Defense ContractManagement Agency

Supplier Risk Management

Quality Leadership Forum, September 25, 2002

Presented by:

Sydney Pope Contract Technical Operations Director, DCMA

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Agenda

• DCMA in Acquisition

• Risk Management

• Quality Assurance (QA) Support• Shifting Emphasis• QA Business Case• Flight Critical Support • Readiness and Overhaul Maint, Mod, & Repair (OMMR) Issues

• DCMA and NASA

• DCMA and NATO

• DCMA and JACG

• NADCAP Pilot Study

• Earned Value Mgmt (EVM) and Technical Performance Measures (TPM)

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DCMA is a Team Member...DCMA is a Team Member...

Secretaryof

Defense

ChairmanJoint Chiefs of

Staff

Under Secretaryof

Defense(Acquisition, Technology, &

Logistics)

DCMA

Army

Navy

Air Force

Marine Corps

...In the defense acquisition community

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Risk Management

• Planning– Customer requirements– Identifying key processes

• Assessing– Consequence– Probability

• Handling– Mitigate / Manage Risk– Methods / Tools

• Monitoring– Evaluating Supplier Performance– Adjusting Surveillance

• Documenting

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• Effective Risk Management ensures program success:

– Provides real-time supplier information in risk-based terms.

– Provides visibility on where to focus attention.– Permits partnering with ALL stakeholders.

Risk Management

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The Critical Few

Depot MaintenanceTimely Return to Mission

Capable Status

• Weapon System Life Cycle SupportWeapon System Life Cycle Support• Visibility and Influence within DoD Supply ChainVisibility and Influence within DoD Supply Chain• Knowledge of Industrial Capability and CapacityKnowledge of Industrial Capability and Capacity

Readiness and OMMR Issues

ReadinessDriver NSN

DelinquentBackorder

SMCC

Informed Engagement

on Spares

The Full Spectrum

The ApparentBig Items - Big $ - High Attention

The Less ApparentSmall Items - Small $ - High Importance

DCMAcovers…

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QA Risk ManagementQA Risk Management

• Oversight• Adversarial• Mil-Spec• Mil-Q• Source Acceptance• C/SCSC

• Insight/Risk Based• Partnership/Alliances• Performance-based• ISO9000 / AS9100• Supplier Excellence• Earned Value Management

From: To:

DCMA Shifting Emphasis

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QA Training Requirements

Mandatory Training and Certifications are required for Quality Assurance positions– Four (4) types of Quality Assurance Training

Certification are required:

• Defense Acquisition Workforce

Improvement Act (DAWIA)

• Core Courses

• Commodity

• Specialty

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Training Certification Types

• Commodity Certification – 15 commodity types– Based on the Specialists assigned facility type code– End Item Risk dictates Training or OJT Need

• Specialized Certification – Specialized Certification is to support Customer

mandated requests and requirements – Customer / Request Types:

• HAZMAT• NASA• NDT• Navy Special Emphasis

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QA Workforce

DCMA QA personnel severely reduced - Down 66% (9,000 to 3,060*) since 1991 - Similar for the Services and DLA

Fewer DoD QA resources results in - more reliance on contractors - less product inspection- lower cost (at least initially)- higher risk (focusing on likelihood vs. consequence)

* As of Mar 02

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QA Business Case Study

• Study mandated by Undersecretary of AT&L to determine cost of outsourcing Government QA functions.

• Studied non-resident quality assurance functions performed in comparison to industry costs and capabilities.

• Study showed DCMA less expensive than contractors who provide comparable services to Civilian Agencies.

• Surveyed customers about turning back technical functions to them.

• Customer satisfied with in-plant technical support and prefer that the responsibility for it remain in DCMA.

