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Contract Pricing January 2007

U.S. Air Force. Contract Pricing January 2007. I n t e g r i t y - S e r v i c e - E x c e l l e n c e. Mr. Phil McManus, GS 15 Chief, Contract Pricing Electronic Systems Center DSN 478-4529. I n t e g r i t y - S e r v i c e - E x c e l l e n c e. Overview.

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Contract Pricing January 2007

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  1. U.S. Air Force Contract Pricing January 2007 I n t e g r i t y - S e r v i c e - E x c e l l e n c e Mr. Phil McManus, GS 15 Chief, Contract Pricing Electronic Systems Center DSN 478-4529 I n t e g r i t y - S e r v i c e - E x c e l l e n c e

  2. Overview • Air Force Organization • Workforce / Workload • Challenges – Field Perspective • Initiatives

  3. Air Force Center Organization (Simplified) Wings/Groups own all wing/group slots including PK – Some organizations currently have pricing slots in wings/groups Center Staff Pricing provides support to all wings/groups: Threshold: Actions >$10M at Product Centers, #$ at ALCs

  4. Pricing Responsibilities • Primary Responsibilities: • Cost & Price Analysis / Negotiation • Proposal Adequacy • TINA Compliance • Training • Business / Financial Advice • Pricing Policy

  5. How We Function • Limited resources forces “pricing triage” • Match analyst skills to cases based on: • Complexity • Pricing Risk (contract type, structure) • Urgency • Caseload • Training Needs

  6. Air Force Price AnalystsBy Grade As of Dec 06 Source: SAF/AQCX

  7. Air Force Price AnalystsBy Command Total = 131 As of Dec 06 Source: SAF/AQCX

  8. AF Materiel CommandPricing Workload • FY 05 data - ASC 12 Month look-ahead in Aug 06 showed 87cases worth $26B

  9. ChallengesField Perspective • Importance of Price • Balance between Acquisition Speed and Price has been lost. • Price Should Matter to everyone – When we pay too much for what we buy, Warfighters end up with less of what they need • Importance of price needs to be re-established. If not, why have pricing?

  10. ChallengesField Perspective (cont) • Pricing is understaffed e.g. • ASC - had to waive nearly $900M of pricing cases in FY 05` 50% cut in staff since 1990 with significant increase in workload • ESC – 33% cut in staff since 1996 / workload same • Pricing facing loss of key personnel (real soon) • ESC - 40% will be retired by Apr 08 (15 months) • ASC - 33% are retirement eligible within 4 years • WR-ALC - 27% will retire in < 5 years, 68% in < 10 years • OC-ALC has already experienced this - avg pricing experience is now < 7 years

  11. ChallengesField Perspective (cont) • Morale of Workforce is negatively impacted by: • Caseload / Schedule stress • Integrated Product Team Approach • Limited promotion opportunities • Reduced emphasis on importance of price • Analysis & negotiation skills atrophied? • Case load & deadlines limit depth of analysis/negotiation • De-emphasis on price (why sharpen tools you won’t use?) • IPT Pricing • Manpower intensive – not enough pricers to support • Essentially a “done deal” coming out of IPT • Pressure on Govt evaluators to reach agreement • Process becoming less disciplined • Difficult learning environment for trainees

  12. Initiatives / Tools • SAF/AFMC Level • Pricing Community of Practice (CoP) • Contract Audit Follow-up (CAFU) • Web-based Training Modules (AFIT) • Web-based Weighted Guidelines • Performance Based Payments Tool • Numerous subject specific guides

  13. Initiatives / Tools • Local Level • New Employee Training and Mentoring • Journeymen Refresher Training • Trainee Rotation Through Pricing • Negotiation Workshop

  14. Final Thoughts “Pricing is the most value added task that a contract negotiator does” Tom Wells, SES AFMC/PK

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