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

• 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

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

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

• DoD Mentor-Protégé Program
• Software Libraries
• Cooperative Agreements
• CRADAS
• Work for Private Parties (Testing)
• Work for Private Parties (Articles & Services)

• 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

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

74 Fed. Reg. 52856
– 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)

• 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)

• 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

(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

• 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.

• 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.

• 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 costreimbursement contracts nearly doubled, from $71 billion in
2000 to $135 billion in 2008.

• Reports by the Inspectors General, the GAO, and other reviewing bodies have shown that noncompetitive and costreimbursement 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.

(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

(Jan 4, 2010)
• 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.

• 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

• 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

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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

“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

• 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

• 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

• 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

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.

• 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)

• 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

• 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

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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

• Insourcing
• Inherently Governmental and Critical Functions
• Conflicts of Interest - Personal and Organizational
Susan Warshaw Ebner
March 27, 2010

• 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!!

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?

•
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!!!

• 2010 – A Year For Setting Standards
• 2010 and on – Implementation
• A Rocky Road Ahead

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

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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

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• 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

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

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• 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

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• 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

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• 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

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Craig Cooning, Vice President and
General Manager, Space and
Intelligence Systems, Integrated
Defense Systems
The Boeing Company

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

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Boeing Video

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

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

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• The promise of commercial
• Fixed price development contracts
• Competition for competition’s sake
• Degree of collaboration on proposal/cost

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• Mission readiness
• Skilled people
• Industrial partnership
• Collaboration and partnership
• Flexible Acquisition Process
• NCMA great forum to work issues

51
Panel Discussion:
Defining Inherently Governmental And the Obama
Insourcing Policy
• Moderator:
• Ric Sylvester, Vice President, Aerospace Industries
Association
• Panelists:
• Kimberly S. Rupert, CPCM, Senior Vice President for
Contracts, Procurement, and Pricing, SAIC
• Terry Raney, Senior Vice President, CACI
• Karl C. Bird, CPCM, Acquisition Division Manager, Jet
Propulsion Laboratory

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Section 841, Duncan Hunter National
Defense Authorization Act for FY 2009
• Develop policy to prevent personal conflicts of interest by contractor employees inherently governmental functions
Proposed rule – FAR Case 2008-025, Preventing Personal
Conflicts of Interest for Contractor Employees Performing
Acquisition Functions

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President’s Memorandum, “Government
Contracting,” March 4, 2009
• Assess the acquisition workforce and clarify when governmental outsourcing for services is appropriate
OMB Policy Memo, “Managing the Multi-Sector Workforce,”
July 29, 2009
DoD Policy Memo, “In-sourcing Contacted Services –
Implementation Guidance”, May 28, 2009
OFPP Policy Memo, Acquisition Workforce Development
Strategic Plan for Civilian Agencies - -FY20102014,” October
27, 2009
Memo on Inherently Governmental Functions pending

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Weapon Systems Acquisition Reform Act of
2009
• DoD to revise acquisition regulations to address potential organizational conflicts of interest
– Public hearing December 8, 2009
– Proposed rule expected soon

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Defining Inherently Governmental and the
Obama In-Sourcing Policy
Moderator – Ric Sylvester,
Aerospace Industries Association
Panel Members –
• Terry Raney, CACI
• Kim Rupert, SAIC
• Karl Bird, JPL
March 26, 2010

PANEL ON IN-SOURCING,
ORGANIZATIONAL CONFLICTS OF
INTEREST AND PERSONAL CONFLICTS OF
INTEREST
NATIONAL CONTRACT MANAGEMENT ASSOCIATION
DEFENSE AND AEROSPACE CONFERENCE
25-26 MARCH 2010
Dr. Terry Raney

• Legislation – DoD & Civilian Agencies To “Consider Insourcing” – no limitations
• Administration Direction – Proper Mix, Best Mix, Reduce
Excessive Reliance On Contractors, Conduct Pilots, Develop
In-sourcing Guidelines
• Deputy Secretary of Defense In-sourcing Direction & DoD
Service Execution (Budget Execution)
• Government Workforce Longevity Realities & Need To Fill
Government Vacancies
• Re-Balancing Ideology – No Cost Comparison Needed
• Death By Slow Blood Transfusion Till None Is Left Scenario
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Administration’s Approach
Framework
- Pilot Program
- Statutory
Requirements
Application

What Are The Realities?
• In-sourcing Will Continue To Impact Contractors Over The
Next 3-4 Years
– Administration And Agencies Are Starting To Execute Their Plans
• Hiring Of Contractor Personnel Will Continue For The
Foreseeable Future Because Of Labor Market Realities
– Partnership for Public Service estimates the government needs to hire 300,000 skilled professionals by 2014 —just to keep up
– Some activities have current vacancy rates of 20% or more
• There Is Pressure From Congress To Expand The Definition
Of Inherently Governmental Functions Which May Lead To
Further In-sourcing Over Time

