Breakout Session #601 A. Brian Brobson, Contracting Officer, US Army, Corps of Engineers

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. Contract/ Cost Management on the Army’s Balkans Contract& Panel Discussion Breakout Session #601 A. Brian Brobson, Contracting Officer, US Army, Corps of Engineers Benjamin B. McClellan, Project Manager, US Army, Corps of Engineers Anthony T. Moody, Program Manager, US Army, Europe, G-4 1st Lt Scott T. Lantz, Theater Administrative Contracting Officer, DCMA Date: Monday, April 26, 2004 Time: 11:15am – 12:15pm NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Contract/ Cost Management on the Army’s Balkans Contract - Outline • Balkans Support Contract (BSC) Scope • BSC Services • Balkans Situation & Environment • Type of Contract • Contract Costs • Customers & Key Stakeholders NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Contract/ Cost Management on the Army’s Balkans Contract (Outline) • Due to Changes downrange • Management Controls Implemented • Conclusion • Panel available for Q&A’s NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. Balkans Support Contract (BSC) Scope • United States Army, Europe (USAREUR) with a full range of logistical support services (US and Multinational) • Hungary • Bosnia • Kosovo • Macedonia • Other locations as necessary to support Army operations in the Balkans NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. BSC Services • Base camps are built, operated, and maintained • Life support is provided at these camps • Transportation services • Base camp operations and maintenance • Other Services: firefighting, radar maintenance, fuel testing, crash & rescue services, Area Support Group (ASG) augmentation, Organizational and Direct Support maintenance, Chemical Agent Resistant Coating painting, Forward Area Refueling Point, Basic Load Ammunition Holding Area, heavy equipment transfer, movement control, etc. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Balkans Situation & Environment • Overall troop reductions by 70% in Balkans • Increase in logistical services provided by Contractor • The number of Contractor employees has declined significantly over the contract period • Labor force efficiencies in FY03 of nearly $43 Million NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. Type of Contract • Indefinite Delivery/ Indefinite Quantity • Cost-Plus Award Fee type contract • Scheduled to end September 30, 2004 • Task Orders • Advantageous in situations where type and quantity of services is unclear • General performance work statement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Contract Costs • High Point: (More than $400 Million Year) • Current Point: Estimated at about $200 Million Year) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Customers & Key Stakeholders • USAREUR, G-4 • Task Forces (Eagle & Falcon) • Area Support Groups (ASG’s) • Army Corps of Engineers (CETAC) • Defense Contract Management Agency (DCMA) • Defense Contract Audit Agency (DCAA) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. USAREUR G4 • Contract/ program command integrator • Develops and implements theater policies and procedures • Hosts the award fee evaluation boards • Approve new work & staff exceptions to policies in the Red and Blue books • Lead on synchronization of contractor reductions with force reductions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. Task Forces/ASG’s • Receive the services in the Balkans • ICW USAREUR staff reviews the level and standards of services and costs • Provide Contracting Officer Representative (COR’s) • Submit award fee evaluation input • Provide staff for the Joint Acquisition Review Boards (JARB’s) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. US Army, Corps of Engineers Transatlantic Programs Center (CETAC) • Competitively awarded the BSC • Provides project management oversight • Provides contracting officer oversight • Awards, modifies, and manages the recurring portion of the BSC • Processes Contractor billings • Performs financial analysis NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. DCMA (Overall) • Interfaces downrange with the Task Forces, ASG’s, & USAREUR Staff • Provides Administrative Contracting Officers (ACO’s) • Assures the quality of required services • Provides oversight of Government property NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. DCMA-San Antonio • Corporate Administrative Contracting Officer (CACO) responsibility • CACO establishes overhead rates • Negotiates forward pricing rates and monitors variances • Works cost accounting standards issues • Determines the allowability of costs • Performs systems reviews on the Gov’t Contractor in areas of: purchasing, estimating, and property NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

16. DCMA-Southern Europe • Provides downrange Contract Administration Services (CAS) Teams that are tailored to meet mission requirements. Teams consist of personnel in: • Quality Assurance • Contracting (ACO Support) • Property • Government Flight Representative NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. DCMA-Southern Europe • The downrange ACO: • Advises JARB members • Requests and reviews Rough Orders of Magnitude (ROM’s) • Issues Notices to Proceed (NTP’s) for non-recurring new work • Downloads weekly cost updates • Maintains estimated balance of funding NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. DCMA-Southern Europe • The downrange ACO: • Issues Situation Reports • Trains/appoints COR’s • Provides award fee evaluations • Participates in recurring management councils • Assists in the quarterly review of recurring services • Most Importantly: The ACO is the only Government representative downrange who can direct the Contractor to perform work. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