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Flight Critical QA Support

• Provide intensive surveillance / continuing product audits of identified critical characteristics– Customer identified through contracts, drawings, letters

of instruction or any other means – Independently performed or conducted by witnessing

contractor product inspection/test/installation operations• Specialist determines items may be flight critical and the

customer has not identified any critical characteristics - initiate contact with the customer to request guidance

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Flight Critical QA Methods

• Risk Management Techniques Drive drive Risk Handling Activities– High Risk Processes

• Process Proofing (Evaluation)• Product Audits• Data Analysis

– Moderate Risk Processes• Product Audits• Data Analysis

– Low Risk Processes• Data Analysis

Products Audits accomplished regardless of assessed risk and in addition to process proofing (evaluation) and data analysis dependent on risk

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DCMA and JACG

• Joint Aeronautical Commanders Group Management of Aviation Critical Safety Items– Disciplined Approach to Managing CSI– Guidance for Activities Associated with CSI

– DCMA QA Activities Include• Provide Assistance to Service ESA regarding “Value-Added” QA

requirements

– Assure that Technical Requirements Include Critical Characteristics

• Verify Compliance of Critical Characteristics

• Disposition Nonconforming Items

• Provide GSI for all CSI as appropriate

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DCMA and NASA

New Initiatives• April 2002 - National Aeronautics and Space

Administration (NASA) submitted a request to DCMA to view the Risk Assessment Management Plans (RAMP) from all delegated prime and sub-tier Goddard Space Flight Centers.

• April 2002 - DCMA conducted a data call.• May 2002 – A total of 69 Risk Plans were

forwarded to NASA for their review.

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DCMA and NATO

• DCMA Represents U.S. at NATO AC/250, NATO Group of National Directors for Quality Assurance, Subgroup B, QA Implementation and Operations

• DCMA Chairs the S/G B Ad Hoc Working Party on Mutual GQA Improvement

• DCMA CMOs Currently Reviewing the New AQAP-2000 Series Documents (Contractual QA Standards)

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National Aerospace and Defense Contractor Accreditation Program (NADCAP) Pilot Study

New Initiatives

• Purpose: To test the feasibility and effectiveness of relying on NADCAP Data to eliminate redundant surveillance to the maximum extent possible.

• DCMA Test Sites:– DCMAE - Baltimore, Syracuse, and Detroit

– DCMAW - Chicago, and Van Nuys

• Test Areas: Welding, Heat Treating, NDT

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• Continue the present level of NADCAP membership and provide training to the remaining CMOs for DCMA wide implementation.

• Continue the NADCAP test through FY03 to focus on the second objective (using analysis of most common problems).

• Continue efforts to engage NASA in tests using NADCAP audits.

NADCAP Next Steps

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Linking EV to TPMs

• Traceability – Requirements to WBS to TPMs to EV control accounts.

• Impact - How much WBS work, & therefore EV money, is covered/accounted for by the TPM(s)?

• TPM Banding/Sensitivity – What banding (R/Y/G) and sensitivity (EV impact) should be used for each TPM?

Bonus Key:• Technical Readiness Level – What’s the state of the

technology supporting the requirement(s) for which TPM is a metric?

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TPM Discussion: Risk Vs Problem

Preventive Corrective Action

May occur Has occurred

Problem

Strategic Tactical Thinking

Long Short

Time horizon

Manage Risk and Future Issues

(TPM Emphasis)

Is it a Risk …………………………or a Problem

Manage Problem and Future Impact

(EV Emphasis)

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TPM – Next Steps

• Working with Northrop Grumman to do a proof-of-concept on a well structured program

• Reaching out to Program Management Offices, other suppliers/organizations, selected CMOs

650

700

750

800

850

Aug Sep Oct

TPM ValueO bjectiveThresholdPlanned ProfileUpper Tol BandLower Tol Band

Value

T e c h n ic a l P e r fo r m a n c e M e a su res

T im e

H

ML

T P M V a lu e s

T o le ra n c eB a n d s

T h re sh o ld

O b je c tive

P la n n e d P ro f ile

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Summary

Provide Customer-Focused Contract Management Services– Right Item = Quality– Right Time = On-Time Delivery– Right Price = Value for Money

QA Approach Adapting – Reduced QA resources

– Risk Management Maturing

– Enhanced Analytical Techniques Needed

DCMA is Focused on Customer Needs!