acquisition initiatives 2005 aviation business conference
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Acquisition Initiatives
2005 Aviation Business Conference
AGENDA
UID/RFID Tom McElwee thomas.mcelwee@dla.mil
Multi-source Contracting Mel Croll melvin.croll@dla.mil
Price Analysis Tim Serfass timothy.Serfass@dla.mil
Q&A
Acquisition Initiatives
UID/RFID
Tom McElwee
Unique Identification (UID)
UID is being championed by OASD as a means to provide unique identification of tangible items providing better asset accountability, valuation and life cycle management
UID is primarily a finance driven initiative designed to provide data to allow DOD to purchase assets on an informed and timely basis.
Programmed implementation date for UID was Jan 1 2004
UID (cont)
UID will be accomplished through the use of various Automated Identification Technologies (AIT) i.e. linear barcodes, 2D barcodes, RFID tags and labels.
Basically UID is bare item marking (engraving, tagging etc.) of items meeting the below requirements:
1. Have a purchase $ value of 5K or more
2. Are serially managed
3. Are Critical Safety Items (CSI)
4. Are designated by program managers as UID candidates
UID (cont)
DLA is partnering with DCMA to work with the top 30 DOD suppliers on an incremental implementation strategy for UID
DCMA has authority to temporarily waive contract requirements for UID
DLA is not actively implementing UID at this time
UID (cont)
…AGAIN…DLA is not implementing UID in contracts at this time pending completion of the following actions: Completion of the DCMA/DLA Top 30 DOD
Supplier initiative
Revision to the DFARS (Final rule published in FR 22 Apr 05, Pages 20831-20838)
Development of implementing clauses for DFARS Rule
UID Summary Heads Up on UID It is coming and will be a requirement for all Get a copy of Mil Std 130L w Change 1 (Rev M
coming) Download a copy of “Unique Identification 101, The
Basics” and the DOD Defense Guide to UID from
http://www.acq.osd.mil/log/rfid/index.htm (UID) Bare Item part marking has a large number of
Commercial providers . (LIST) Many more on web. Access http://www.acq.osd.mil/dpap/UID/ for more
detailed info
Radio Frequency Identification (RFID)
The DOD RFID vision is to implement knowledge-enabled logistics through fully automated visibility and management of assets
in support of the warfighter.
RFID (cont)• There are two types of RFID tags, Active and
Passive• Active RFID Tags:
1. Are a mature technology 2. Hold more data3. Require a battery4. Are bulky and expensive 5. Used on transport containers, RR cars
and other industrial operations. • Active tags have been invaluable to the DOD
in tracking its materials into theaters of war.
RFID (cont)
Passive RFID Tags are an evolving technology and DOD is in the forefront of their development and usage. A passive RFID tag has no internal power
source. The tag is activated by the reader/transponder. Passive tags are currently being used for Case
and pallet tagging operations DOD plans to expand their use to unit pack
tagging in the future.
RFID (cont) OSD has mandated a phased implementation (10
Years) as of 1 January 2005.
DLA is going to test delivery of tagged material of designated classes of material to 2 sites after 1 October 2005. Some voluntarily tagged receipts are being received now
DLA has an Implementation Team identified and in place for RFID. This team has adopted a Concept of Operations plan (CONOPS) and an Implementation Plan for DLA.
DLA is aggressively planning for RFID and pursuing implementation.
RFID Summary BE AWARE RFID is here…(Reference Suppliers Implementation
plan) If you have a contract requiring delivery (after 1
October 2005) of Class I, II,VI or IX items to DDSP Susquehanna or DDJC San Joaquin the shipping containers and pallets will be required to have RFID tags.
Additional Classes of material and delivery sites will require RFID tags after 1 Jan 06 (ref as above)
All classes of material will require tags after 1 Jan 2007
Long term contracts will be modified ASAP
RFID Summary (cont)
For more information: Access http://www.acq.osd.mil/log/rfid/index.htm
/
Download a copy of: The US DOD Suppliers Passive RFID Information Guide from: http://www.acq.osd.mil/log/rfid/Events/DoD_Suppliers_Passive_RFID_Information_Guide_v7.0.pdf
Download a copy of: The Supplier Implementation Plan from: http://www.acq.osd.mil/log/rfid/implementation_plan.htm
RFID Summary (cont)
OASD RFID Training Program. See particulars as below: http://www.acq.osd.mil/log/rfid/suppliered_training.htm
Get a copy of Mil Std 129 w change 3 from The DOD Single Stock Point for Specifications and Standards (DODSSP) http://dodssp.daps.dla.mil/
Acquisition Initiatives
MULTISOURCE CONTRACTING
By Mel Croll
Agenda
Defining Multisource Contracting
Procedures for the use of Multisource Contracting
Multisource Contracting at DSCR
Process at DSCR Firm Fixed Price
Long Term Contracts
Overview
Questions
Definition
Multisource Contracting:
More than one awardee selected to fulfill a given requirement for supplies or services
Multisource Contracting at DSCR
Utilized for the Purpose of Supply Assurance History of poor performance unrelated to
Government caused delay
Complex or difficult specification with requirements that must be satisfied in a relatively constrained timeframe
First Article Testing requirements
