Breakout Session # 806 Michelle Jones, Associate, Booz Allen Hamilton

2. Enabling Competition between the Public and Private Sectors Breakout Session # 806 Michelle Jones, Associate, Booz Allen Hamilton Date: April 11, 2006 Time: 2:45 pm NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Introduction Financial Management Line of Business Is this Competitive Sourcing? How to structure a competition among both Government and Private entities Agenda NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Introduction Financial Management Line of Business Is this Competitive Sourcing? How to structure competition among both Government and Private entities NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. Government Entities have evolved into Centers of Excellence for the Financial Management Line of Business whereby they are competing with Private Industry to provide software platforms and services Government and Private entities are competing for the same work, but not in the realm of Competitive Sourcing The Centers of Excellence successfully serve many small government agencies Introduction NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. What rules and policies govern the intersection of public and private performance? • FAIR Act of 1998 - Helps Federal Agencies Determine where Competitive Sourcing is appropriate • OMB Circular A-76 - Provides guidelines for competition between the public and private sector as a result of FAIR Act Determinations • The Economy Act of 1932 - Provides approval process and mechanism for government entities to establish Interagency Agreements for the exchange of goods and services on a cost reimbursement basis • Franchise Funds - authorized by the Government Reform Act of 1994 Unlike Interagency Agreements, which are done on a cost reimbursement basis, the Franchise Fund designation allows a Government entity to perform services for a fee, and maintain control over retained earnings. • Office of Management and Budget, Line of Business Initiative - see next slide NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Introduction Financial Management Line of Business Is this Competitive Sourcing? How to structure competition among both Government and Private entities NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Office of Management and Budget, Line of Business Initiative:The Financial Management Line of Business initiative enables government agencies to serve or be served • Serve – Apply for Center of Excellence Status, and provide Tier 1, Tier 2, or Tier 3 Financial Management services to other government agencies • Be served – transfer the hosting of the financial system, or all financial operations to an operating center of excellence NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Introduction Financial Management Line of Business Is this Competitive Sourcing? How to structure competition among both Government and Private entities NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. The Public/Private competition can use elements of Competitive Sourcing, without being an OMB-A-76 Procurement • Authority • Tailoring the process • Role of Competitive Sourcing Officer • As Is Operations, To Be Operations • Elements of OMB A-76 Process NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Introduction Financial Management Line of Business Is this Competitive Sourcing? How to structure competition among both Government and Private entities NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. Focusing on compliance with OMB’s FM LoB initiative, we analyzed several models for source selection that enable the public and private sectors to compete. • Model 1 Serial process in which the program office evaluates the viability of government performance separately from the evaluation of private sector performance • Model 2 Simultaneous process whereby the program office coordinates the competition among the public sector, leading to issuance of an interagency agreement and the contracting officer coordinates the competition among the private sector, leading to issuance of a contract • Model 3 Integrated process based on an A-76 Competitive Sourcing process in which all proposals are considered together NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Advantages to the Serial Model The resulting agreement (i.e. IAA, BPA, IDIQ) follows the normal channels for each type of contracting instrument. Following normal channels takes less time than blazing new trails. There is clear authority for each type of procurement method. Using an established process with clear authority can be done quicker and more routinely than entering uncharted territory. Disadvantages to the Serial Model Decision makers do not have all information at time of decision. They decide whether or not to go with a Center of Excellence before seeing what the private sector has to offer. Cost can be woefully understated because not all the information is available to the offerors. Offerors that submit earlier do not have as much information as offerors who submit later. Model 1: Serial Model - Consider public sector performance because of a trigger NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. Advantages to the Simultaneous Model In this case the program office, or the source selection authority has all the information at the time of the award decision. The buying agency is still able to use the normal IAA process for IAA’s under the authority of the Economy Act and the normal procurement process under the authority of the Federal Acquisition Regulations. Following normal channels takes less time than blazing new trails. Disadvantages to the Simultaneous Model With no integrated decision making, the source selection decision may be hard to justify. Agency provides same scope of work to public and private sector performers although potentially, it will only be awarded via one of those mechanisms, risking protest. This structure, if disclosed from the beginning, could lead to a perception of bad faith and a lack of interest in the solicitation by industry. Model 2 – Simultaneous Process NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. Advantages to the Integrated Process Meets OMB Directive True Best Value Decision – Government reviews both COE and commercial offerings before making a decision Single TEP and SSA help level playing field for evaluation Shorter timeframe for award than sequential release of public and private sector requests for proposals Disadvantages to the Integrated Process The program office may venture into new territory with this hybrid competition between the public and private sectors Sensitivity of government personnel to any mention of the Competitive Sourcing Process Model 3 – Integrated Process in which all proposals are considered together, in a process based on the A-76 Competitive Sourcing Process. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. How does an agency ensure COE performance in the absence of mechanisms available with the private sector? • Ensure High-Level commitment by the service provider • Increased Management and Oversight • Agency plays active role in planning • Agency provides timely input and review of all deliverables • Schedule Tracking and Earned Value Management • Robust and inclusive Risk Management Process NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Risks – Procurement Process • Playing field is not level because not all COE’s can offer fixed price work, or performance incentives • Proposals lack sufficient detail for evaluation • Evaluators have difficulty evaluating past performance because COE’s have a limited performance record NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Performance Risks • Lack of Agreement Enforcement Mechanism • Increased Cost • Lack of Integration NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management