cost analysis | The Contracting Education Academy

February 18, 2016 By AMK

Robins Air Logistics Base has not effectively negotiated depot contractor profit, says IG

The Air Force has not effectively negotiated depot labor profit at its logistics complex at Robins Air Base in Warner Robins, Georgia, the Defense Department watchdog concluded, missing an opportunity to cut contractor profit and fees by $9.6 million to $24.9 million.

“Contracting officials did not adequately reduce or eliminate profit and fees paid for work performed” through a public-private partnership, said an inspector general’s report dated Feb. 8. “This occurred because program officials either did not prepare or update the business case analysis supporting the partnership type selected.”

The labor charges based on repair and maintenance affect such weapons programs as the Boeing C-17 Globemaster III heavy-lift aircraft and the AN/APN-241 high resolution radar system developed by Northrop Grumman.

Keep reading this article at: http://www.govexec.com/contracting/2016/02/air-force-told-save-millions-contractors-depot-labor/125912

November 17, 2015 By AMK

Securing the future by ‘Bending the Cost Curve’

Bending the Cost Curve (BTCC), one of the 13-Make-Every-Dollar-Count cost initiatives launched by the Air Force, includes a growing and evolving set of more than 20 acquisition reform activities. These activities are focused on finding ways the Air Force can be more effective at how it spends money to get better capabilities to the warfighter faster.

“BTCC is coming up with ideas with industry, then going out and trying those ideas to see if we can actually drive down cost, increase capability and get it delivered faster,” said Dr. Camron Gorguinpour, the director of the Air Force Transformational Innovation Office, Air Force Office of Acquisitions. “Everything we do with BTCC is in collaboration with industry. (They are) a big part of the solution, so working closely with them helps us come up with better ideas of things that we should be doing.”

One program, Open Systems Acquisition, has reached a level of success. The concept is to move Air Force weapons systems toward a more open architecture, allowing traditional and non-traditional industry partners more flexibility for future improvements.

“Basically, OSA is a plug and play type of model. You have a system that anyone can understand and plug into if they develop a product that complies within certain requirements,” Gorguinpour said. “That way one company can create a system, but down the road, when you need a new capability, another company can create the new part and it can be changed out without a huge contracting action.

“This new open architecture environment will allow us to rapidly change out capabilities, to compete to a very broad segment of industry and be able to build on certain designs rather than having just one fixed product.”

As part of this program, the Air Force Research Laboratory created its own acquisition vehicle tailored to the new OSA model. With this new system, it will take only three weeks from the time companies demonstrate their capabilities to the time the winner is funded and doing work.

“This is getting us closer to the point of where you can acquire at the pace of global innovation,” Gorguinpour said. “There is definitely a lot more work to be done to smooth out the process for everyone to use, but we are getting it closer to being a reality.”

Thinking outside of the box and in the spirit of innovation, the Air Force launched the largest cash prizes ever conducted by one of the military services called Air Force Prize — worth $2 million to the entity that can produce a lightweight, mid-sized turbine engine.

“Turbine engines are important, especially if it can be installed into a smaller vehicle, the engine can double the fuel efficiency and improve the lifecycle cost,” Gorguinpour said. “The opportunity to win the cash prize started in May and companies will have two years to provide a product.”

Also included in BTCC is the Cost Capability Analysis program that would create better transparency by providing more awareness of Air Force requirements to industry to reduce the costs and development times for Air Force systems.

“When buying something as simple as a computer, you can see where a small increase of speed or memory is going to dramatically increase the cost,” Gorguinpour said. “So you need to find the optimal setting for your requirement. Because of BTCC, the Air Force is working with industry early in the acquisition process to refine what the requirements should be.”

The Air Force is looking to provide more tools to help navigate the complex acquisition process with AQ Prime, a beta website powered by a learning computer with the knowledge of the federal acquisition regulation. This website will serve as a resource for businesses not used to working with the military, as well as the public, an easy way to understand the complex government regulation.

“Even if we do the best job at streamlining bureaucracy, the fact is that it is going to be complicated because the work we do is incredibly complex,” Gorguinpour said. “We not only need to streamline the process, but also give people the right tools to navigate this better.”

