June 29, 2004

1. NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

2. DFARS Transformation Presented to: NCMA Aerospace and Defense Contract Management Conference Marolyn Russell DCMA DAR Council Member marolyn.russell@dcma.mil June 29, 2004

3. Overview • Rulemaking Process • DFARS Transformation • Background • Procedures, Guidance, and Information • Future vision • Summary NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

4. Rulemaking Process NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

5. Defense Procurement & Acquisition Policy (DPAP) Ms. Deidre Lee Director Mr. Frank Anderson President, Defense Acquisition University Ms. LeAntha Sumpter Special Assistant Mr. Daniel Nielsen Dep Dir, Program Acquisition & Int’l Contracting Mr. Domenic Cipicchio Dep Dir, Policy Mr. Ronald Poussard Dep Dir, Defense Acq Regulations System Mr. Mark Krzysko Dep Dir, E-Business Dep Dir, Acquisition Workforce & Career Mgmt Lt Col Vince Feck Dir, Operations AET & CD DoD DACM ACQ DEMO NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

6. Defense Acquisition Regulations (System) Director, DPAP Deputy Director, DARS Army* Navy* Air Force* DLA* DCMA* NASA* DFARS Committees and FAR Team Chairs *One Policy Member (voting) & one Legal Member (advisory) each NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

7. FAR Council DAR Council CAA Council FAR Teams FAR Council Structure NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

8. DFARS Rulemaking Historical Archives Coordination DARS Council Process Publication OIRA Initiate Request Collabortion Participation Document Management • Congress • E.O. • Industry • Public • Workforce Fed. Reg. OMB WWW Congress WorkFlow Management Mangement Reporting SBA • Web Posting • email • U.S. Postal • Facsimile Public Comments End-to- End Life Cycle Tracking and Reporting NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

9. DFARS Transformation NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

10. Objectives: Reduce Regulations Improve Processes Insert Technology DoD Direction • Conduct a comprehensive review and transformation of the FAR and DFARS • Reduce DFARS by 40% • Include operational proceedings used to revise and implement the DFARS NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

11. DFARS Challenges • Paper-based processes • Lengthy process - - Idea to reality: • FAR - 14 month average • DFARS - 11 month average • Difficult to participate in rule-making process • Blurred distinction between “regulation” (what to do) & “procedure” (how to do it) NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

12. Recast purpose, process, & content of DFARS Objectives • Value-based approach • Identify opportunities & potential for improvement • Identify opportunities to reduce regulatory requirements • Focus on opportunities with measurable benefit • Strengthen procurement process • Reduce cost, cycle time, & administrative burden • Increase effectiveness & foster innovation NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

13. Done! Done! In process 3 Phases NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

14. Phase 1 Categories 273 pages 900 pages 255 pages Total DFARS Words: 360K Pages: 1400 (avg. 250 words/page) Based on DFARS total word count NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

15. Phase 2 Recommendations* Changes result in additional 7% reduction Additional reductions would result from legislative and FAR changes Streamline Clarify Reduce burden 40% Change 22% Retain 38% 7% Remove 33% Statutory & DoD ‘must have’ Relocate to PGI or eliminate * Based on estimated word reductions * Requires full implementation of all proposals NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

16. A New DFARS DFARS, the Regulation -- • Requirements of law • Mandatory DoD-wide policy • Delegations of FAR authorities • Deviations from FAR • Policies/procedures with significant effect outside DoD internal operations And… • Links to Procedures, Guidance, and Information NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

17. Procedures, Guidance and Information (“PGI”) • Procedures • Mandatory DoD-internal procedures* • Optional DoD-internal procedures** • Guidance** • Helpful explanations, samples, guides, etc. • Information** • Reference material No significant impact on public Not a codified regulation *Mandatory link in DFARS **Optional link in DFARS NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

18. Why PGI? • Value • Supports rapid change • Fosters flexibility & innovation • Distinguishes regulation vs procedure • Shortens DAR Council & rulemaking processes • Approach • Managed content (DAR direction & processes) • Seamless access (web-based) NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

19. Increment 1 • Finalize Rules to move current PGI coverage out of the DFARS • Provide pop-up links from the DFARS to PGI Procedures, Guidance and Information (“PGI”) NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

20. 209.106 Before NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

21. 209.106 After Links to the Related PGI Language NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

22. PGI 209.106 NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

23. Procedures, Guidance and Information (“PGI”) • Increment 2 • Incorporate enabling technology to provide seamless access to . . . • FAR, applicable statutes, & PGI • Training, reference documents, & guides NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

24. View # 1 - The DFARS with PGI NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

25. View # 2 - The New DFARS with FAR and PGI NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

26. Improve Responsiveness Enhance Transparency Model for E-Rulemaking Technology Work flow & Mgmt Information Enhance Transparency Collaboration Tools Document Management World Wide Web Publication Tools Public Comment Forum (E-Docket) Share Knowledge Reduce Manpower NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

27. Summary • Transforming rule-making process • Better process = better product • Improve responsiveness, effectiveness, transparency, & simplicity • Create a value-based product • Exploit technology • Build a responsive acquisition rule-making system • Create a forum for idea generation, publishing, collaboration, feedback, data, research, retrieval • Bring contracting officers and public to the rule-making table - - early! NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

28. Out for comment now! NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

29. NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment