Keynote Presentation

2. Keynote Presentation Timothy K. Dowd Executive Director, Contracts, Space and Navel Warfare Systems Command

3. SPAWAR • Navy’s Technical Authority and acquisition command for C4ISR,* Business IT, and Space Systems • Exercise Technical Authority in support of programs acquired by 3 PEOs: • PEO C4I; PEO EIS; PEO Space Systems • Support JPEO – JTRS • Provide advance communications and information capabilities to Navy, Joint and coalition forces • More than 12,000 employees and contractors deployed globally and near the fleet *Command, Control, Communications, Computers, Intelligence, Surveillance & Reconnaissance

4. SPAWAR PEO SpaceSystems SPAWAR Space Field Activity PEO EIS Washington DC SPAWAR HQ Norfolk, VA Charleston, SC SPAWAR Systems Center Pacific New Orleans, LA Germany, Italy, UK San Diego, CA Japan, Guam, Hawaii PEO C4I SPAWAR Systems Center Atlantic JPEO JTRS

5. Collaboration • Interaction via NDIA, AFCEA, NCMA, SPAWAR Industry Forms – Working Groups (Ad Hoc) • RFIs • Draft RFPs • Post award • SBIR Program

6. Collaboration (Cont’d) • DoD Mentor-Protégé Program • Software Libraries • Cooperative Agreements • CRADAS • Work for Private Parties (Testing) • Work for Private Parties (Articles & Services)

7. Developments/Initiatives

8. Peer Reviews of DoD Solicitations and Contracts A new DFAR 201.170 established a requirement for Peer Reviews by DoD teams for solicitations and contracts valued at $1B or more (July 29, 2009) OSD/DPAP organizes teams of reviewers and facilitates the process To promote quality and consistency in DoD contracting To share best practices and lessons learned across DoD SPAWAR has had 2 OSD peer reviews and we have participated as members in 2 peer reviews

9. Award Fee (Oct 14, 2009) 74 Fed. Reg. 52856 An interim FAR amendment made a number of changes for award fee contracts, including: Requiring that award fees be linked to acquisition objectives in the area of cost, schedule, technical performance Clarify that a base fee be at zero may be included in a cost plus award fee type contract

10. Prescribes narrative ratings that will be utilized in award fee evaluations Prohibiting award fees if the contractor’s overall performance is not satisfactory Prohibiting the “rollover” of unearned award fees from one evaluation period to another D & F is required (HCA Approves) Award Fee (Oct 14, 2009) 74 Fed. Reg. 52856

11. Organizational Conflicts of Interest (OCI) Conflicts of Interest: Requires DoD to revise the DFARS to provide uniform guidance and tighten existing requirements for OCI (Weapons System Reform Act of 2009)

12. Possible areas of conflicts of interest: Lead system integrator contracts Companies that perform systems engineering & technical assistance functions for the Government while competing to perform as a prime contractor or supplier Award of subcontracts to affiliate business units Contractors performing technical evaluations on major defense acquisition programs Organizational Conflicts of Interest (OCI)

13. National Defense Authorization Act 2010 (Oct 28, 2009) Non-Price Evaluation Factors The Comptroller General was directed to study DoD procurements in which evaluation factors are more important than cost or price. The study must consider: The frequency of such procurements Types of contracts for which such evaluation factors are most frequently used The reasons for DoD’s use of such factors Extent to which the use of such factors is, or is not, in the interest of the DoD

14. Personal Conflicts of Interest (PCIs) The National Defense Authorization Act for FY09 directed the Administrator of the Office of Federal Procurement Policy (OFPP) to issue policy to prevent PCIs by contractors performing acquisition functions associated with inherently government functions. PCIs potential has increased due to the Government’s reliance on contracted technical, business and procurement expertise.

