Organization: Graduate School of Business & Public Policy (GSBPP)
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Price Analysis on Commercial Item Purchases Within the Department of the Navy
The objective of this project is to research current pricing memorandums and determine whether the use of price analysis techniques and pricing memorandums can improve acquisition-pricing outcomes. The purpose of the research is to explore the efficacy of the government’s current documentation of price analysis information. The intent is to diagnose what price analysis techniques are being utilized and documented in the contracting file, and to explore potential improvements. This analysis is based on a review of a sample size of 30 contract files and a personnel survey at a Navy contracting office.
Defining success: the Air Force Information Technology Commodity Council
The Department of Defense (DoD) is using industry best practices to transform the way it manages its acquisition functions to include its people, processes, practices, and policies. Strategic sourcing is one such process. The objective of strategic sourcing is the creation and application of carefully crafted procurement strategies to acquire various supplies and services at the lowest total cost. While numerous sourcing strategies exist (e.g., those for strategic items, leverage items, bottleneck items, and noncritical items), this study focused on leverage items and the use of commodity councils, specifically the Air Force Information Technology Commodity Council (AFITCC). Using a case study approach, this research identified the specific factors that contributed to the successful development and implementation of AFITCC. These factors included the development of an overall sourcing strategy, the utilization of an appropriate commodity strategy, and the ability to implement change within an organization. Thus, by documenting specific challenges and successes, this research should help to guide the development and implementation of commodity councils throughout the Air Force, DoD, and various other public organizations.
Budgeting for National Defense Acquisition: Assessing system linkage and the impact of transformation
In this article we conduct a processual analysis (Barzelay, 2003; Barzelay &Gallego, 2005) to assess evidence and test the following hypothesis: the complicated architecture and processes of national defense planning, programming, budgeting and execution and the defense acquisition decision system lead to unintended and negative consequences for defense acquisition and procurement. The purpose of this article is to identify key points of linkage weakness or failure between DoD financial management and acquisition decision systems. We first describe the PPB system and decision process. We then provide an analysis of recent changes to PPB. Next, we describe the defense acquisition system (DAS) in detail. This leads us, by drawing on interview data, to identify systems linkages and areas of misalignment between the PPBES and the DAS. Finally, we provide conclusions with respect to our hypothesis, analysis of consequent key problems and issues, and areas that require further research.
An exploratory study of contracting performance by untrained individuals
This paper reports on an experimental study where 178 student subjects without formal training in contracting issues were asked to accept or reject each of 20 clauses of a software purchasing contract. The subjects used a Web-based interface to accept or reject clauses. Of the 20 clauses in the contract, 6 were intentionally deceitful, in the sense that they specified binding obligations that made it unadvisable to accept them as part of a contract. On average, the subjects were able to correctly accept approximately 11 out of 14 non-deceitful clauses. Somewhat surprisingly, the subjects were able to correctly reject only 2 out of 6 deceitful clauses. The study also suggests that, among untrained individuals, those who are older, have more general work experience, and have above-average scholastic ability are the ones more likely to perform well in contracting tasks under conditions similar to those found in this study (i.e., Web-based contracting conditions). This study's findings provide the basis for a strong call for more and better training of contract officers in the DoD.;The following article is taken as an excerpt from the proceedings of the annual Acquisition Research Program. This annual event showcases the research projects funded through the Acquisition Research Program at the Graduate School of Business and Public Policy at the Naval Postgraduate School. Featuring keynote speakers, plenary panels, multiple panel sessions, a student research poster show and social events, the Annual Acquisition Research Symposium offers a candid environment where high-ranking Department of Defense (DoD) officials, industry officials, accomplished faculty and military students are encouraged to collaborate on finding applicable solutions to the challenges facing acquisition policies and processes within the DoD today. By jointly and publicly questioning the norms of industry and academia, the resulting research benefits from myriad perspectives and collaborations which can identify better solutions and practices in acquisition, contract, financial, logistics and program management.
Pensions and intemporal choice: evidence from the U.S. military
We study a choice made by over 20,000 U.S. military personnel annually between the High-3 and Redux retirement plans. Compared to High-3, Redux offers a $30,000 current lump sum payment in exchange for lower future annuity payments. Despite break-even discount rates between 10% and 25%, about 40% of individuals chose Redux. The likelihood of choosing Redux is decreasing with the break-even discount rate and is related to individual demographics. The implied personal discount rates from this choice are around 9.2%, much lower than found previously. Offering this choice has already saved the government over $2 billion in future retirement payments.
