Organizational Alignment for Contracting/Subcontracting:

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2 Breakout Session #: G17 Organizational Alignment for Contracting/Subcontracting: Optimizing Performance and Managing Performance Risk Presented by: The Subcontract Management Institute (ScMI ) Date: Wednesday, July 26 Time: 9:45am - 11:00am. 1

3 Speakers Dan Jacobs, Chairman ScMI - Chairman/CEO, The Federal Market Group (FMG); Past National President NCMA; Chairman Emeritus, Contract Management Institute (CMI); Director, Procurement Round Table (PRT); NCMA Board of Advisors, Fellow and CPCM. Certified Management Consultant (CMC), Institute of Management Consultants (IMC). Lenn Vincent, Vice Chairman ScMI - RADM USN (RET); NCMA Past National President, Fellow, and Board of Advisors; Director, Procurement Round Table (PRT); former Industry Chair, DAU; Former Commander, Defense Contract Management Command (DCMC); former Commandant, Defense Systems Management College (DSMC). DAWIA Certified Level III in Logistics and Contracting. 2

4 Dedicated to reducing performance risk in the execution of publicly-funded contracts Combines Certification with Qualification Established and maintains the Subcontract Management Body of Knowledge (ScMBOK ) Developed and delivers Subcontract Management Certification Program (ScMCP ) for Subcontract Managers (SCM) and Technical Representatives (TR) 3 Equivalency Training Provider

5 Dedicated to reducing performance risk in the execution of publicly-funded contracts Combines Certification with Qualification Certification only when candidate has demonstrated they are Qualified; combines online, classroom and experiential Training Online Toolbox, Desktop Reference Guide, Performance Support Tools Program recommended by DOD and State Department to the Commission on Wartime Contracting as a best practice Program briefed to heads of DCMA and DCAA; supports outreach Representation in DC, Denver, Los Angeles, Seattle, Brussels, Tel Aviv 4 Equivalency Training Provider

6 SESSION CONTENT 1. Organizational Alignment 2. The Contract/Subcontract Management Process 3. A Notional Contract/Subcontract Management MEO & Case Study 4. Eight Steps To Develop And Execute The Most Effective Organization (MEO) 5

7 TAKE AWAYS Outcomes are determined by People; not systems and processes. An organization that has the right people in the right job at the right time doing the right thing, ensures that there is a higher probability of successful performance of a contract. 6

8 TAKE AWAYS Upon completion of this Session, we want you to have a better understanding of: 1. The importance of properly organizing to successfully manage contracts and subcontracts; 2. The need to clearly define/baseline the requirement from the outset; 3. The need to identify all of the players/stakeholders from the outset at the Government, End User, Prime and Subcontractor level; 4. How to create and tailor the Most Effective Organization (MEO) for your organization to provide high-performance support for publicly-funded contracts and mission success. 7

9 1. ORGANIZATIONAL ALIGNMENT 8

10 THE ORGANIZATIONAL CHALLENGE To establish an organization that aligns and integrates people, processes, and technology to enable suppliers and stakeholders to acquire and deliver the right stuff, at the right time, to the right place, at an affordable cost to support customer requirements; To structure an organization that provides total acquisition visibility: Timely access to accurate, authoritative, and reliable information supporting acquisition oversight, accountability, and decision-making; To maintain an organization that provides total materiel visibility: Locate and account for materiel assets throughout their lifecycle and provide transaction visibility across the enterprise in support of the customer s mission. 9

11 Every Organization is Unique Common Factor in Every Successful Organization A consistent and organized strategic planning process: Alignment/Priorities Resiliency Effective use of resources Company strategy affects all elements of the organization Structure Staffing Financials/Investments Relationships/Alliances Processes/Innovation Risk management Communications 10

12 Organizational Alignment A Notional Model The structure of an organization must be aligned with: Internal Environment Corporate Vision, Mission, Strategy Values and Culture Processes and Procedures External Environment Customer Expectations Competition Legal Other organizations (SEC, rating agencies, bankers, analysts, etc.) For an organization to perform well, these seven elements need to be aligned and mutually reinforcing. A company s size and access to resources will influence its organizational strategy. 11