19. DCMA: Quality & Property Oversight • Quality Assurance Representative (QAR): • Ensures that the Contractor performs work to the standards written in the contract • Monitors compliance, and monitors service outputs • Property Administrators: • Manage and monitor the filing of property reports • Manage the disposition of Gov’t property • Ensure that property is properly maintained and accounted for by the Contractor NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

20. DCMA-Southern Europe • CAS Teams deployed with the Contractor in an austere environment • As mission matured, teams grew to 23 members in Bosnia and 18 in Kosovo • Currently, the two teams consist of a military Commander, an ACO, a QAR, and two local national assistants • The addition of local nationals has freed up military and civilian personnel to deploy to the Middle East, greatly reduced overtime hours, and provided continuity to teams that rotate every six months NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

21. Defense Contract Audit Agency (DCAA) • Assists the Government by providing audit and advisory services for the PCO, DCMA ACO’s, and USAREUR G4 • Recurring audits • Systems audits include: • Accounting • Billing • Budget and planning • Compensation • Electronic data processing • Estimating and purchasing • Operational audits NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

22. Joint Acquisition Review Board (JARB) • All increases/decreases in work in the Balkans require JARB approval • New work greater than or equal to $50,000 requires task force concurrence and approval by USAREUR G4 • JARB validates new requirements greater than $2,500 • New work less than $2,500, but over $1,000, is approved by the Directorate of Logistics (DOL) or Director of Public Works (DPW) • Installation Coordinator or USAREUR G-4 Project Manager must approve new work less than $1,000 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

23. Due to changes downrange • USAREUR funding reductions • Operational & Tactical Changes • Contingency environment maturation • Evident that BSC: • Management controls implemented to better emphasize cost control • Contract modified to implement these controls NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

24. Management Controls Implemented • Cost control management and standards review were tied to the tri-annual Award Fee Evaluation Board/ Senior Management Council/ Planning Conference meetings • For new work, standards were developed: • Red Book • Green Book • Blue Book • Resulted in revised mission and standards NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

25. Management Controls Implemented • ASG’s and TF’s required to review service standards for conformance to the Red and Blue Books and recommend revised and updated standards and scope • Changes made to Award Fee Determining Plan to better emphasize cost control • Outstanding category added • Change in award fee rating criteria and/or weighted percentages NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

26. Management Controls Implemented • Goal/expectations are set for each award fee period. Three such goals were: • Reduction in the number of Contractor expatriate employees • Cost Reduction Targets • Consolidation of operations where feasible NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

27. Management Controls Implemented • Tighter control oversight mechanisms established. Instituted improved Gov’t visibility over: • Subcontracting costs • Temporary construction incidental to services costs • Gov’t consent for property purchases • GFE Excess Property • Oversight of Maintenance Programs NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

28. Management Controls Implemented • The Gov’t added and realigned staffing to better facilitate cost control management and initiatives • Additional USAREUR, CETAC, DCMA, and DCAA oversight • CETAC Liaison Officer/ Contracting Officer position created • Delegation of contractual authority matrix revised to clarify ACO responsibilities and powers • Quarterly Contractor Visit and Report to USAREUR staff NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

29. Management Controls Implemented • Cost Avoidance Measures (CAM) Report changed: • Cost Savings: Cost savings are based on Contractor actions. Contractor must show what was done to reduce costs. These are tied to the current award fee period and should be validated by the ACO, and contain sufficient information that DCAA can audit. • Improvements & Stewardship: Improvements and Stewardships are cost avoidance measures based on Government actions or directions that increase or decrease the Estimate at Completion. This category gives the Contractor recognition for past good ideas that saved money and have become “best business practices.” NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

30. Management Controls Implemented • Frequency of CAM reports changed from every four months to once a month • DCAA implemented a random “field audit” of the CAMs for DCMA – to validate the CAM process • Value and management of contract reports were improved • Change in format of reports • Analysis of the cost of each report • # of reports reduced NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

31. Conclusion • Gov’t was able to adjust to changes in the Balkans environment • Improved cost control and management mechanisms were developed • Cost savings and management improvements have been a direct result of this process NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

32. Panel available for any questions from the audience A. Brian Brobson, Contracting Officer, CETAC Benjamin B. McClellan, Project Manager, CETAC Anthony T. Moody, Program Manager, US Army, Europe, G4 1st Lt Scott T. Lantz, Theater Administrative Contracting Officer, DCMA NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”