. • Increase the preparedness for candidates entering the CM workforce by increasing undergraduate programs containing CM and related curriculum, and by publishing a standard CM curricula and promoting the program to universities. • Accelerate the development of new professionals through a leadership development program. • Increase research and writing opportunities for new professionals and students through the Macfarlan program.

20. Increase Professional Advocacy • Improve perception of the contract management profession in industry, the government (including Congress), the press, and the general public, through an active public relations program. • Increase recognition of NCMA in industry, the government (including Congress), the press, and the profession, through an active public relations program. • Increase membership participation in advocacy activities through bilateral electronic communications and events.

21. Reach More People in the Federal Contracting Community • Expand the number of programs to serve the federal community, including education, certification, conference, publication, and other types of programs. • Increase communication and involvement of the senior executive cadre within the profession. • Utilize education partners, advertisers and corporate sponsors to reach new people in the federal community.

22. Develop Professional Standards • Baseline existing professional standards for government and industry organizations; benchmark standards and processes of other professions. • Reach consensus among stakeholders (chapters, BOA, BOD, academia) on Generally Accepted Contract Management Practices (GACMP). • Align professional standards and certification processes.

23. New Program! Communities of Practice • More ways to connect to the information, people, and tools that you need. • Launch April 2008: • Task order and Schedule Contracting • Small Business Contracting • Performance Based Acquisition • Online features: e-courses, discussion forums, listservs, blogs, expert networks, e-newsletters, website, research archives • Meetings at World Congress, new educational conferences, quarterly magazines

24. What you can do. • Lead by your actions. • Be a “chief courage officer” • Stay informed on the issues. • Have opinions, and engage in the discussion. • Participate in continuous learning. • Demonstrate your competency by getting certified. • Resist cynicism and skepticism. • Participate in your NCMA chapter. Engage in your profession!

25. NCMA 21740 Beaumeade Circle, Suite 125 Ashburn, VA 20147 Neal J. Couture, CPCM Executive Director couture@ncmahq.org 1-800-344-8096 x423 571-382-1123 703-448-0939 (fax) www.ncmahq.org