Today’s Agenda

1. Enterprise Software Initiative (ESI)Overview Briefing On Blanket Purchase Agreements With COTS Systems IntegratorsSpring 2005

2. Today’s Agenda

3. ESI BACKGROUND What is ESI • ESI AWARDS • Systems Integration deals: Finalist in 2004 IRMCO Award • Finalist for 2004 and 2005 eGov Awards • Finalist for 2003 DoD CIO Awd. 1998 to Present • Joint project formed in 1998 by DoD CIO • To establish a DoD-wide process for software acquisition and management • Mission is Software Asset Management • Leverage the purchasing power of the DoD Results • 50 Blanket Purchase Agreements with more than 25 Software Firms • In first five years, ESI helped avoid more than $2 Billion in negotiated discounts off GSA schedule prices ESI Scope Broadened to Services • ESI Reach was extended to technology services and hardware in 2002 • COTS Systems Integration selected for initial Enterprise Agreements for Services • ESI and SMART-BUY • Started June 2003 • OMB Initiative for Federal-Wide Licensing • SmartBUY Implementation in DoD is through ESI • Initial DoD Policy for SmartBUY Implementation issued Sep 03 • ESI working with GSA SmartBUY team to coordinate requirements for acquisitions beyond DoD

4. COTS Systems Integration Services Why & How APPROACH • Market Research and Strategy Coordinated with Logistics Systems Management within DUSD AT&L • Enterprise Integration Group (EIG) Collaboration • Real-world users involved throughout the process (commercial and government organizations) • Confirmed by Gartner, Forrester, Acquisition Solutions Inc. OBJECTIVES • Pre-negotiated, best value agreements for systems integration services • Enable the acquisition of Systems Integration services more quickly, more effectively, and less costly. • Enable projects to have greater likelihood of success / reducing risk by using best contracting practices and educating buyers • Develop / adopt a standardized contract structure based on proven methodologies for COTS implementation

5. Key Contracts Involved Software License and Maintenance Agreement What optional BUYER Hardware / Equipment Purchase Order ASP / Hosting Systems Integration / Software Implementation Sample Commercial Contracts in an ERP Project

6. Software to Services Ratios Why Source: OMB

7. Reducing the Ratio If ESI avoided $2B in the cost of software license costs over 5 years, how much cost can be avoided on services? How to reduce the ratio: • Via ESI* • Via toolkit / domain advocacy / compliance streamlining • Education and training via DAU / NDU • Via reuse / leverage (RICE, Education and Training, etc.) (Matching commercial ratios is not likely with government-specific requirements.) Getting to a lower ratio * LaborRate discounts are not the ultimate goal. Establishing BPAs with fixed prices tied to vendors’ disciplined methodologies for COTS implementations will avoid risky and costly pricing structures (e.g. paying for time spent and not for results). Why

8. Improvement In Business Metrics • Vendor accountable for end results as defined in established metrics Performance Based Scenarios Deliverables- based Task Orders • Pre-configured Task Orders tied to Methodology T&M Solution definition is unclear Need and solution are clear Buyer has metrics set & can quantify results desired Typical Pricing Structures

9. ESI Contracting Process FAR Part 12 Systems Integrators with GSA Federal Supply Schedule Award Competition 1: Enterprise Wide Market Research RFQ Eval Done May 2004 Blanket Purchase Agreement for COTS Implementations • Section 803 requirements satisfied by BPA competition • Opened to all GSA IT schedule holders • Published RFQ on GSA e-Buy • Tasks and Deliverables • Pricing B. Labor Discounts C. Performance Approaches RFQ / SOO Eval Acq. Strat. Competition limited to five pre-qualified BPA holders Competition 2: Program Specific Task Order for a Program’s COTS Implementation How

10. Services Typically Purchased in aSystems Integration Project F I X E D P R I C E Hardware Reports ERP Data Migration/ Conversion Interfaces Legacy Systems Data Base Secure Access Extensions / Bolt-On Apps User Configuration Security & Controls Testing Business Process Reengineering Post- Implementation Support Project Management Change Management / Training / Communications Support / Preparation / Participation in OSD Reviews / Milestone Decisions / Oversight / Certifications / Regulatory Compliance T&M

11. Task Order Structure Aligned with COTS Project Life-Cycle Typical COTS Project Lifecycle How Phases follow the vendor’s proven implementation methodology FFP Task Order No. 1 FFP Task Order No. 2 SI RFQ / SOO Preparation Blueprint Design / Build Transition / Cutover Go Live • Key success factors in using the BPAs • Development of SOO • Clear business objectives and performance measures • Fidelity of requirements • Evaluation Criteria to include: • % of price at risk • Methodology Demo • Gov’t Duties • Definitions of RICE complexity • Gov’t discipline crucial to controlling scope creep Award Option with NTE or +/- XX% Price for Design thru Go-Live* * Option Price for Task Order #2 is based on a Baseline Project Scope, which gets finalized during the Blueprint Phase

