ACQUISITION EXCELLENCEAcquisition Innovation in Action ACQUISITION EXCELLENCEAcquisition Innovation in ActionMarch 12, 2019 Grand Hyatt DC March 12, 2019 Grand Hyatt DC
Category Management Changes Everything Moderator:Greg Giddens, Partner, Potomac Ridge Consulting Panelist:Major General Cameron G. Holt, Deputy Assistant Secretary for Contracting, Office of the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics
Category Management Changes Everything! Lessons from the Air Force’s Award Winning Program Maj Gen Cameron Holt Deputy Assistant Secretary (Contracting) Assistant Secretary of the Air Force (Acquisition, Technology, & Logistics)
Overview • Concept & Principles • 4 Key Tenants • Category Management Results (The Real Deal!) • Mission-Focused Business Leadership “We will continue to leverage the scope of our operations to drive greater efficiency in procurement of materiel and services while pursuing opportunities to consolidate and streamline contracts in areas such as logistics, information technology, and support services” - 2018 National Defense Strategy of the United States of America
3 Levers of Category Management 1. Rate 2. Demand Capability 3. Process
Principles Category Management Strategic Cost Management 4. Drive Results Issue Policy Manage Demand & Consumption Strategic Acquisition Solutions Industry Best Practices 3.Develop Business Intelligence 2. Assign Cost Ownership via Category Managers 1. Categorization of Spend Key: Acquisition Solution Non-Acquisition Solution 1. Air Force category structure aligns to OMB’s government-wide program 2. Assigns cost management authority & responsibility to functional domain owner 3. Comprehensive analysis robust business intelligence data driven solutions 4. Reduce TCO through shaping, managing, and strategically acquiring requirements
The “4 Pillars” (Examples) Taxiway Lighting Elevator Maintenance Issue Policy Manage Demand & Consumption Action: Issued policy memo for mandatory use of Elevator Mnx Performance Work Statement Impact: Process & Demand Result: 22% savings over FYDP or ~$3.7M Action: Converted airfield lighting from incandescent to LED Impact: Process & Demand Result: Greater than 60% reduction in energy consumption Strategic Acquisition Solutions Strategic Cost Management Rate – Process - Demand Integrated Solid Waste Management Client Computing Action: Benchmark dumpster management practice at Ohio State University Impact: Demand Result: Eliminate unscheduled dumpster pickups; reduce fuel consumption cost driver Industry Best Practices Action: Implemented strategic sourcing program Impact: Rate & Process Result: 41% savings over FYDP or ~$163.9M
Tenant 1. Categorizing SpendAir Force Mountain of Spend We needtoacceleratedour efforts to characterize the “does cost/should cost” GAP R&D Medical
Tenant 2. Assign Cost Ownership 94 % of Spend OWNED!
Tenant 3. Develop Business Intelligence Key Points • Initial planning establishes goals and identifies prioritized targets of opportunity • Comprehensive analysis of AF requirements provides actionable business intelligence • AF and Industry benchmarks are used to identify gaps in cost and performance • Category Managers make data driven decisions to select optimal courses of action to close gaps
Category Management Summary • Air Force achievements to date: • Validated saving/avoidance of $1.5B • Enabled improved lethality through local, regional, and enterprise level cost reduction • Partnering across the USAF & DoD – we are positively influencing the Federal Government • Opportunities to capitalize on: • Improve requirements development and control • Shape future buying behavior through data analytics • Instill more disciplined cost management • Improve alignment between budgeting and execution Think like a business, where the “bottom line” is Lethality & Readiness!
