WC10 601

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					Acquisition Planning and
Management, and the
Federal Budget Process

Breakout Session #601

Names:
Ginny Wydler, Senior Associate, Booz Allen Hamilton
Paul Tetrault, Senior Associate, Booz Allen Hamilton

Date: July 20, 2010
Time: 4:00 – 5:15 pm


                                                       1
Agenda
• Acquisition Planning
   – Developing agency needs
   – Acquisition Strategies
• Programming, Planning, Budgeting & Execution
  Process
   – PPBE Timeline and Lifecycle Map
   – Alignment with the Acquisition Process
• Case Study – IT System
• Case Study – IT Service
• Summary

                     2
Three Major Management
Systems
                                      Effective Interaction is
                                      Essential for Success
              Planning,
              Programming,
              Budgeting and
              Execution



   Capabilities
   Definition and       Systems
   Requirements         Acquisition
   Development
System Enterprise View
• Strategic Requirements Planning Process (SRPP)
   – Key component of Planning Phase
   – Identifies strategic requirements and capabilities
   – Links Strategic Plan and programs
   – Output is the Integrated Planning Guidance (IPG)
• Programming and Budgeting
   – Develop 5-year Future Year Plan (FYP)
   – Ensures high priority programs are funded within guidance
   – Programs prioritized and balanced
• Acquisition Management Process
   – Key process in the Execution Phase of PPBE
   – Goal is to effectively provide capabilities to users which
      meet the strategic requirements of the SRPP and the
      constraints of the P&B Process
   – Provides a framework of efficient review and approval of
      acquisitions
What is Acquisition?
 The Federal Acquisition Regulation (FAR 2.101) defines acquisition
 as follows:
 “Acquisition means the acquiring by contract with
 appropriated funds of supplies or services (including
 construction) by and for the use of the Federal Government
 through purchase or lease, whether the supplies or services
 are already in existence or must be created, developed,
 demonstrated, and evaluated. Acquisition begins at the point
 when agency needs are established and includes the
 description of requirements to satisfy agency needs,
 solicitation and selection of sources, award of contracts,
 contract financing, contract performance, contract
 administration, and those technical and management
 functions directly related to the process of fulfilling agency
 needs by contract.”
 Acquisition Process
• Governed by Laws, Regulations, Policies, Guidance
• Structured into discrete phases separated by major decision
  points (Acquisition Decision Events (ADE). Focuses on Key
  activities
• Process forms the basis for comprehensive management and
  informed decision-making
• Phases and decision points tailored to meet the phased budget
  plans for the work/program schedule
An integrated life cycle
Acquisition Process
• PM initiates the process
   – Conducts acquisition planning
   – Describes agency needs in writing
   – Obtains program and budget approval
   – Submits procurement request to contracting officer

• Contracting Officer awards and administers the contract
   – Develop and issue RFP/RFQ
   – Review/evaluate proposals – recommends selection
   – Awards contract/order
   – Appoints COTR
Developing Agency Needs
• Acquisition Planning
   – Acquisition Plan – written plan reflecting the specific
     actions necessary to execute the approved strategy
   – Formal individual acquisition plan >$XXX
• Describe/develop requirements
   – Statement of Work (SOW) – Details work to be performed
   – Statement of Objectives (SOO) – Performance-based
     broad objectives of the product or service
   – Performance Work Statement (PWS) – Specifies outcomes
     not how to do the work
   – Evaluation Factors for competitive actions (Section M)
   – Market Research – collecting and analyzing information
     about capabilities
                               Methods of Acquisitions
                  5