12. Experience 18,000+ ERP/COTS implementations Methodology Proven tools, processes, templates for COTS Balance IP protection with sharing details Performance Based Approaches Willingness to bear risk Past Performance Proven ability to deliver Pricing Fixed Prices Tied to Methodology Performance Based / incentives / penalties Flexible menu to fit many scenarios BPA Holders Who

13. Features / Benefits • Saves Time and Money • Pre-qualification at the BPA level reduces the time and cost incurred instead of doing a redundant full and open competition • Section 803 competition requirements already satisfied at the BPA level • Solicitations less than 30 days are allowed (GSA based - shorter) • Market research at the Task Order level can be targeted to your program’s specific situation – COTS implementation qualification already determined • Price Certainty • Fixed price services tied to proven methodology • Payment tied to results with performance incentives • Modular contracting / deliverables-based payments utilized • Menu of fixed prices is set for key project variables (e.g. RICE objects) • Flexibility • Task Orders can be structured to fit your specific program strategy / needs • Ordering can be done based on specific program requirements • Reduced risk • Proven implementation methodology and best practices employed in the BPAs • Less likelihood of a successful protest compared with a full and open competition • Better educated buyers – the BPAs act as educational tools • BPAs require Reuse – RICE objects and Training deliverables • Scope creep reduced by following proven project management processes • Built-in Knowledge-sharing – lessons learned, tools, and reuse Why

14. Baseline Scope and Factors What One Table covers all three COTS Packages Three Tables for each of the three COTS Packages

15. Phased Approach: Price Tied to Methodology

16. Example Phased Methodology for Task Order Structure

17. Deliverable Deliverable Price Payment Upon Acceptance 10% Holdback Performance Scorecard Summary Payment Based on Performance Scorecard Change Management Plan $100,000 $90,000 $10,000 Exceeds $15,000 Meets $10,000 Does not meet $0 Sample Performance Based Holdback Sample Excerpt from FFP Table Tied to Methodology Pre-configured Price Tables In accordance with Methodology Methodology Phase:

18. Variable Scope with Fixed Pricing Bolded type shows the Baseline scope and Price for each task / deliverable Description of the factor that causes a variable price The variable number that determines the adjusted price The adjusted price for the variable number of sites or commands

19. $ $ $ $ $ $ $ $ $ $ $ $ Fixed Pricing Menu for Variable Scope Price includes creation of technical specification, coding, documentation and unit testing

20. EXAMPLES Provide a Project Manager who will … Provide staff resources who … Provide office space, telecommunications, … Provide documentation of business processes … Document data and database file structure … Perform data and file cleanup on legacy systems … Stage legacy system data for conversion … Provide all hardware, software … Conduct User Acceptance test … AVOID USE OF ASSUMPTIONS Common cause for confusion, failure, delay and avoidable change orders Government Duties

21. Sample Performance Based Approach

22. Key Links / Web Sites / Tools www.don-imit.navy.mil/esi

23. BACK UP SLIDES

24. BPA Structure GENERAL TERMS AND CONDITIONS • Tasks and Deliverables • Fixed Price Tables B. Labor Categories & Rates C. Performance Based Approaches A T T A C H M E N T S D. RICE CONOPS E. Education and Training CONOPS F. Report of Sales Format

25. BPA – General Terms and Conditions GENERAL TERMS AND CONDITIONS • Based on GSA FSS Contracts • 5 year term • Obligation of Contractor to comply with RICE and E&T CONOPS • Staff Skill Commitment • Deliverable Acceptance Process • Administration of BPA • Ordering • Invoicing and Payment • Contractor to Provide: • Program Manager for work done under the BPA • Report of Sales • Records maintenance and access • Periodic Reviews • Marketing • EI Toolkit reference in Marketing

26. Attachment A:Tasks and Deliverables Fixed Pricing • Tasks and Deliverables • Fixed Price Tables • Applicability of Pricing Table • One Table Covering all Three or One Table for Each COTS Package • Tables structured in accordance with Implementation Methodology • Scenario and Scope Used in Baseline Pricing • Defines standard scenario used to compile Baseline Prices • Some show Baseline, Medium and Complex Scope Levels or Small, Medium and Large Program Scope • Tasks and Deliverables Fixed Price Tables • For Scenario(s) (Baseline and others defined) • Typically shown for each of the 5 year periods • Options / Variables Pricing Tables • Prices for Deliverables Based on Variability in Scope • e.g. Number of Users, Modules, Locations, RICE Objects • Government Duties • Mitigate Use of Assumptions • Clearly Identify Government Duties to Avoid Confusion and Blame