Mission-Focused Business Leadership • Mission-Focused Business Leadershipa shift: • from Linear to Systemic Thinking • from Bureaucratic to Entrepreneurial • from Defense to Offense • from “Business Advisors” to “Business Leaders” • from Compliance Focus to Mission Focus
Mission-Focused Business Leadership • Four Lines of Effort (LOE) with associated Objectives and Key Results for Calendar Year 2019 • LOE 1: Build Mission Focused Business Leaders • Attract, Assess and Retain Key Talent • Reimagine training and culture from initial skills through executive level • Leverage and formalize key strategic external partnerships • LOE 2: Tools Not Rules! • Reimagine AF Contracting online presence • Eliminate all MPs below Air Force level (2a) and flatten and align contractual authority (2b) • Enhance Instructional Guidance • Build Dashboards to enable Data-Driven decision making
Mission-Focused Business Leadership • LOE 3: Own the High Ground: Optimizing the Acquisition Enterprise • Efficiency – Optimize aggregate cycle time savings • Effectiveness – Build credibility and achieve cost savings/avoidance • Experimentation – Exploit lessons learned from closed loop innovation efforts • LOE 4: Expeditionary Contracting as a Joint Force Capability • Present a ready Total Contingency Contracting Force • Sharpen expeditionary training, exercises, and lessons learned • Enhance integration of contracting as a warfighting capability • Amplify OCS planning and integration proficiency
4. ResultsStrategic Acquisition Solutions Transient Alert Services (100% SB) USAF-wide 5-yr MAC IDIQ Savings/Efficiencies: - $205K (5%) in 1st year Seating I (43% SB) USAF-wide 6-yr GSA BPA Savings/Efficiencies: • $6.49M (11%) over 6 years Executive Office & Conference Furniture (100% SB) USAF-wide 5-yr BPA Savings/Efficiencies: - $4.44M (12%) over 3 years Digital Printing & Imaging (67% SB) USAF-wide 5-yr BPA Savings/Efficiencies: • $40.7M (32%) over 4 years Client Computing Solutions (50% SB) USAF-wide 5-yr BPA Savings/Efficiencies: • $163.9M (39%) in 1st year System & Modular Furniture (100% SB) USAF-wide 5-yr Contract Savings/Efficiencies: • $15.29M (29%) over 4 years Maintenance, Repair & Operations (89% SB) USAF-wide 5-yr BPA Savings/Efficiencies: - $6.23M (29%) over 4 years Roofing Replacement Repair (96% SB) USAF-wide 5-yr IDIQ Savings/Efficiencies: • $14.86M (63%) over 3 years DF-LCS2 Non-FR Combat Shirt Gen 2 (100% SB) USAF-wide 5-yr IDIQ Savings/Efficiencies: • $830K (38%) over 2 years Office Supplies V3 (96% SB) USAF-wide 5-yr IDIQ Savings/Efficiencies: - $9.92M (16%) over 3 years Land Mobile Radios USAFE EOY Buy Savings/Efficiencies: • $11.4M rate and trade-in savings – 2 years Folding Wardrobes Joint AF/Army 5-yr BPAs Savings/Efficiencies: • $1.2M (15%) in 6 years Transforming operational acquisition from money spenders to deal makers!
Tenant 4. ResultsEnterprise Sourcing & SB Examples Executive Office & Conference USAF-wide 5-yr BPA Awardees: 100% SB Increased SB utilization by 38% Savings/Efficiencies: $2.05M (12%) saved for 1st 2 yrs Digital Printing and Imaging USAF-wide 5-yr BPA Awardees: 67% SB Increased SB utilization by 14% Savings/Efficiencies: $25.4M (40%) saved 1st 2.5 yrs Roofing Replacement Repair USAF-wide 5-yr IDIQ Awardees: 96% SB Increased SB utilization by 23% Savings/Efficiencies: $12.064M (27%) saved 1st 1.5 yrs System & Modular Furniture USAF-wide 5-yr 2-Tier/C-Type Awardees: 100% SB Increased SB utilization by 49% Savings/Efficiencies: $11.6M (30%) saved 1st3yrs Transient Alert Services USAF-wide 5-yr IDIQ Awardees: 100% SB Increased SB utilization by 24% Savings/Efficiencies: $6.3M projected over next 5 yrs AFMC Small Business Special Achievement Award Market Research Strategic Sourcing increasing SB utilization!!