SUCCESSFUL PRACTICE (SP) TEMPLATE

							                     SUCCESSFUL PRACTICE (SP) TEMPLATE
                                            SECTION 1
Service Set Number &Title        One Book Chapter Number & Title              SP Originating Office
7.1                             Forward Pricing Rates                       Northrup Gumman
                                                                            Maryland
                                                Impact:
                                           (check all applicable)
          Policy                Process                Product (new)           Product (existing)
Explain the change between the current and new policy, process or product:
DCMA Northrup Gumman (NG) Maryland has developed a pricing model that incorporates
changes in forward pricing rates into weapon program Earned Value data. These rate changes
flow down to the contract and program level so as to provide Program Managers (PMs) individual
program cost impacts.
NG Maryland used the Comanche Program as a pilot project. The contractor provides rate change
data to the CMO in an Excel Spreadsheet. The CMO inputs company data into their pricing model.
The CMO has received excellent feedback from DCMA Boeing Philadelphia. The CMO wants to
refine their model for predictive use, i.e., being able to plug in "anticipated changes" provided by the
contractor and advise the customer as to projected changes in program costs.
SP Purpose (Explain what could be accomplished by implementing the SP):
Currently, this model enables the CMO to provide proactive advice to PMs on forward pricing rate
changes and impacts to program costs. It will be even more useful to PMs in the future when the
CMO configures the model into a predictive analysis tool. PMs can then use the information for
budgetary and advance planning purposes.




Enabling Tool (e.g. Documents, exhibits and samples):
The enabling tool is a pricing model developed by DCMA Northrop Grumman Maryland. An
example of model results was briefed at Headquarters on Feb 11, 2004. The model has not yet
been posted to the DCMA or the CoP for Pricing and Negotiations web site since the CMO would
first like to work through another change scenario for the Comanche Program.




                                            SECTION 2
                             Is the SP exportable:            Yes      No
Intended Environment (Identify where the SP can be exported e.g., Aircraft Engine Manufacturers):
To all CMOs administering major DoD programs.
DCMA HQ POC (Name):               POC Phone #:             Date Review Completed:
Joan Sherwood ( currently in PM   Elaine Philpott 8-0985   2/19/2004
School at DAU)