US DOD Acquisition Management: What s Working, What s Not Society of Japanese Aerospace Companies
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1 US DOD Acquisition Management: What s Working, What s Not Society of Japanese Aerospace Companies Deloitte Tohmatsu Consulting Co., Ltd March 2015
2 Four Questions For Today What Does the US DOD Buy? What s Working, What s Not? How Is DOD Improving? What Might This Mean for Japan?
3 Defense Procurement Budgets 2014 Actual and 2018 Forecast $US Billions China India Japan Russian Federation United States
4 Top 12 DOD Acquisitions: FY16 Budget $9B $55B = 50% of US Procurement Budget Source: President s Budget Submission FY 16
5 Four Questions For Today What Does the US DOD Buy? What s Working, What s Not? How Is DOD Improving? What Might This Mean for Japan?
6 Competition Total DOD Procurement Awards By Competition Status 2013 Actual 100% = $174B 39% Not Competed DOD Competition Status by Type of Procurement 2013 Actual Percent of Dollars Awarded Non-Competitively 100% = $57.6B $92.5B 20% 61% $19.0B 35% Products R&D Services Source: GAO ; Deloitte analysis Reason for non-competitive awards: 72% = Only One Responsible Source 11% = Authorized or Required by Statute
7 Cost and Schedule Performance 80 Major Programs $1,500B Total Value Schedule Delay + 70% 20% Procurement Cost 61% + 41% 35% Development Cost + 49% Source:
8 Four Questions For Today What Does the US DOD Buy? What s Working, What s Not? How Is DOD Improving? What Might This Mean for Japan?
9 DOD Acquisition System Elements Policies Processes People Federal Acquisition Regulations Cost Accounting Standards Joint Strategic 61% Planning System Budget Acquisition 35% 20% Acquisition Workforce Program Executive Officers
10 LAKOTA Acquisition Timeline 1980 s: Army develops requirements for light attack/recon helicopter A 2004: RAH-66 development terminated July 2005 B June C August 2007: FRP GO for 345 aircraft
11 New Policy: Adapt ; Be Flexible 20% 61% 35%
12 DOD Acquisition System Elements Policies Processes People FAR DCAS JSPS 61% Budget Acquisition 35% 20% Acquisition Workforce DOD Executives Program Executive Officers
13 Lifecycle Cost Modelling Cost Assessment and Program Evaluation Service Cost Agencies Army Cost and Economics Agency etc DOD Component Commitment to Fully Fund May be done by Service agencies or PEO Program Executive F35 Joint Program Office PEO, Submarines etc VAMOSC Databases CSDR Databases Industry Sources: ; DOD January 2015
14 Earned Value Management EVMS Requirement When? Why? Operate an EVM system Produce Integrated Performance Management Reports (IPMR) Conduct Integrated Baseline Reviews with DOD When contract is awarded and throughout performance Monthly throughout the program Within 180 days after award or modifications Shared picture of program performance Provides program cost and schedule status for monthly review Risk Management Source: DOD January 2015
15 DOD Acquisition System Elements Policies Processes People JSPS Acquisition Workforce FAR Budget 35% DOD Executives DCAS Acquisition Program Executive Officers
16 >150,000 Acquisition People Army Navy Air Force DCMA DLA DCAA Other DOD 61% 10K 6K 5K 5K 35% 37K 35K 20% 53K 26K In DOD Agencies Source: AT&L Data Mart The Defense Acquisition Workforce data as of 30 Sep 14
17 Highly Qualified Engineers Contracting LC Support Pgm Mgt Business Test/Eval Audit IT 17K 16K 61% 11K 9K 5K 5K 30K 35% 20% 45K Since % Source: AT&L Data Mart The Defense Acquisition Workforce data as of 30 Sep 14
18 Program Executive Office (PEO) DOD Requirements PEO Sets Program Baseline Allocates Risk Implements EVM Sets IP Strategy Picks Contract Type Lt Gen Bogdan Pilot/Engineer F35 JPO Asia Support Strategy RADM Johnson MIT Engineer PEO, Subs $4B Cost Reduction Industry
19 Four Questions For Today What Does the US DOD Buy? What s Working, What s Not? How Is DOD Improving? What Might This Mean for Japan?
20 Acquisition Reform in Japan? Objectives? Policy: What? Processes: How? People: Who? MOD + SDF + Industry Collaboration
21 US DOD Acquisition Management: What s Working, What s Not Society of Japanese Aerospace Companies Deloitte Tohmatsu Consulting Co., Ltd March 2015
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