Acquisition Planning for Limited Sources

Transcription

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2 Acquisition Planning for Limited Sources Breakout Session #: F11 PRESENTED BY: Ms. Shenê Commodore, CPCM, Fellow President-Commodore Consulting, LLC 1 Date: July 25, 2017 Time: 4:00PM-5:15PM

3 WORKSHOP GOAL Learn how to create acquisition plans, mitigate risks, monitor performance, and obtain fair pricing when dealing with limited sources of supply. 2

4 OVERVIEW 1. Learn how to use market research to develop good bid requirements. 2. Identify risks and cost factors required for innovative acquisition plans. 3. Learn how to develop acquisition plan for innovative supplies/service. 3

5 VENDOR MANAGEMENT DEFINED Vendor Management is the process of working with vendors, controlling costs and increasing value while ensuring quality and mitigating risks. 4

6 MARKET RESEARCH BENEFITS Better understand supply chain process Understand what parameters are the true drivers of cost. Document the reasonableness of technical program drivers to validate significant cost drivers. Establish realistic expectations for both parties. Identify alternative solutions 5

7 MARKET RESEARCH Market Research for same or similar items must satisfy 4 requirements: 1. Validated price 2. Adjusted for quantity Identify and analyze differences 3. Adjusted for scope & complexity of work 4. Adjusted for inflation 6

8 Business Acumen Market Perspective: Knowing your customers & what they want, who are available suppliers/ competitors & what they have to offer, the trends shaping and redefining the marketplace. Financial Acumen: Knowing how decisions impact bottom-line financial results is essential. Business System Thinking: Operations, Supply Chain, and Manufacturing 7

9 COMMON PROBLEMS WITH LIMITED SOURCES Reliability Site visits, manager interviews, talk to employees, references, and even examine their financial statements. Cost competitiveness 8

10 LEVERAGE & INCENTIVE Leverage - What can you require of the vendor if they fail to deliver? How can you safeguard your organization & the project if the vendor cannot meet the contract requirements? Incentives - What incentives can you offer to motivate the vendor/supplier to do their best? 9

11 SUPPLIER QUESTIONS TO POTENTIAL PROBLEMS Why is the vendor unwilling to negotiate? Who had the vendor been working in the past within your organization? Was this relationship a good one or a contentious one? What are their demands and why are they making them? Is the vendor trying to make their end sales quota? 10

12 GETTING STARTED What are your current costs? Historical data? Any gaps or lessons learned from prior contracts or work? Based on market research, how does the business operate? What is the level of quality, service, & time defined by your business? How can this be communicated to suppliers? How will you measure and monitor performance? 11

13 GOVERNMENT ECONOMIC DATA Federal Supply Schedules Consumer Price Index (CPI) Producer Price Index (PPI) Employment Cost Index Department of Commerce Bureau of Labor Statistics (BLS) Federal Reserve System Congress Department of Agriculture Customs and Border Patrol 12

14 MARKET ECONOMIC DATA Industry Data Internal Dbases Catalog Prices GSA Tool (CALC) Gsa elibrary FPDS Historical Prices/Costs 13

15 HISTORICAL PRICES Historical Prices must meet 3 Requirements: 1. Previously determined to be fair and reasonable 2. Quantity Comparable quantities or Learning curves 3. Inflation Recent prices (within the last 12 months) Inflation adjustments 14

16 IDENTIFYING COST FACTORS Material costs include all costs to procure a commodity. Costs of getting raw materials to finished product for use. Operating costs, also referred to as overhead, are nonmaterial costs that are both directly and indirectly. (G&A, Engineering, Materials) Direct & Indirect costs 15

17 DATA ANALYSIS PROCESS (5-STEPS) Step 1: Define Your Questions Step 2: Set Clear Measurement Priorities A) Decide What To Measure B) Decide How To Measure It Step 3: Collect Data Step 4: Analyze Data Step 5: Interpret Results 16

18 DATA ANALYSIS PROCESS Are you asking the right questions and using the right data? Did you identify risks? Are you drawing reasonable, verifiable, substantiated conclusions? Do stakeholders have access to the right data to make sound decisions? Have you allotted time needed to review performance and make contract changes throughout the contract. 17

19 EVALUATE YOUR MARKET RESEARCH Historical prices paid Competition - Which firms in the market are expected to respond to the solicitation? Timing of acquisition, contract type, contract terms Risks What are different costs of ownership based on limited sources and your expectations/needs? Pricing strategies of prospective offerors How do their prices compare with the firms that are not expected to respond? 18

20 REVIEW FOR PRICE REALISM Direct labor rates, direct labor hours, indirect rates, travel and other direct costs, subcontractor costs, and fee. Proposed labor mix or level of effort, and Distinguish between the fixed-price and cost-reimbursement elements. Don t forget about NPV and Time of Money 19

21 ACQUISTION PLAN CONTENT The Acquisition Plan should include: Clear requirements Budget Goals S.M.A.R.T Objectives Timeframes Ongoing market research Admin time for contract compliance Methods used to validate performance, evaluate costs, and make decisions 20

22 ACQUISTION PLAN CONTENT Define clear requirements based on the market and department needs Create metrics and targets for tracking, assessing costs, risks, forecasting, and performance. Develop an evaluation plan & interim milestones for assessing the impact of ongoing efforts and take additional corrective actions, if warranted. Review plan with CO, end users and stakeholders Finalize acquisition plan 21

23 MARKET Description: The Department of Defense (DOD) budgets billions of dollars each year to purchase & repair the spare parts needed to maintain its weapons systems and support equipment. Create an acquisition plan to provide support for the Navy's Product Quality Deficiency Reporting Program. What should you include in the plan for data needed for the analysis, correction, and prevention of deficiencies in spare parts? Step 1: Define Your Questions Step 2: Set Clear, Measureable Priorities: a. Decide What To Measure b. Decide How to Measure Step 3: Collect Data Step 4: Analyze Data (Relationships, drivers, variables) Step 5: Interpret Results

24 MARKET RESEARCH COST/PRICING VALIDATION SUMMARY Key Objectives 1. Price Worst Case Best Case $17M $14.0M $14.5M Historical Data 2. Payments Worst Case Best Case After Delivery /Liquidated Damages On Time Incentives 3. Materials Worst Case Best Case 18 Months 12 months 9 months Industry average 4. Labor Worst Case Best Case $150/hour $100/hour $125/hour Index, Location, Seasonal, Special Skills, etc. 23

25 BEST PRACTICES Market Research is ongoing Consider technology changes & new processes Identify needs of stakeholders, people of power and influence Gain industry knowledge to ask the right questions, create right metrics Build a working relationship with SMEs Apply Sound Business Judgment, evaluate cost & risks Continually measure/monitor supplier performance Identify & place performance metrics in acquisition plan/contract

26 CONTACT Ms. Shenê Commodore, CPCM, Fellow President-Commodore Consulting, LLC Office: (770)