                 4.5

                  4
Speed and Ease




                 3.5

                  3

                 2.5

                  2

                 1.5

                  1

                 0.5

                  0
                       Micro Purchase (<     FAR Part            FAR Part           FAR Part      FAR Part 14/Sealed       FAR Part
                            $2,500)        13/Simplified    12/Commercial Item   17/Interagency          Bid           15/Contracting by
                                           Acquisition (<                          Agreement                              Negotiation
                                            $100,000)
Contract Types
• Types of Contracts
   – Firm fixed price, Fixed quantity at a set unit price
   – Labor hour, Time and Material
       Provides for a mix of labor at set rates up to a maximum
        dollar amount
   – Cost Plus
       Contractor bills for all costs and receives a fee that is set
        at time of award; costs could be more or less
                        Cost/T&M              Fixed Price

  Promise               Best effort           Shall deliver
  Risk to contractor    Low                   High
  Risk to gov’t         High                  Low
  Cash flow             As incurred           On delivery
  Financing             None                  Progress/performance
                                              payments
  Administration        Max gov’t control     Min gov’t surveillance
Solicitation Types
•   Competitive – Full and Open Competition
•   Competitive Government-wide (GWAC)
•   Competitive GSA Schedule
•   Sole Source/Limited Competition
•   Federally Funded Research and Development
    Center
Contract Administration
(Post Award)
• A Federal employee must monitor contractor performance
• May require a team of people, sub COTRs and agents
• Inspection and testing requirements
• Government Furnished Equipment
• Invoice review and approval
• Prompt pay act
• Closeout
Agenda
• Acquisition Planning
   – Developing agency needs
   – Acquisition Strategies
• Programming, Planning, Budgeting & Execution
  Process
   – PPBE Timeline and Lifecycle Map
   – Alignment with the Acquisition Process
• Case Study – IT System
• Case Study – IT Service
• Summary

                     14
The Budget Process
• Budgeting is about prioritizing and planning resources to meet
  the mission without redundancy and gaps.
• Influenced by Threats, Risks, National Strategy
• Federal Agencies use the Planning, Programming, Budgeting
  and Execution (PPBE) system to govern the allocation of
  resources.
• Considered an annual process; it’s really a long-term strategic
  process, with an outlook of several years
   – Planning is a 5 to 10 year outlook;
   – Programming is a 1 to 5 year outlook;
   – Budgeting is a justification and request for annual
      resources (or multiple years in some cases); and
   – Execution is the annual use of funds according to the
      budget plan
    Programming, Planning,
    Budgeting & Execution Process
•    The PPBE process is part of an integrated suite of business
     processes designed to align resources to requirements in
     order to fulfill capability gaps and minimize duplication in
     fulfillment of Agency strategic goals
      Planning establishes strategic priorities and capabilities
       required to achieve the strategy
      Programming applies the resources to programs which
       provide the capabilities required to achieve the strategic
       priorities
      Budgeting properly prices the programs, develops
       justification, and an execution plan
      Execution performs and monitors the approved plan
•    Reporting includes annual reports (including performance
     and accomplishments) and agency level financial position
     reports
PPBE aligns investments to
strategy and efficiently spending
Overall process                                       Challenges to PPBE Process
• Executive branch (OMB)
  proposes a budget from the                         • Complexity of budget structure
  President to Congress                              • Accuracy of cost & performance
• Congress authorizes and                              data
  appropriates funding through
  Acts of Congress                                   • Complexity of operating structures
• Executive Agencies execute                         • Conflicting stakeholder demands
  funds through individual budgets
  for programs and operations                        • Alignment of data between program
                                                       & budget
• Activities are built around the
  Federal Fiscal Year, October -                     • Dependencies across the Enterprise
  September
 Sustaining a multi-year PPBE process requires dedicated resources and managing key decisions
  Oct     Nov     Dec     Jan      Feb         Mar      Apr     May      Jun   Jul   Aug   Sep