A Framework for Calculating Indirect Costs and Earned Value for IT Infrastructure Modernization Programs
Earned Value (EV) supports proactive project management by comparing work accomplished over time against the cost and schedule of work authorized. This comparison is essential to a range of tasks such as performance-based acquisition and budgeting. However, the utility of EV as a planning and management tool depends on the accuracy of Planned Value (PV) estimates. For Information Technology (IT) infra-structure modernization projects, those estimates are dominated by difficult-to-calculate indirect costs''for the effort consumed in communication, control, and coordination activities. While the DoD 5000 recognizes and recommends including indirect costs in Earned-Value computation, it does not provide guidance on how to do so. However, a conceptual framework built around the notion of communications efficiency can be constructed and evaluated using the information resident in artifacts such as Enterprise Architecture products, organizational capability and maturity assessments, and repositories of project data; each of these provide a basis for developing (parametric) bounds on indirect costs and, in some instances, direct estimates. These methods can be built into an Earned-Value Management (EVM) system.
Total Ownership Cost: An Exercise in Discipline
As a first step, we felt it was important to gather research and data relating to total ownership cost initiative, without bias and complicating the process. This, in itself, is quite a task, as there had been quite a bit of work done in the area over the last two years in all services and numerous DoD programs. This presentation is designed to provide some insight and perspective into what we''ve drawn upon from the work done.
Services Supply Chain in the Department of Defense: Comparison of Acquisition Management Practices in Army, Navy, and Air Force
This paper presents the results of our empirical studies of current management practices in services acquisition in the Army, Navy, and Air Force. The primary objective of these studies was to develop a comprehensive understanding of how services acquisition is being managed within as well as across individual military Services. In these empirical studies, we developed and deployed a web-based survey to collect primary data. Specifically, we studied the current management practices in areas such as contract characteristics, and we studied acquisition management methods, including regional- or installation-level acquisition, use of the project management approach, acquisition leadership, and ownership of requirements. We also studied other program management issues such as the ability of personnel responsible for acquisition, adequacy of acquisition billets and their fill rates, and training provided to services acquisition personnel. We found that for the most part, the services contracts awarded and administered conformed to our expectation. For example, most services contracts are competitively bid, fixed-priced awards with minimal use of any type of contract incentives. The survey data also confirmed that the Navy uses a regional approach in services acquisition, while the Army and the Air Force use an installation-level approach. These differences, in turn, appear to be having important implications for other acquisition management practices, such as the use of project management and contract surveillance. One surprising finding of the study was that the project teams are often led by the contracting officer as opposed to by a formally designated project manager who is responsible for the overall success of the service project. Finally, the survey respondents indicated that the number of authorized staff positions for services acquisition was inadequate and that the existing billets were inadequately filled. The analysis and comparison of management practices in different military services was used as the basis to develop, and report in this paper, our preliminary recommendations for improving the management of the services supply chain in the Department of Defense.
The need for a strategic approach to contingency contracting
The purpose of this study is to examine the applicability of a strategic approach to contingency contracting. Strategic approaches to procurement are successful in both industry and the Department of Defense; however, the contingency arena is often overlooked. Corporations are finding a strategic enterprise orientation to procurement can create or enhance their own competitive position within a market. This is done by identifying opportunities to leverage purchases--thus reducing costs by more than any subsequent trade-off to product market value or identifying opportunities to increase product value by more than any subsequent trade-off to cost. Indeed, the purpose of competitive advantage is to create the largest delta between a cost position and product market value or customer willingness-to-pay. This project applies the principles of competitive advantage and, with them, creates a strategic approach to contingency contracting operations. This paper first recommends the DoD create a centralized activity, such as Joint Contracting Command-Iraq/Afghanistan, to consolidate contracting activities within a Combatant Commander's contingency theater. Secondarily, this discussion suggests the DoD initiate spend analysis of all contracting activities within Combatant Command geographic regions. The DoD can identify opportunities to capture maximum value from key regional suppliers. This framework emphasizes achieving Combatant Commanders' objectives.