Procedures
Single Use Firm Fixed Price Contracts
DSCR Provision 52.217-9G34 Supply Assurance Through Multisource Contracting
DSCR Clause 52.217-9G36 Multisource Contracting Supply Assurance OptionCriteria
Reduce or eliminate supply availability problems
Benefits must outweigh increased costs
All awardees must be determined responsible
Price reasonableness
Example Evaluation
Requirement for 100 EA
40 EA on backorder
First Article Testing is required
Contractor A
2 FA @ $500.00 EA 120 DARO
100 Production @ $219.00 EA 120 DAFAA
Contractor B
FA Waived
100 Production @ $264.00 EA 120 DARO
Example Evaluation (Cont’d)
Contracor A (Unproven)Prod Unit Price 219.00$ Production Quantity 100Production Total Price 21,900.00$ FAT Unit Price 500.00$ FAT Quantity 2FAT Total Price 1,000.00$ Subtotal 22,900.00$ FAT Eval Factor 2,150.00$ Contract Total Price 25,050.00$ ABVS 96.2
Contractor B (Proven)Prod Unit Price 264.00$ Production Quantity 100Production Total Price 26,400.00$ FAT Unit Price -$ FAT Quantity 0FAT Total Price -$ Subtotal 26,400.00$ FAT Eval Factor -$ Contract Total Price 26,400.00$ ABVS 86.9
Requirements
Proven source shall be awarded no more than 40% of the requirement – Contractor B 40 EA
Unproven source shall be awarded the balance of the requirement – Contractor A 60 EA
40 EA
60 EA
100 EA
Performance
If the unproven source fails to perform their contract may be cancelled or terminated
Under 52.217-9G36 the Government may award an option of up to 150% to the proven source
150% Option
Contractor A fails to perform, their contract for 60 EA is cancelled
The Government exercises its 150% option on Contractor B
40 EA x 150% = 60 EA
Base Quantity 40 EA
150% Option 60 EA
Total 100 EA
Procedures
Long Term Contracts
DSCR Provision 52.217-9G43 Single or Multiple Awards
FAR Provision 52.216-27 Single or Multiple Awards
Prerequisites
Reduce or eliminate supply availability problems
Benefits must outweigh increased costs
All awardees must be determined responsible
Price reasonableness
Example Evaluation
Five year IQC consisting of a base plus four option years
Backorders Exist
First Article Testing Applies Contractor A (Unproven) submits a best
value proposal
Contractor B (Proven) submits a proposal under which the First Article Requirement has been waived
Awards
Contractor A and Contractor B are both awarded Long Term Contracts
Both contractors will receive Guaranteed minimum orders as described in the solicitation
Unproven contractor will submit to First Article Testing
Orders after guaranteed minimums have been met are to be competed
All awardees must be afforded fair opportunity for consideration
Streamlined processes may be used
Ordering (Cont’d)
Requirements in FAR Part 6 and Policies in FAR Part 13.5 do not apply, however the Contracting Officer must; Ensure fair opportunity for consideration Tailor the procedures to each acquisition Include the procedures in the solicitation and
contract Consider price or cost as an evaluation factor
Ordering (Cont’d)
Exceptions to the Fair Opportunity Process Order value is less than $2500
Agency need is so urgent that competition would cause an unacceptable delay
Only one awardee is capable of meeting the requirements of the specification
Logical follow-on to an already competed order
Order is a guaranteed minimum
Ordering (Cont’d)
Should One Contractor Fail to Perform The Contract awarded to the non-performing
contractor will be cancelled
Competition of orders ceases
The contract awarded to the remaining, performing contractor reverts to a standard Long Term Contract and the pricing submitted in the proposal applies
Overview
Reasons for Multisource Contracting
Single Use Contracts Requirements are split between awardees
Provisions for non-performance
Long Term Contracts Orders are competed between awardees
Provisions for non-performance
Reasons for the Use of Multisource Contracting
Establishing or Maintaining Alternative Sources FAR 6.202
Industrial Mobilization FAR 6.302-3
Production Testing FAR 6.101
Prospective Contractor Not Responsible for Entire Quantity FAR 9.103
Supply Assurance FAR 6.101
PRICE ANALYSISPRICE ANALYSIS
DSCR-CB
Price Analysis
Required by FAR
Performed when adequate price history is available.
Comparison made with representative price history.
Analysis Factors
Quantity Price Relationship
Previous Prices Paid
Annual Escalation Rates
Escalation Rates
Default escalation rate 3%
Producers Price Index (PPI)
Other factors considered
Quantity Price Relationship
Default 95% Curve (why?)
828486889092949698
100102
50 100 150 200 250
Quantity
price
Quantity & Escalation
Calculation
Calculation Formula (Projected Unit Price)=(Prior Unit Price) x (QPR Adjustment) x (Escalation Adjustment)
QPR Adjustment =(Current Qty/Prior Qty)^(LOG(QPR Curve)/LOG 2)
Escalation Adjustment =
(1 + Annual Escalation Rate)^(Elapsed Time in Years)
Quantity & Escalation
Example
Projected Unit Price =(Prior Unit Price) x (QPR Adjustment) x (Escalation Adjustment)
Prior Unit Price = $100 Quantities: Current = 200 and Prior = 100 QPR Curve = 95% Elapsed Time = 2 years Annual Escalation Rate = 3%
Projected U/P = $100 x [(200/100)^(LOG 0.95/LOG 2)] x (1.03)^2 = $100 x (0.95) x (1.061)
Projected Unit Price = $100.79
Summary
Considerations
Rough measurement
Questions / Discussion
Questions?
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