15. PCIs present lesser risk to Government on fixed-price, supply contracts; however risk increases as the supply or services become more sophisticated or the relationships between Government and contractor blur into inherently governmental functions. Additionally, guidance was issued from USD AT&L in Nov ’09 regarding PCIs related to Contractors supporting Government. Personal Conflicts of Interest (PCIs)

16. Increase Fixed Price & Competitive Contracts White House Memo – March 2009: Non-competitive and cost reimbursement contracts misused, wasteful, etc. Since 2001, spending on Government contracts has more than doubled, reaching over $500 billion in 2008. Between FY00 and FY08, dollars obligated under cost-reimbursement contracts nearly doubled, from $71 billion in 2000 to $135 billion in 2008.

17. Reports by the Inspectors General, the GAO, and other reviewing bodies have shown that noncompetitive and cost-reimbursement contracts have been misused, resulting in wasted tax-payer resources. A GAO study of 95 major defense acquisition projects found cost overruns of 26 percent, totaling $295 billion over the life of the projects. DoD established goals for increased competition and fewer cost type contracts. Increase Fixed Price & Competitive Contracts

18. DoN Energy Strategy for Acquisitions Memorandum(Jan 4, 2010) Five energy goals been established by the Secretary of the Navy (SECNAV) Must ensure that in DoN source selections, careful consideration is given to: The lifecycle energy cost of platforms, weapons systems, and buildings The fully-burdened cost of fuel in powering these capital investments The overall energy efficiency and the energy footprint of competing companies

19. Contracts must be structured to hold industry contractually accountable for meeting energy targets and system efficiency requirements. Acquisition plans and source selection documents must address these issues. A team of experts from the program management, technical, financial and contracting communities, in collaboration with the Navy Energy Coordination Office, will develop evaluation policies and procedures for the Department. DoN Energy Strategy for Acquisitions Memorandum(Jan 4, 2010)

20. Naval Strategic Sourcing Governance Background In November 2008, ASN (RD&A) formally established the DON Strategic Sourcing Governance Structure and Charter The Naval Strategic Sourcing Working Committee (SSWC) is chaired by RDML Baucom, (ASN, ALM) responsibility to approve DON-wide strategic sourcing initiatives NAVSUP is Executive Agent via the Strategic Sourcing Program Office Focus is now on services

21. Goals Optimize performance Streamline and standardize processes Minimize price Increase socio-economic acquisition goals Evaluate total life cycle management costs Improve vendor access to business opportunities Naval Strategic Sourcing Governance

22. Comments / Questions?

23. 22 Panel Discussion:Legislative and Regulatory Update • Moderator • Karen Wilson, Fellow, Director, Acquisition Policy, The Boeing Company • Panelists • Mary Ellen Fraser, Of Counsel, McKenna, Long and Aldridge, LLP • James S. Latoff, Counsel, Committee on Oversight and Government Reform, US House of Representatives • Margaret DiVirgilio, Vice President, CFO and Treasurer, Concurrent Technologies Corporation • Susan Ebner, Attorney Government Contracts, Buchanan Ingersoll & Rooney PC

24. Topics “Findings and Recommendations” House Armed Services Committee Panel on Defense Acquisition Reform March 23, 2010 Weapon Systems Acquisition Reform Act of 2009, Public Law 111-23

25. Panel Examined Acquisition of Weapon Systems – WSARA still being implemented; identified additional issues Acquisition of Commercial Goods and Commodities Acquisition of Services Information Technology – A hybrid/special case

26. Recommendations - IT DoD is currently drafting a new process for IT acquisition A cultural change is needed to capture and track metrics IT must involve ongoing dialogue between system developers and warfighters DoD should foster an open architecture approach Translate competitive prototyping used in weapon systems into IT environment

27. Recommendations - PARCA Create comprehensive Performance Assessment and Audit Function for Acquisitions - GAO-like capability Expand role of Performance Assessment and Root Cause Analysis (PARCA), created in § 103 of the WSARA Assess performance (cost, schedule, and performance) for MDAPs against established metrics Analyze root cause why MDAPs breach Nunn-McCurdy - examine unrealistic performance expectation; unrealistic baseline estimates for cost and schedule; immature technologies; unanticipated design, engineering, manufacturing, or integration issues; funding instability; poor performance by contractor/govt personnel

28. PARCA cont’d All PEOs and buying activities should have measurable goals related to cost, quality, delivery, acquisition workforce quality, market research, small business utilization, utilization of best practices PARCA assess performance and link performance to positive incentives and consequences.