13 WHAT MUST BE DONE? Organization Functional Work Breakdown Structure (WBS) 1.0 Executive 1.1 Strategic Planning & Execution 1.2 Financial Planning & Execution 1.3 Business Development 1.4 Branding 1.5 MEO Mgmt. 1.6 Operations 1.7 Ethics & Standards of Conduct 1.8 Risk Management 1.9 Communications 1.10 Stakeholder Relations 1.11 Human Resources 1.12 Contracts Mgmt. MEO = Most Effective Organization HR = Human Resources E/S/H = Environmental/Safety/Health IT = Information Technology 2.0 Finance & Accounting 2.1 General Ledger 2.2 Accounting Records 2.3 Banking & Cash Mgmt. 2.4 Cost Accounting 2.5 Financial Statements 2.6 Audits 2.7 Invoicing 2.8 Accounts Receivable 2.9 Accounts Payable 2.10 Payroll 2.11 Taxes 2.12 Forecasting 2.13 Budgeting 2.14 Cost Mgmt Operating Systems 3.0 Administration 4.0 Business Dev. & Marketing 3.1 Corporate Records 4.1 Strategic Planning 3.2 File Maintenance 4.2 Business 3.3 Contract Records Development 3.4 Human Resources 4.3 Marketing 3.5 Communications 4.4 Branding 3.6 Internal Audits 4.5 Advertising 3.7 Contracts & Grants 4.6 Communications Administration 4.7 Forecasting 3.8 Purchasing 4.8 Lobbying 3.9 Socio Economic 4.9 Stakeholder Policies Relations 3.10 Policies & 4.10 Capture Planning & Procedures Execution 3.11 Legal 3.12 Document Control 3.13 Quality Control 3.14 Risk Management 3.15 Project Management 3.16 Insurance 3.17 Facilities 3.18 Equipment 3.19 Safety/Health 3.20 Environmental 3.21 Security 3.22 Information Technology 3.23 Property Mgmt. 5.0 Operations 5.1 Strategic Planning 5.2 Financial Planning, Estimating 5.3 Product Development 5.4 Cost Mgmt. 5.5 Operations Mgmt. 5.6 Facilities Mgmt. 5.7 HR Mgmt. 5.8 Quality 5.9 Certifications 5.10 Internal Audit 5.11 Job Placement 5.12 External Audit 5.13 Risk Mgmt Supply Chain Mgmt Security 5.16 E/S/H 5.17 Program/Project Mgmt Communications 5.19 IT Mgmt. 12

14 PROVEN METHODOLOGY TO DEVELOP THE MOST EFFECTIVE ORGANIZATION The MEO Zero Base Benchmark Comparison Work Activity Analysis + + = Most Effective Organization Develop from the ground up the core staffing Compare to an enterprise significantly better than yours Determine what work processes beyond the zero base core should be performed. The right quantity and quality of people doing the right things the right way 13

15 PLANNING If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions. - Albert Einstein Outcomes are determined by People; not systems and processes. Having the right people in the right job at the right time doing the right thing, ensures that there is a higher probability of successful performance of a contract. Formation of the Most Effective Organization (MEO) from the outset is essential! 14

16 2. 2. THE CONTRACT/SUBCONTRACT MANAGEMENT PROCESS 15

17 Planning Where Does/Should Contract and Subcontract Management Fit Into The Organization? Contract/Subcontract Management Process Solicitation Selection and Award Requirement Determination Requirement Specification Procurement Requests Solicitation Evaluation Negotiation Selection Award Contractor/Subcontractor Interface Business Planning Marketing Proposal Preparation Negotiation Award Disputes Contract/Subcontract Administration Assignment System Compliance Performance Measurement Contract Modifications Completion/ Payout/ Closeout Work Authorization and Scheduling Sub and Sub Tier Contracts Compliance Monitoring (QASP) Changes, Claims & Disputes Delivery & Acceptance Invoicing & Collection Closeout 16

18 Managing a Prime Contract/Subcontract typically includes: Identifying requirements Addressing various needs, concerns, expectations Balancing the competing constraints (unique per contract) including but not limited to: Scope Quality Schedule Budget (Cost) Resources, Issues (problems) Risks (potential problems) SCHEDULE The Triple Constraint 17

19 HIERARCHICAL ARRANGEMENTS Hierarchical arrangements are essential in the context of publicly-funded contracting. They help groups of people coordinate their activities and gives people information about who does what; It reduces the need to bargain and argue over such decisions. This is especially true as the interdependence among people in a group increases. The number of functions and personnel in publicly-funded contracts demand a clear, unambiguous organizational hierarchy among each of the organizations participating in the contract. 18