27. SI Contracting Process -Incorporating ESI FAR Part 12 Systems Integrators with GSA Federal Supply Schedule Award Competition 1: Enterprise Wide Market Research RFQ Eval RFQ - Issued on an unrestricted basis for GSA based BPAs • RFQ open to all GSA IT schedule holders • RFQ published on GSA e-Buy EVALUATION - Best value source selection to determine most viable technically service providers for ERP integration • Technical • Corporate Experience/Related Engagements (type and extent of work) • Implementation Methodology • Performance Based Service Contracting Approach • Project Management • Past Performance (quality of past performance in related work) • Price RFQ Eval

28. SI Contracting Process -Incorporating ESI FAR Part 12 Systems Integrators with GSA Federal Supply Schedule Award Competition 1: Enterprise Wide Market Research RFQ Eval Blanket Purchase Agreement for COTS Implementations AWARD • BPAs established with five vendors based on clear demonstration of ability, resources and proven track record to successfully perform full ERP implementations • Provides firm fixed prices and performance based approaches to facilitate more efficient buying of ERP services • Provides framework of terms and conditions that should be considered at the task order level for any implementation • Permits meaningful competition at Task Order level among firms that have been determined technically qualified SCOPE • Includes integration of COTS software • Not limited to Oracle, PeopleSoft, SAP implementations Award

29. SI Contracting Process -Incorporating ESI FAR Part 8 RFQ / SOO Eval Acq. Strat. Competition 2: Program Specific Task Order for a Program’s COTS Implementation ACQUISITION STRATEGY • Competitive or Sole Source • Compete among all five BPA holders in accordance with BPA “fair opportunity” provisions • Section 803 requirements satisfied by BPA competition • BPA RFQ was open to all IT GSA vendors via GSA e-Buy • Sole Source orders are permitted iaw regulatory exceptions to competition (Ordering Office responsible for compliance) • Teaming and subcontracting • Teaming with other GSA vendors permitted under the BPAs • BPA holders have subcontracts in place and may use other subcontractors as appropriate to the specific task order

30. SI Contracting Process -Incorporating ESI FAR Part 8 RFQ / SOO Eval Acq. Strat. Competition 2: Program Specific Task Order for a Program’s COTS Implementation RFQ/SOO • Include notice to vendors “This solicitation seeks pricing under the DoD ESI Systems Integration BPA and is subject to the terms and conditions of BPA N00104-04-A-ZF__.” • Solicit prices with performance based metrics • Use of BPA not limited to BPA schedule baseline or priced variables • Discounted labor rates/categories available in BPA for solicitation of FFP for any requirement or for alternate price scenarios • Address desired performance based approach with defined metrics • Include evaluation criteria specific to task order requirement. Consider need for: • Specific technical criteria • Socio-economic requirements/goals • Review of Contractor Team Arrangement (CTA) if applicable • Include any specific T&Cs or changes to Government responsibilities • Some BPA provisions require tailoring, address specifics • Gov responsibilities listed in BPA and Price Schedules, address as required

31. Getting to a lower ratio $5B DoD Business Systems 2003 $3B DoD Modernization of Biz Systems Est. $2.4B DoD Modernization with COTS 2003 Reduce the Ratio / Cost Avoidance A reduction of $1 in the ratio equates to 6.6% cost avoidance or $160M each year / $800M over 5 years. • FY 2003 DoD IT Investments are estimated to be $27B (OMB). • $5B+ to be spent annually by DoD on business systems • If only 60% is spent on modernization and 80% of modernization is spent with COTS, that would amount to • $5B each year on Biz Systems • $3B on modernization (60% of $5B) • $2.4B on COTS (80% of $3B)

32. Approach Objective Circumstances where applicable Withhold % of Fees Incentivize on-time performance BearingPoint will deliver on schedule and will commit to doing so for deliverables, milestones, phases, and/or complete projects. Withhold % of Fees Incentivize BearingPoint to provide high levels of customer satisfaction BearingPoint is willing to be measured for services during the implementation, or customer satisfaction post-implementation. Specific areas of measurement will be determined based on the needs of individual task orders. Withhold % of Fees Incentivize BearingPoint to meet or exceed industry standards of service post go-live. After the implementation Go-Live and once stabilized sustainment and support operations have begun, pricing will be based on the percentage of time that BearingPoint meets or exceeds industry standards for agreed upon operations and managed service metrics. Share-in-Savings Align government and BearingPoint interests in reaching targeted improvements in operational metrics After Go-Live and when processes have stabilized, mission objectives in the processes and supporting infrastructure will be used to determine financially quantifiable improvements, which are then shared between BearingPoint and the government. BearingPoint would also be interested in Share-in-Savings options through improved O&S of the supporting IT environment. Performance-Based Approach To demonstrate our confidence in our ability to deliver on time, achieve high levels of customer satisfaction, and meet or exceed industry standard service levels, the BearingPoint Team is proposing to place up to 10% of our fees at risk using a withhold based approach.

33. Performance Based Approach