29. Financial Management DoD must plan to have financial statements validated as ready for audit by Sep 30, 2017. Each service CMO should develop and implement a specific plan Congress should consider penalties or withholds for deficiencies in financial management and accountability (Sarbanes/Oxley)

30. Industrial Base Repeal 3% withhold of contract payments Shift responsibility for review of contractor business systems to independent teams within or outside DCAA Use data analysis tools to compile info on pricing of commercial items and prices paid by DoD Multi-year procurement - should be based on totality of situation not just “substantial savings” which does not mandate 10% savings

31. Requirements Approve Vice Chief JSC to improve process of setting requirements; Service chiefs to improve requirements process for commercial goods and commodities; Mandate guidance for setting of requirements for acquisition of services Appoint COCOM as end user capability proponent – improve dialogue btwn acquisition community and warfighter. Formally communicate DoD’s mission needs w/industry that is independent of specific programs or contracts

32. 31 Panel Discussion:Legislative and Regulatory Update • Moderator • Karen Wilson, Fellow, Director, Acquisition Policy, The Boeing Company • Panelists • Mary Ellen Fraser, Of Counsel, McKenna, Long and Aldridge, LLP • James S. Latoff, Counsel, Committee on Oversight and Government Reform, US House of Representatives • Margaret DiVirgilio, Vice President, CFO and Treasurer, Concurrent Technologies Corporation • Susan Ebner, Attorney Government Contracts, Buchanan Ingersoll & Rooney PC

33. Legislative and Regulatory Update Insourcing Inherently Governmental and Critical Functions Conflicts of Interest - Personal and Organizational Susan Warshaw Ebner March 27, 2010

34. Insourcing A Never-Ending Pendulum Efficiency and Funding Issues A-76, The FAIR Act, DOD IG Report (D-2008-111 in 2008) Now Tied To Inherently Governmental, COI Concerns What is Mission Critical? Where are Skill Gaps?/ How Will Accomplish? Focus In This Administration and On Hill – Current Initiatives DOD Authorization Act FY ’10, PL 111-84, Sections 321 et seq., … Obama EO – Government Acquisition Gordon – Tools Coming Assad – Positions Are Being Brought In House; Contractors Are Being Cut!!

35. Inherently Governmental and Critical Functions • Ties to Insourcing, COI, PCOI • Key Questions -- How To Define? Evaluate? Implement? • Congress – What’s It Doing? • Need Build Appropriate Core / Corps – Assad, Gordon • New Regulations Being Proposed End of March - Gordon • What is Inherently Governmental? • What is Closely Related to Inherently Governmental • What is Critical?

36. Conflicts of Interest – Personal and Organizational Traditionally Addressed in FAR Parts 3.1 and 9.5 Prevent Conflicting Roles Prevent Bias Prevent Unfair Competitive Advantage OCI / PCOI – Identify, Avoid, Neutralize, Mitigate Hot Button Issue For This Administration Obama EO – Ethics in Government “Rules” TARP OCI and PCOI Rules in 2009 Focus of GAO Studies, Reports and Protests, OFPP, DOD FAR Case 2007-017 Service Contractor PCI Congress - DOD Auth. Act ’09, Sec. 841 and FAR Case 2008-018 OCI FAR Case 2008-025 Preventing Contractor Employee PCIs – Comments In, COMING SOON!!!

