Defense Contract Management Agency (DCMA) Brief

1. Defense Contract Management Agency (DCMA) Brief Presented By: Mr. Syd Pope Director, Contract Tech Ops spope@hq.dcma.mil March 07, 2002

2. AGENDA • DCMA Focus • What we do, • Where we are, • How we do it! • Topics to Brief • Risk Management • Earned Value Management (EVM) and Technical Performance Measures (TPMs) • National Aerospace and Defense Contractor Accreditation Program (NADCAP) Pilot Study

3. DCMA Focus • Who is our customer? • Taxpayer • Civilian Customers • War-fighter • Program Office • What is our authority? • Federal Acquisition Regulations • Memoranda of Agreement • What do Program Offices want? • Predictive data analysis and mitigation of program cost, schedule, and technical risks

4. What We Do Achieve Customer Expectations Provide Customer Focused Contract Management Services • Right Item = Quality • Right Time = On-Time Delivery • Right Price = Value for Money Combat Support Agency • Military Operations • Readiness of Fielded Systems • Modernization of Military Equipment • Industrial Surge – During Conflict

5. Where We Are: Worldwide Operations . . . Northern Europe . . . . . . . . . . . . . . . . . . . . . Americas . . . . . . . . Southern Europe . . . . . DCMAW . . . . . . . . . --- HQ DCMA And DCMAI . . . . . . . . . . Pacific . DCMAE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Saudi Arabia . . . . . . . . Three Districts: - Eastern U.S. - Western U.S. - International 60 U.S. Field Contract Management Offices . . . . . . . . . . . . . . 5 International Contract Management Offices covering 21 Countries and 566 Fuel Sites

6. CAS Life Cycle Involvement PRE-AWARD 81 Functions Pricing / Negotiation Core Contract Admin Program Technical Support Quality Assurance Engineering Surveillance Production Surveillance Property Management Small Business COMPLETION AWARD PERFORMANCE How We Do It • FAR 42.302(a) Standard Functions • DFARS 242.302(a) • NASA Standards • FAR 42.302(b) Additional Functions • DFARS 242.302(b) • NASA Mandatory Inspections

7. Supplier Risk Management

8. Risk Management Supplier Risk Management CONCEPT TYPICAL FOCUS • Processes • Quality • Manufacturing • Software • Engineering • Systems • Earned Value • Purchasing • Property • Estimating • Collaborative Approach • Buying Activity • Supplier • DCMA • Key Steps • Understand customer requirements • Focus on Key Processes / Systems • Predictive Analysis for customer • Adjusting risk based on risk changes

9. Supplier Risk Management Coordination with Supplier required RISK DOCUMENTATION • Required for ALL elements of risk...includingUPDATES! • Risk Management Plans should reflect the operating environment: • Current, accurate, and complete • Basis for Customer decision-making • Focus should be on the quality and succinctness of the information • Where are the risks and what is the risk mitigation strategy? • Method of Communication to all Stakeholders

10. Supplier Risk Management • Effective Risk Management ensures program success: • Provides real-time supplier information in risk-based terms. • Provides visibility on where to focus attention. • Permits partnering with ALL stakeholders.

11. Earned Value Management • Work Breakdown Structure (WBS)* • Used to organize collection and analysis of detailed costs. • Establishes a structure for identifying products, processes, and data. • Is a product of the systems engineering process. • Earned Value • Reporting system that tracks cost and schedule progress. • Projected performance is based on WBS. *Systems Engineering Fundamentals, Defense Systems Management College, January 2001

12. Technical Performance Measures and EVM • Metrics and Earned Value* • Technical Performance Measures (TPMs). • Traceable to WBS elements are preferred. • When combined with product metrics, earned value is a powerful tool *Systems Engineering Fundamentals, Defense Systems Management College, January 2001

13. TPM Discussion: Risk Vs Problem Is it a Risk …………………………or a Problem Action Preventive Corrective Problem May occur Has occurred Thinking Strategic Tactical Time horizon Long Short Manage Risk and Future Issues (TPM Emphasis) Manage Problem and Future Impact (EV Emphasis) Link works in “slide show” mode only

14. TPM Pilot • Desired end state… ultimate goal? • Predictive analysis of cost/schedule/performance problems • Integration of TPMs with WBS, EV, and Risk Management • Did we get there? • Needed program(s) with good traceability between WBS elements, EV control accounts, requirements, and TPMs • Needed to show predictive success and/or an enhancement in program and risk management

15. TPM Pilot: Results • Pilot program was a challenge: • TPMs not on contract; contract problems • Rqmts not defined; inadequate WBS • But there were many benefits: • Greater understanding of contract/system requirements • Better insight into risk assessment • Forces a systematic approach to analyzing performance • Next step is to approach industry and PMOs • Working with Northrop Grumman; making joint presentation at Lean Aerospace Plenary in March • May work with Army Excalibur and Air Force JSF programs

16. National Aerospace and Defense Contractor Accreditation Program (NADCAP) Pilot Study Purpose: To test the feasibility and effectiveness of relying on NADCAP Data to eliminate redundant surveillance to the maximum extent possible. • DCMA Test Sites: • DCMAE - CMO Baltimore, CMO Syracuse, and CMO Detroit • DCMAW - CMO Chicago, and CMO Van Nuys • Test Areas: Welding, Heat Treating, NDT

17. NADCAP Pilot study • Results to date: • Limited success due to the very small ratio of active contractors currently certified. • Unsuccessful in doing a comprehensive data analysis of NADCAP audit findings for most common problems • Current actions: Working with NADCAP staff to restructure database for more effective data analysis • Current Plans: Continue membership in the 3 areas.

18. Summary DCMA is Focused on Customer Needs! Provide Customer-Focused Contract Management Services • Right Item = Quality • Right Time = On-Time Delivery • Right Price = Value for Money Teaming with NASA, Military Services, and Defense Contractors to ensure that tax dollars achieve mission requirements

19. Closing Questions?