Breakout Session 1207 Erin Mirsky, Sr. Associate, Booz Allen Hamilton

2. IT Procurement: Getting “IT” Right Breakout Session 1207 Erin Mirsky, Sr. Associate, Booz Allen Hamilton Stacey Donald, Associate, Booz Allen Hamilton April 11, 2006 4:30 – 5:30 NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. What’s special about IT Procurement? • High visibility • Large user base • High price tag • Support agency mission • Security • Law enforcement • Medical NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Challenges to IT Procurement • Integration • Out-year maintenance • Technology advancements • Multiple high-profile stakeholders NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. Federal IT Budget Statistics • $65 billion budgeted for FY06 for IT equipment and support • DOD ($30B) vs. civilian ($35B) • $12.5B for Development, Modernization, and Enhancements (DME) Source: OMB Report on IT Spending for Federal Government FY2006 (Exhibit 53) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Federal IT Budget Statistics • Civilian agencies dedicate an average of 10.5% of their budget to IT • Transportation and Homeland Security top the list at over 20% of their overall budget allotted to IT purchases NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Procurement Lifecycle Requirements and Data Gathering Alternatives Analysis Solicitation Development Source Selection Award and Operations Planning • How do I begin gathering requirements when the existing program or system has been in place for the last eight years? • When do I beginning planning for transition? • Where can I incorporate small business into our IT environment with minimal risk? • How do I know what other entities are doing in similar IT environments? • How can I make the best use of the support staff (Government and contractors) throughout this procurement lifecycle? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Coordination of Stakeholders OCIO • Close interaction between the Program and Contracting offices models commercial trends • A communicative working relationship between the Program and Contracting Offices is critical Contracting Office Program Office Contractors NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Planning and Requirements • Well-defined processes for collecting data will facilitate a rapid requirements gathering phase Users Technical Staff • Get your IT SMEs involved early in areas such as strategy, planning, and IGCE NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. Planning and Requirements Brief CIO Council Brief CIO Council Initial Requirements Formulation Session One Facilitated Session With All Working Group Members Specific Requirements Breakout Sessions Multiple Facilitated Sessions With Appropriate Subject Matter Experts from the Working Group and Other Sources Final Session One Facilitated Session With All Working Group Members • Build consensus on primary requirements and service areas • Establish breakout sessions to refine requirements and define specific service levels at future sessions • Refine requirements • Specify required service levels for each requirement Breakout Session Breakout Session • Report consolidated results of all focus sessions • Report results of baseline validation • Obtain feedback from Working Group members • Plan follow-on sessions (if needed) Breakout Session Determine Acquisition Strategy REQUIREMENT FINANCIAL BREAKOUT SESSION ILLUSTRATIVE ILLUSTRATIVE • Accurate, clear, and timely billing from vendors • Required bill delivery timeframes • Required bill formats and details • Required bill dispute processes Other REQUIREMENT Other BREAKOUT SESSIONS • Other • Other Baseline Validation Structured Process For Validating Inventory and Usage Data • Validate locations, quantities, and usage statistics • Determine high-level opportunities for optimization NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11.  Enhancements  Specialized Additional Requirements  Common Additional Requirements  Minimum Baseline Requirements Planning and Requirements • Standardize • Categorize • Prioritize Organization or Bureau NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. Planning and Requirements Departmental Bureau PMO NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Market Research NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. Small Business SOFTWARE HARDWARE NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. Performance Based Elements • Guiding principles • Usefulness • Accountability • Simplicity • Critical success factors • Analyze the existing environment • Baseline • Industry benchmarks NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. Performance Based Elements Process Metrics Performance Metrics Project Milestones Performance Drivers Key Performance Metrics Shareholder Value • Actual versus planned dates of project activities, for example: • Strategy agreed to • RFP issued • Contract in place • Roll out to specific locations • New policy in place • Controllable factors • Spend under contract • Policy compliance • Equipment utilization • Waste • Cleaning frequency • Guards per square foot • External factors • Market prices • Level of activity • Baseline spend • Value • Price per unit • Units per activity (or per other relevant denominator) • Lifecycle cost or value • Sustainability • Customer satisfaction • Ongoing investment • Core Values • Diversity • Safety • Benefits • Reduction in cost • Reduction in CapEx • Increase in revenue • Costs • Implementation cost • Ongoing management costs NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Transition Strategy • Develop incentives that are tied directly to transition performance • Funding considerations • Contractor overlap • Upfront or dispersed transition costs • At what point in the fiscal year will transition occur • Prepare the incumbent for the “transition out” NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Transition Strategy • Determine the most appropriate amount of overlap of incumbent and incoming contractors IT Equipment or Services Program Incumbent Incoming Contractor Third Party Support NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

19. Communication and Customer Education • Create branding and awareness • Early introduction of new program, processes, and technologies • Ongoing communication up to and beyond award and transition Overarching Communication Structure Campaign 1 Partnership Communication Campaign 2 People Communication Campaign 3 Market Communication NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

20. Communication and Customer Education • Front-Line • Operation • Regional • Headquarters • What is the program? • What is it delivering? • How much will it cost? • When will it be available? • Will it make managing employees easier? • How will my employees be trained? • Will my job change? • How will a centralized infrastructure maintain the service levels of the current infrastructure supporting our mission functions? BUSINESS & TECHNICAL EXECUTIVES AND MANAGERS • EMPLOYEES • Inspectors • Investigators • IT Support • IT Specialists • Application specialists • Administrative • What is the program? • What is it delivering? • What will it replace? • When will it be available? • Will I still have a position? • How will my job change? • Will I be trained on new systems? • THIRD PARTIES • Federal Agencies • State and Local • Private Sector • Information Providers • Contractors • What is the program? • How will affect our interaction with an agency? • When will it be available? • Will we need to change our interfaces? • How will our existing contracts change? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

21. Third Party Support in the Procurement Lifecycle • Contractors can provide a valuable resource to the contracting and program offices when properly utilized • Objectives for your IT contractors • Transparency • Objectivity • Applicable and relevant subject matter expertise NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

22. Conflicts of Interest • Concern with more than “acquisition” support • Program office support • Strategic direction • Engineering / system design • Financial management • Avoid, neutralize, redirect and remedy Any contractor that is in a position to favor its own products or services in a future procurement presents risk NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

23. IT Procurement Risk Matrix NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

24. Best Practices • Develop collaborative environment between program, technical, and contracting offices • Understand and plan for enterprise-level vision and directives • Understand your baseline and total costs • Share risk • Create and build partnership with vendor • Use critical metrics that impact the user NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

25. More Best Practices • Involve multiple stakeholder levels in the requirements gathering process • Stay current with commercial trends for IT management and IT outsourcing • Begin stakeholder communications early • Ensure warranty and maintenance options meet the needs of your customers NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

26. Erin Mirsky Mirsky_Erin@bah.com (703) 902-4816 Stacey Donald Donald_Stacey@bah.com (703) 902-4602 NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management