37. Predictions 2010 – A Year For Setting Standards 2010 and on – Implementation A Rocky Road Ahead

38. Contact Susan Warshaw Ebner* Buchanan Ingersoll & Rooney PC 1700 K Street, NW, Suite 300 Washington, DC 20006 Tel: (202) 452-7995 Email: susan.ebner@bipc.com *Not admitted to practice in California

39. 38 Panel Discussion:Program Case Study: Transformational Satellite Communications • Panelists: • Lt. Col. Tim Cunningham, Chief, Corporate Branch/Deputy Chair, RDT&E Panel Office of the Deputy Assistant Secretary of the Air Force (Acquisition Integration) • Robert Jacobsen, Director of Finance, Space & Intelligence Systems • Ed McNamara, Director, Subcontract Management Global Communications Systems, Lockheed Martin

40. 39 TSAT Space SegmentProgram Structure • System Definition/Risk Reduction – 2 contractors • Competitive prototyping with independent Gov’t testing • Tech requirements and System Design Review • Preliminary integration w/ larger TSAT system • ~$500M/contractor • Development & Production – full and open competition • 5 satellites + spare through launch and activation • 2 ground elements • Integration into TSAT system • ~$10-20B over 10+ years

41. Key RRSD and Acquisition Timeline J A S O N D J J J J J J F F F F F F M M M M M M A A A A A A M M M M M M J J J J J J J J J J J J A A A A A A S S S S S S O O O O O O N N N N N N D D D D D D J F M A M J J 2002 2003 2004 2005 2006 2007 2008 2009 Original Program Milestones Program Milestones SRR SDR PDR Award (S)* CDR RRSD Contract closure ATP SSRR ISSDR SSDR CCR Phase B Point of Departure (POD) Design Cycles Key Technology Maturity Major Demonstrations Proposal Milestones Initial Proposal Submittal Industry Day 1 (of 5) Final RFP DRFP 1 (of 5) ATP 10/7 Award *Multiple segment Awards possible ENs RFP DRFP RFP TSI Pt-3 SOW 9/20 PDM Down Select Competitive Range D&P Award *Several CRAD/IRAD project bids for technology development risk reduction Cost Submittals

42. 41 TSAT Space SegmentAcquisition Priorities • Two viable contractor teams that could perform • Mission assurance • Lowest risk approach to achieve threshold requirements • TRL-6 or better maturity on all key technologies • Flexibility going forward • Realism: Risk, Schedule, Cost

43. 42 TSAT Space Segment Friction Points • Maintaining competitive fairness vs. making firm progress • Scope of RFP & proposals – drove scope of source selection • Point at which to break off source selection team from RRSD effort • Degree of rigor and openness in discussions • Ensuring business proposition remained sound amidst ‘DC churn’ and multiple budget cycles • Fee plan – increased objectivity, long-term hook to ensure mission assurance • OCI , Data Rights, IA (with international partners) Requirements • Requirements were unsettled with changing Military priorities • Several Changes to funding profile during RRSD execution and discussions • Maintaining resources in uncertain economic times with space programs in development trouble

44. 43 TSAT Take Aways • TSAT Acquisition Plan with Risk Reduction Study Phase, Demonstrations, and Technical Readiness is part of future Acquisition Reform • Current Environment in Washington and OSD is not favorable for large new system starts like TSAT • RR&SD and Acquisition took too long for both Government and Industry • TSAT did not have a single champion as it tried to be all things to all people

45. 44 Luncheon Speaker Craig Cooning, Vice President and General Manager, Space and Intelligence Systems, Integrated Defense Systems The Boeing Company

46. Background PCO AFPRO/DPRO Commander Program Director x 2 Director of Contracting Program Executive Officer Congressional Advocate VP and Deputy GM VP and General Manager Government Commercial Intelligence 6200 people $3 Billion Revenue 45 Government Industry

47. A Day Without Satellites Boeing Video 46

48. Observations Mission focus Commitment toproduct success Drive to a fair deal Budget vs.Profit & Loss culture Understanding of Business Plan Measures of merit Velocity vs. bureaucracy Risk/Reward Interpretations 47 Similarities Differences

49. 48 Oxygen Depletion • Program “fits and starts” • Lack of trust • Oversight that migrates to the “how-to” • Inability to make decisions • Security as a “weapon”

50. 49 Déjà vu All Over Again • The promise of commercial • Fixed price development contracts • Competition for competition’s sake • Degree of collaboration on proposal/cost