BTCC activities will continue to improve the internal Air Force acquisition process, enhance interactions with industry throughout the acquisition lifecycle, and expand competition among traditional and non-traditional industry partners.

Source: http://www.af.mil/News/ArticleDisplay/tabid/223/Article/627140/securing-the-future-by-bending-the-cost-curve.aspx

February 27, 2015 By AMK

Air Force claims $2 billion in acquisition savings from ‘should-cost’ management

The concept of “should-cost” management was a key component of the first version of the Defense Department’s Better Buying Power program when it was first rolled out almost five years ago.

But the Air Force’s top acquisition official said the idea hasn’t been forgotten: his service has used it to cut programs’ actual costs by an estimated $2 billion over the last several years, with more potential savings to come.

Should-cost is not strictly a new idea in government procurement. It’s been codified in the Federal Acquisition Regulation for decades, but it wasn’t until 2010 that the Pentagon ordered the military services to use it in all of their major acquisitions. In a nutshell, it requires program managers to set-aside the historically-based independent cost estimates that are developed for all big programs and that DoD is required to base its budgets on, and instead, manage their programs according to what they ought to cost.

Keep reading this article at: http://www.federalnewsradio.com/395/3802526/Air-Force-claims-2-billion-in-acquisition-savings-from-should-cost-management

January 13, 2014 By AMK

OFPP updates rules for how agencies should analyze ways to lower costs

The Office of Federal Procurement Policy is reinvigorating the concepts of share- in-savings and lowering life-cycle costs of programs by analyzing all facets of the approach.

OFPP released the first update to Circular A-131 in more than two decades in the Federal Register on Dec. 26, 2013. The Office of Management and Budget first issued A-131 in 1988 and updated it in 1993, but since then has only offered memos encouraging its use.

A-131 promotes the use of value engineering (VE), which is an organized effort by an integrated product team to evaluate functions of systems, facilities, services and supplies with an eye toward lowering costs and maintaining performance, quality, safety and reliability.

“VE challenges agencies to continually think about their mission and functions — in the most basic terms — in order to determine if their requirements are properly defined and if they have considered the broadest possible range of alternatives to optimize value,” OFPP Administrator Joe Jordan wrote in the notice. “Most importantly, VE enables agencies to achieve greater fiscal responsibility and operate within tighter budgetary constraints. By identifying and eliminating unnecessary program and acquisition costs that do not contribute to the value, function and performance of the product or service, VE can permit programs to continue delivering the same, or an even higher, level of service for less money — a critical capability for managing in a fiscally austere environment.”

Keep reading this article at: http://www.federalnewsradio.com/517/3534771/OFPP-updates-rules-for-how-agencies-should-analyze-ways-to-lower-costs

December 5, 2013 By AMK

DoD official pushes back against contracting ‘myths’

Pentagon procurement official Shay Assad sought to dispel what he said were myths that the Defense Department’s contracting workforce is untrained and unprepared.

“Our workforce today is healthier and stronger than it has been in the last 10 years or so,” said Assad, who oversees pricing for the department.

Some of the myths he addressed included:

■ Reports the contracting workforce is shrinking. Assad said it has grown by nearly 24,000 people over the last five years through a combination of additional hiring by the services and through in-sourcing.

■ Reports DoD is not hiring enough experienced contracting officers. He said that DoD has focused on having 35 percent of its contracting workforce have industry and business experience — that number is about 34 percent today.

■ Rumors the Defense Department is moving toward lowest-price, technically acceptable contracts. Assad said that only one major program falls under that category and that LPTA is less than 2 percent of DoD purchasing and that he is not pushing to increase that number.

Keep reading this article at: http://www.federaltimes.com/article/20131118/DEPARTMENTS01/311180004/DoD-official-pushes-back-against-contracting-myths-

The Air Force has not effectively negotiated depot labor profit at its logistics complex at Robins Air Base in Warner Robins, Georgia, the Defense Department watchdog concluded, missing an opportunity to cut contractor profit and fees by $9.6 million to $24.9 million.

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