                                                     PLANNING (FY +3)
                          PLANNING to +3)
                               Budget (FY
                                Congress
   PROGRAMMING (FY +2)                                    BUDGETING (FY +1)
                                           EXECUTION (FY)
     Planning
                                   POTUS
                 SECDEF            National             5-10 year extended planning
                 National          Security                period the overarching
                 Defense           Strategy                direction and priorities:
                 Strategy         (Approx. every
                                     4 years)           • strategic goals and
  CJCS                                                     objectives
  National
  Military                                              • projected operating
  Strategy                                                 environment
(Approx. every
   4 years)                          OSD                • operational assessments
                              Guidance for              • mission needs and
                            the Development                priorities
                              of the Force

                                                   Joint Program/Planning Guidance


                                                       Annual Program/Planning Guidance
                                                                                          18
      Programming
                                            Adjudication of
                                             alternatives                              To OSD
                                            based on risk
         New
                                                              Funded      Most Dear         Most Dear
      Requirement                                                                          Most Dear
                                                                                          Most Dear
           s                                                                             Most Dear
                                                                                        Most Dear
                                 AFCS                                       FY10               FY09
                                                                                              FY09
                                                                                             FY09
 Linked to Planning                           Unfunded                   New Funded        FY09
                                                                                           New Funded
                                                                                         FY11-15
                                                                                          New Funded
                                                                                              Funded
                                                                                         NewContent
                                                                           Content           Funded
                                                                                        NewContent
                                                                                            Funded
                                                                                       NewContent
                                                                                          Content
                                                                                         Content
Unresourced, prioritized
                                                                          Least Dear        Least Dear
  requirements at the          Most Dear
                                                                                           Least Dea
                                                                                          Least Dear
                               Most Dear                                                 Least Dear
                                                                                        Least Dear
beginning of the exercise
                                FY10-15
                                FY06/07
                                Existing                         Unfundeds
   Prioritized baseline at      Existing
                                Funded                                                           Next POM
    the beginning of the     Funded Content                                                       Baseline
                                Content
           exercise
                               Least Dear
                               Least Dear
                                                               Areas where we have
                                               Offsets
                                                                   accepted risk


            Key to this phase is must allocate limited resources between competing requirements
                  –   Must align with strategic goals and Secretary's priorities
                  –   Requirements must be prioritized between base activities and new/unfunded
                      initiatives
            Final output: Secretary's Resource Allocation Decisions (RADs)
                                                                                                         19
        Budgeting
      Dept and Staff Build PBR                    Agency Review
Jan     Feb     Mar Apr May        Jun    Jul    Aug Sep Oct Nov Dec
08                                                                          Jan/Feb
                                                                RMD         09
                                           Submit
                                         Justification         Budget
      Program          FY10 PBR          Documents             Review
                                               &                                FY10
        Build           Submit                                                   PB
                      (POM/BES)           Electronic
       (POM)                                                                   Submit
                                         Data Pass to         Program
                                            OSD’s             Review           Submit
                                          databases                          Justification
            Budget Build
           Budget Build                                                      Documents
                                                    J Book + RMDs                 To
            (Price POM)
          (Price POM =
                                                        = PB                  Congress
               BES)

        Budget shows a financial plan for accomplishing goals and objectives
        Full costs of programs identified in compliance with Presidents Management Agenda
        Final output: Budget to Congress for approval and appropriation of funds
     Budget Execution and Reporting
2005                    2006                      2007                      2008                    2009                  2010
National Security Strategy                                                          National Security Strategy                   Strategy
                                National Military Strategy
                                                             National Defense Strategy
 Strategic Planning (ongoing)                                                    Chairman’s Program Recommendation
                        Quadrennial Defense Review
                                                                        Integrated Priority List           Planning Process (ongoing)
      Strategic Planning/CRRA (ongoing)                      ICRRA         Annual Planning & Programming Guidance
Enhanced Planning Process (ongoing)                Strat Planning Guidance              Joint Programming Guidance               Planning

                             Division POM Developed & Delivered
                                                                                                                          Programming
                                                  Dept POM Developed


                                                     Dept Budget Prepared & Submitted                                          Budgeting
                                                       Program & Budget Reviews
                                                                  President’s Budget Submitted