FY09 National Defense Authorization Act
Section 841
Ethics Safeguards Related To Contractor Conflicts of
Interest
• OFPP Administrator To Develop A Policy To Prevent
Personal Conflicts of Interest (PCI) By Contractor
Employees Performing Acquisition Functions
Closely Associated With “Inherently Governmental
Functions” Including The Development, Award and
Administration of Government Contracts

• Provide A Definition Of Personal Conflict of Interest As It
Relates To Contractor Employees Performing Acquisition
Functions Closely Associated With Inherently Governmental
Functions
• Require Contractors To:
– Identify and prevent employee PCIs
– Prevent employees with access to non-public government information from using it for personal gain
– Report PCI violations to the CO or COR
– Maintain effective oversight to verify compliance
– Implement procedures to screen for potential PCIs
– Take appropriate disciplinary actions when employees fail to comply with established policies

Legislation Policy Requirements (cont)
• Develop a personal conflicts of interest clause or set of clauses for solicitations, contracts and task or delivery orders (above the simplified acquisition threshold) that sets forth policies and contractor responsibilities
• In consultation with the Office of Government Ethics review the Federal
Acquisition Regulation (FAR) to:
– Identify contracting methods, types and services that raise concerns for potential organizational conflicts of interest (OCI) and personal conflicts of interest
– Determine if revisions to the FAR are required to address PCI and OCI by contractor employees with respect to functions other than acquisition functions closely related to inherently governmental functions
– Achieve sufficiently rigorous, comprehensive and uniform government-wide policies to prevent and mitigate organizational conflicts of interest in Federal
Contracting

• Acquisition Function Closely Associated With Inherently Governmental
Functions
– Supporting or Providing Advice or Recommendations With Regard To:
• Planning Acquisitions
• Developing Statements of Work
• Defining Requirements and Evaluation Criteria
• Evaluating Contract Proposals
• Determining Whether Contract Costs Are Reasonable, Allocable & Allowable
• Awarding, Administering & Terminating Contracts
• Determining What Supplies or Services Are To Be Acquired
• Covered Employee
– An Employee of the Contractor or Subcontractor, a Consultant, a Partner or a
Sole Proprietor That Performs An Acquisition Function Closely Associated
With Inherently Governmental Functions

• Personal Conflict Of Interest
– A Situation In Which A Covered Employee Has A Financial Interest, Personal
Activity, or Relationship That Could Impair The Employee’s Ability To Act
Impartially And In The Best Interest Of The Government When Performing
Under The Contract
• Sources Of Personal Conflicts Of Interest
– Financial Interests Of Covered Employee, of Close Family Members or Of
Other Members Of The Household
– Other Employment or Financial Relationships
– Gifts

• Contractor Shall Have In Place A Process To Screen Covered Employees For
Potential Personal Conflicts Of Interest
– Obtain and Maintain Financial Disclosure Statements From Each Employee
– Ensure Disclosure Statements Are Updated Annually
– Ensure Disclosure Statements Are Updated When Financial Changes Occur
– Flow down To Subcontracts Above $100K
• For Each Covered Employee Contract Must
– Prevent Personal Conflicts Of Interest
– Prohibit Use Of Non-Public Government Information
– Obtain Signed Non-Disclosure Agreements
– Avoid Even The Appearance Of Personal Conflicts Of Interest
– Maintain Effective Oversight and Verify Covered Employee Compliance
– Take Appropriate Disciplinary Action
– Report Personal Conflict Of Interest Violation To Contracting Officer

• Penalties For Non-Compliance
– Suspension Of Contract Payments
– Loss Of Award Fee
– Termination For Default of Contract
– Disqualification From Future Contracts
– Suspension or Debarment

• Industry Concerns
– Compliance System Requirements And Audits
– Corporate Policies On Employee Privacy Relative To Personal
Financial Information
• Who Will See The Information; How Will The Information Be Used;
How Will The Information Be Maintained; How Will Employee
Privacy Be Protected
• Industry Input On Proposed Rule
– Objection To Inclusion Of List Of Violations & Remedies In Clause
– Most Definitions Are Imprecise And Broad
– Privacy Issues Not Addressed
– Request For Proposed Rule To Be Reissued

• Many Different PCI Clauses Already In Use
• There Seems To Be A Desire To Combine OCI and
PCI As A Contractual Issue
• Will Government Auditors Have Access To
Contractor Personnel Personal Financial
Information?
• Unclear What Procedures and Processes Will Work

• What’s New Since WSARA Section 207
• Agency Trends in Setting OCI Rules of the Road
• Protests on OCI: Recent Case Law
• Current Outlook: Word on the Street

• AF issues guidance on OCI and mitigation
• Northrop Grumman sells TASC
• DoD and OFPP hold public meeting on OCI in December 2009

• DARPA
• IARPA
• Missile Defense Agency
• NRO
• Air Force
• NAVSEA
• SPAWAR

• Cahaba Safeguard Administrators & C2C Solutions – January 25, 2010
• The Analysis Group, LLC – November 13, 2009
• Raydar & Associates – September 1, 2009
• L-3 Services, Inc. – September 3, 2009
• Nortel Government Solutions, Inc. – December 30, 2008
• Axiom Resource Management v. United States – September 28, 2007

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