20 Program/Project/Contract/Subcontract Management Functions The Federal Government is Program/Project Management-Centric: Congress passed the Program Management Improvement Accountability Act, (Public Law No: , 12/14/2016) that mandates OMB establish standards and policies for executive agencies consistent with widely accepted standards for program and project management planning and delivery (DOD is exempt). Portfolio Management - A portfolio refers to a collection of projects or programs and other work that is grouped together to facilitate effective management of that work to meet strategic business objectives. (PMI) Program Management - A program is defined as a group of related projects managed in a coordinated way to obtain benefits and control not (necessarily) available for managing them individually. (PMI) Project Management - A project can be defined as a temporary endeavor undertaken to create a unique product or service therefore, Project Management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. (PMI) 19

21 Program/Project/Contract/Subcontract Management Functions Contract Management - Contract management is the process of managing contracts, deliverables, deadlines, and contract terms and conditions while ensuring customer satisfaction. (NCMA) Subcontract Management - Subcontract management is the process of managing any contract by a subcontractor (i.e. supplier, distributor, vendor, or firm) to furnish supplies or services for performance of a prime contract or a subcontract while ensuring satisfaction for all stakeholders. (ScMI) Supply Chain Management - Supply chain management is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. (ISCM) Purchasing - Purchase order, when issued by the Government, means an offer by the Government to buy supplies or services, including construction and research and development, upon specified terms and conditions, using simplified acquisition procedures. (FAR Part 2) 22 20

22 2. 3. A NOTIONAL CONTRACT/SUBCONTRACT MANAGEMENT MEO & CASE STUDY 21

23 Publicly-Funded Contracts Notional Contract/Subcontract Management Most Effective Organization (MEO) Corporate Support: Finance/Accounting Operations/PPM Contracts/Purchasing Administration/Legal Compliance HR Quality ESH Security Portfolio Manager Program Manager Contracts Manager Customer Interface: Program/Project Manager Contracting Officer COR End-Users Stakeholders Subcontracts Manager Supply Chain Manager Subcontract Administrators Buyers Technical Representatives Logisticians Supplier Development Specialists Warehouse/ Inventory Control Specialists = Planned & Coordinated Functional Corporate Support SUBCONTRACTORS = Planned & Coordinated Customer Interface 22

24 CASE STUDY Q&A 1. Based on your experience and/or observed best practices, what are the top 2-3 issues to consider to ensure the contract/subcontract management functions would be properly aligned with the total organization structure? 2. What recommendations would you propose to your respective Directors? Join with the person on your right and left for discussion. You have 10 minutes to complete this task and then each group will discuss their thoughts/recommendations. 23

25 2. 4. EIGHT STEPS TO DEVELOP AND EXECUTE THE MOST EFFECTIVE ORGANIZATION (MEO) 24

26 Eight Steps to Develop and Execute the Most Effective Organization (MEO) STEP 1 Baseline and clearly define the requirement from the outset; use WBS; ask and answer: What must be done? ; STEP 2 Baseline the requirement schedule using order of precedence diagram; identify Critical Path ; ask and answer: When it must be done? ; STEP 3 Identify and communicate with all of the Stakeholders; STEP 4 Using the WBS, identify and assign roles and responsibilities internally, in writing, for all tasks identified; prepare Resource Matrix; ask and answer: Who will do what? ; 25

27 Eight Steps to Develop and Execute the Most Effective Organization (MEO) STEP 5 Execute Make or Buy process; compete subcontracts; exercise due diligence in sourcing; Select Subcontractors; Validate MEO; STEP 6 Prepare and execute a Contract Communications Plan ; Conduct Post Award Contract/Subcontract Orientation Meetings; STEP 7 Prime negotiates a Quality Assurance Surveillance Plan (QASP) with the Government and negotiates a QASP with each subcontractor; subcontractors negotiate QASPs with sub-tier subs; STEP 8 Perform in accordance with the Terms & Conditions of the Contract/Subcontract; Manage the Triple Constraint ; Scope, Schedule, Cost. 26

28 Contact Information 3509 Connecticut Avenue NW Suite 1112 Washington, DC Ph: Fax: For more information: 27