                                                             Congressional Review & Debate & Marks                             Enactment
                                                                                                   Budget Enacted

                                                                     Budget Execution Planning                                  Execution
                                                                                  O&M Execution Plans
                                                                                                   Investment Budget Review
                                                                                                  O&M Budget Review
                                                                                                Budget Execution

2005                    2006                      2007                      2008                    2009                  2010
Appropriations by Funding Type
can influence Execution
  One-year Appropriations            Operations
       • O&M
       • Personnel
  Two-year Appropriations
                                       R&D
       • Research and Development
  Three-year Appropriations
       • System Procurement
       • Hardware Procurement       Procurement
       • Other Procurement
  Five-year Appropriations
                                    Construction
       • Construction
           Alignment with the Acquisition
           process

                                         Program
              A                      B   Initiation                              C            IOC                 FOC
Materiel           Technology             Engineering and                             Production &             Operations &
Solution          Development        Manufacturing Development                        Deployment                 Support
Analysis
 Technology         Design                                                                 Production         Maintenance
 Contract                                                    Development
                    Contract                                 Contract                      Contract           Contracts




      The Budget Process supports contract awards in each phase of a program

           Oct       Nov       Dec        Jan         Feb       Mar        Apr       May        Jun     Jul   Aug    Sep

                                                Budget to             PLANNING (FY +3)
                                                Congress
              PROGRAMMING (FY +2)                                            BUDGETING (FY +1)
                                                            EXECUTION (FY)
Agenda
• Acquisition Planning
   – Developing agency needs
   – Acquisition Strategies
• Programming, Planning, Budgeting & Execution
  Process
   – PPBE Timeline and Lifecycle Map
   – Alignment with the Acquisition Process
• Case Study – IT System
• Case Study – IT Service
• Summary

                     24
Case Study – IT System

DHS Program to Update Nation’s
 Alert and Warning capabilities
       The Evolution of Emergency
       Broadcasting


        1951 - 1963                1963 - 1997                  1997 - 2006 2006
             CONELRAD                        EBS                         EAS            Upgrade Initiative

Originally called the         EBS was initiated to         EAS jointly coordinated     Modernize and integrate
“Key Station System,”         address the nation           by the FCC, FEMA and        the nation’s alert and
the CONtrol of Electro-       through audible alerts. It   NWS.                        warning infrastructure.
magnetic RADiation            did not allow for targeted   Designed for President to   Integrates new and existing
(CONELRAD) was                messaging.                   speak to American           public alert and warning
established in August         System upgraded in 1976      people within 10 minutes.   systems and technologies
1951.                         to provide for better and    EAS messages                Provides authorities a
Participating stations        more accurate handling of    composed of 4 parts:        broader range of message
tuned to 640 & 1240 kHz       alert receptions.                                        options and multiple
                                                           • Digitally encoded
AM to initiate the            Originally designed to                                   communications pathways
following sequence:                                          header
                              provide the President with
                                                           • Attention Signal          Increases capability to
 –   Shut down – 5 sec        an expeditious method of                                 alert and warn communities
 –   Return to air – 5 sec    communicating with the       • Audio Announcement
 –   Shut down – 5 sec                                                                 of all hazards impacting
 –   Transmit tone – 15 sec   American Public, it was      • Digitally encoded end-    public safety.
Several shortcomings          expanded for use during        of-message marker
and vulnerabilities           peacetime at state and
                              local levels.
                                                                                       Source: The Broadcast Archive
                                                                                       Maintained by: Barry Mishkind
                                                                                       The Eclectic Engineer
Program Vision
                                                          Television
      Provide Timely Alert And Warning To
      American People To Preserve Life And
      Property

                                                                 Radio




                                                          Cell Phone


 Alerting
 Authorities;                                                 Computer
 Federal, State,
 territorial, tribal,
 and local
                                                          Home Phone

                        Program Aggregator


                                             Public Signage
Program Background

• PMO stood up in April 2007
• Budget projected at $25M per year thru 2014
  with initial $70M in Hurricane Katrina Funds
• Initial focus on Presidential Alerts
• Governance process similar to DoD
  Milestone as adapted by DHS (ORD, MSN,
  AoA, AS, ILSP, FRD etc)
• Program redirections/budget impacts/ GAO
  have all impacted progress
         DHS Acquisition Directive 102-01
         made budget process changes
FROM:                                       TO:
MD 1400 Investment Management               102-01 Acquisition Directive
 – Multiple versions in various states of     – Compliments new acquisition line of
   of release and usage                         Business Directive (MD 252-07)
                                              – Accompanied by robust “how-to”
                                                Instruction document
 • Focused on Investments                   • Focus on Delivery of Capability
   - Limited to capital assets                through Programs and Projects
                                              – Includes all efforts related to delivery
                                                of capabilities, e.g., services,
                                                interagency agreements)

 • Separate Processes for                   • Interoperable Decision Support Systems
   Resourcing, Acquisition, and               – Interfaces between requirements, PPBE,
   Requirements                                 and acquisition are defined
    - Non-functional Department               – 3 processes are mutually aware
      requirements process
                                             PPBE: Planning, Programming, Budgeting & Execution
    - Devolving acquisition processes
Speed Bumps

• Mission changes – wider focus on
  usage by State and Local communities
• GAO reports and help from the Hill
• Budget reductions and earmarks
• Staffing turnover
• Governance process growing pains
Lessons Learned

• Document your way ahead and solicit
  buy in from stakeholders
• Expect your funding will change
• Prioritize project components
• Remain flexible
Case Study – IT Services

Naval Marine Corps Intranet
 Outsourced IT services
Budgeting for Services
• Major Programs are procured with formal Budgets
• General services are procured in two ways
   – Line in the Organizational budget
   – Embedded (hidden) within a Program or
      Operation
• Examples include
   – Training, 1% of budget, upwards of 3-5% hidden
      costs
   – Information technology, both line item and
      embedded
   – Facilities, centralized or special interests
• Little way to trace or account for hidden spending
Outsourcing IT Services
• Navy Marine Corps Intranet (NMCI) largest
  outsourcing effort within the Federal Government
  $9B, 10 years
   – Awarded October 2009, ends October 2010
• Initiative based on cost drivers for infrastructure
  upgrade $3.9B investment and maintenance,
  cheaper alternatives     Rules for NMCI funding – General IT Budget
                         FY99 DON IT Budget                                           •Naval CIO had budget authority and
                   Exhibit 43 Cost Category
                                   ($ in Millions)
                                                                                      controlled IT funds investments, NMCI
                            Personnel
                                                        Intra
                                                     Government
                                                        (Net)
                                                                                      priority
                                                                                      •Naval FM had spend rules froze dollars
                              28%
                                                         5%
                   Other
                    3%

                                                           Equipment                  within accounts, withholds for NMCI
                                                                                      •Navy and Marine Corps Organizations
                                                             26%
                 Support
                 Services
                  21%                                Software
                                        Services
                                         14%
                                                       5%
                                                                                      owned budget dollars; Discretion on who
                                                                       Total $2,803
                                                                                      and when to deploy NMCI under fixed
Source: FY 99 Budget Estimates Submission (Oct 97)
                                                                                      costs for desktop and network services,
                                                                                      “seat management”
What Issues to Consider

                MCEN   Smartlink
     RBA
    Efforts
                                              ISSUES      Reasons to consider seat
                            Regionalization
                                        • DOD               management?
              DON CIO
                                        • Internal Buy-in • Free staff to focus on core
    IT-21
           Architecture         Naval
                               Intranet
                                        • Programmatic      missions (41%)
           & Standards
                                        • Funding         • Improve service delivery
      NWI
                                        • Contracting       (41%)
                    Other Command
                                        • Security        • Eliminate daily
          OSD GNIE
           Efforts
    6/16/2010
                      LANs/WANs
                                        • Other             management headaches
                                                            of managing the desktop
                                                            (39%)
 Eliminate all decentralized purchases of IT
 Eliminate use of “sweep-up” IT spending • Reduce costs (32%)
 Eliminate “shadow armies” of IT support                  • Easier implementation of
 Eliminate desktop changes by users                         new software (32%)
 Eliminate user downloads from Internet
  NMCI Philosophy
• Buying commercial services using commercial
  practices                                           Actual “per seat”
   – Outsourcing for cost reduction, obsolescence,    costs
     and inventory management                              $6,039 (INPO)
                                                           $6,200 (GSA
• Buying a capability with “seat management”               sampling)
   – All costs for desktop, network services, timed        $8,000
                                                           (Gartner)
     refreshment of hardware and software,                 $12,331
     standardized software loads for all users, 24-        (SAM)
     hour help desk, information assurance            Navy goal of
                                                      <$4,500 per seat
• Reduce costs of IT infrastructure and investment    (actual FY98 costs)
   – Navy would have spent $3.9B up front
   – Outsourcing moves investment to industry,
     with Navy costs stretched over the 10 years
• No need for program structure, merely buy COTS
Program and Contract Approach
• Program approach – no PMO, users determine needs
   – No Program of Record designation, commercially available
   – IT Departments responsible for capital investment analysis
• Oversight approach – no need for oversight
   – Not a Major Acquisition, no program staff needed
   – Buying commercial, no systems development under COTS
• Budget approach – no Program Element
   – General IT Budget line from each user organization
   – Annual appropriations for IT Services
• Contracting approach – Mandatory Requirements contract
   – Annual guaranteed payment to Vendor
   – SOO with SLAs, incentives and penalties
• Funding approach – Draw from annual budget
   – Mix of funding types (Working Capital Fund, Operation and
     Maintenance, annual procurement, R&D
Lessons Learned
• Big ticket items draw attention
   – Congress, GAO, OMB, User interest caused adjustments
     to the deployment plan
• There is a need to budget for a major investment effort
   – Current NMCI has a Program Element number in budget
   – PM NMCI is a functioning program office
   – Navy and Defense now provide oversight
• The Planning portion of PPBE has critical decision points
   – This can trigger programmatic and contracting approaches
   – Buying seat services roles up all the segments of IT, which
     brings into play the allocation of funding types and
     auditable spend
Changes to Major IT buying
• The FY2010 National Defense Authorization Act (NDAA)
  codified into law new processes for IT Programs, and directed
  a new acquisition process for IT Systems
• IT programs will execute multiple, rapidly executed releases of
  capability that allow requirements to be prioritized based on
  need and technical readiness, allow early operational release
  of capability, and adapt to changes driven by field experience
• A portfolio of IT systems, with staggered deployment and
  refresh, with be the approach to acquiring the capability
   – Stepping away from rigorous IT Oversight and Approvals
   – Recognizing the budgeting process will be based on
      diverse user needs, deployments and refreshment cycles

         Maybe NMCI wasn’t so far off….
Summary
• The budget and acquisition processes and organizations are
  tightly linked
    – Needs/Gaps are addressed through Strategic
      Requirements Planning process (Office of Policy/Joint
      Requirements Council)
    – Resources are identified, obtained, and allocated through
      the Programming and Budgeting cycle (CFO/Program
      Review Board)
    – Acquisitions are managed through the CPO/Acquisition
      Review Board)
• Conducting an acquisition to meet approved requirements
  demands an integrated process that involves close
  cooperation between the PM, the CFO and PCO
Points of Contact


       Ginny Wydler
       703 377-5577
  Wydler_Virginia@bah.com




                  Paul Tetrault
                 703 917-2737
            Tetrault_Paul@bah.com
QUESTIONS?

				
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