Responses to:
Second Industry Questionnaire
Computing Environment STRATCOM Architecture (CESAR) Contract
Contract Architecture
1. USSTRATCOM/J66 envisions the CESAR contract to span the SWPS, C2, and OA LAN missions. Potentially, it will also span the Intel mission. If the contract envelopes its largest proposed scope, the contractor will be responsible for integrating existing C4 programs , buying commodities (both hardware and COTS software ), providing engineering services, developing custom applications, and maintaining existing systems. The most important aspect of the CESAR contract is the contractor's assumption of responsibility for integrating the above list of products. For example, if a development version of software is not fully compatible with hardware the contractor purchases, the contractor finds a fix (not the government). The government is considering a number of acquisition alternatives ranging from 1) one contract encompassing all responsibilities to 2) multiple contracts, one for each of the specific activities (integration, buying equipment, services, etc.) Between those extremes are options for various groupings of activities into a smaller number of contracts (e.g., one contract covering both integration and buying equipment). What are the strengths and weaknesses of each alternative? Which alternative would work best from the perspective of the government? Which would work best for the prime? How do issues of responsiveness, efficiency, and cost effectiveness affect the government choice of this alternative?
Single vs. multiple contracts:
1) one contract encompassing all responsibilities.
A. We see no major difficulties in using a single contract to acquire all services envisioned for the CESAR Program. A single system integrator should, through proper teaming, be able to meet all of the contract requirements, and provide a single focal point for the Government. Large integration efforts of the type envisioned by CESAR are not uncommon and should not pose a risk to the Government provided that sound management principles and integration experience as the leader of a large contractor team are key factors in the selection of the CESAR integrator.
B. We believe that the best approach is for the Government to have only one contract and make one Prime Contractor responsible for the entire program. By doing this the Government's stipulation that the integration contractor will be responsible for finding fixes to all system integration problems, regardless of which contractor(s) or subcontractor(s) is involved, would be most effectively met since the Prime Contractor would have complete authority and responsibility for performing on all CESAR requirements and would be able to take appropriate action to solve problems without having to act through multiple administrative layers. In addition, this approach would reduce Government costs by eliminating the need for multiple competitions and the need for administering multiple contracts. Further, with only one contractor responsible, the Government could receive more rapid response to its requirements since the process for tasking the contractor would be streamlined significantly over this process when multiple government contracts are involved. With respect to how this approach would affect the Prime Contractor, we believe that a single contract would be the most advantageous approach for the Prime Contractor since it would eliminate several associate contractor agreements and cut related administrative costs, plus this approach would significantly increase the Prime Contractor's ability to be responsive and efficient in meeting CESAR support requirements and thus enhance award fee evaluations.
C.
One Contractor:
Strengths
- A single contractor / integrator may be in the best interest of the government when a procurement calls for a classic systems development and integration effort. CESAR does not seem to be a classic development / integration procurement.
- Reduces the number of contracts the government is required to manage.
Weakness -
- Potential for conflict in work share assignment when client directs tasks to sub.
- Potential for losing access to end to end contractor expertise.
- Possible erosion of local contractor base.
Which alternative would work best from the government perspective?
A multiple contract alternative can be an effective approach to reducing the number of contracts to be managed, and as such may provide lower risk for the government. This alternative also has the best potential for stabilizing the contractor resource base.
Which alternative would work best for the prime?
Alternative 2, assuming multiple contracts/primes, recognizing of course, that under alternative 1 the single prime would enjoy a larger per cent of business.
How do issues of responsiveness, efficiency and cost effectiveness affect the government choice of this alternative?
A multiple contract approach preserves more options/flexibility for the government. This approach can facilitate responsiveness, efficiency and cost effectiveness for the government.
D. The primary value in having a single contractor is that the responsibility for system performance, cost and schedule is clearly assignable to a single prime. The government in essence is capable of "one-stop shopping." With multiple primes the government is the ultimate integrator even though they have an "integration contractor." In a multiple contractor scenario the government would be responsible for the delivery of all separately contracted services and equipment to the integration contractor. Thus the burden of all performance shortfalls, schedule delays and cost growths caused by inadequacies in government furnished or separately contracted services, equipment and/or software products must be absorbed by the government or passed along by the government to their vendors. The value of the multiple contract approach is that it theoretically saves the government money by eliminating some initial "markup" or pass through" costs. However, in the end there is no guarantee that it would save any money at all. For CESAR the government might consider a variant which provides for a single prime contractor and an independent verification or validation or SETA contractor. This would give the government an independent technical arm for support without distributing the responsibility for system performance, cost and schedule control to multiple independent contractors. This variant is a little more expensive to employ because of the added cost of a V&V/SETA contractor but it has proven to be successful in the past and the price should be viewed as an insurance cost.
E. Strengths.
The one contract arrangement will establish the "Integrator" concept that is apparently a key ingredient in the CESAR recipe. If organized and managed correctly, including a USSTRATCOM reorganization, the government could gain the following:
"Single Belly-button" management of all integration activities.
A core of experts chartered to accomplish problem identification, problem solution, purchasing, technology insertion, and integration.
A sustained work force to maintain embedded legacy software through transition, translate legacy functionality into emerging technologies and policies i.e., Ada, DMS, DII-COE, GCCS, etc.
Active contract reduction from 74 to a manageable few.
Weaknesses.
The broad scope of CESAR cuts across many rice bowls, creating an extremely difficult task for a single contractor. There will be functional disagreement between government offices because of differences in vision, and similar discord among contractors on hardware/software replacement which may jeopardize use of their proprietary products. Realistically, the process conglomerate, fragmented maintenance and support controls, are all opposing operations with layers of directors, interface requirements, and configurations. The complexities, domain multiplicity, autonomy, and hybrid interfaces will result in a contract scope too broad to articulate succinctly.
There will be:
Ambivalence. The potential for the prime, considering the size of responsibility, to saunter through requirements and solutions unless checks, balances and /or incentives are placed in the contract.
Loss Talent. Impoverished contractor environment (shrinkage in contractor talent). Increased departure of talent to purely commercial companies i.e., FDR, Kiewit, etc. The advent of this started with the SAC deactivation and resulting miscues.
Changes in Infrastructure. Phased reduction in base contract operations (chronically downsized 55 CONS Special Flight, signaling an end to business growth at Offutt AFB).
Pitfalls. The few "Integrators" will "court" application and functional type contractors - the one with the most widely recognized players on his team will have the highest probability of win! Losers will pull-out.
F. There are success stories for either of the approaches described above as well as some number of failures. We feel that success depends upon the specific people involved, on both the contractor's and Government's side, their experience, dedication, motivation and the funding available to support them. Our answer to the specific questions above is reflective of this and our understanding of the Government's present situation: (1) reduced number of experienced personnel, (2) continued erosion of personnel experience levels, (3) possible further manpower reductions, and (4) a limited budget. Our answer to the above questions is summarized and shown in the chart below.
What are the strengths and weaknesses of each alternative?
Alternative #1 - "One contract encompassing all responsibilities..."
Strengths:
(1) Based on Government downsizing, inherently higher Government turnover rates, and limited budget, the single prime contract approach would have a significantly higher probability of success.
(2) The single contract approach would allow the Government to focus it's diminishing resources minimizing its redundant activities such as multiple additional acquisitions and the administrative overhead of managing multiple programs.
(3) The single contract approach gives the Prime more leverage when dealing with the subcontractors and suppliers as well as an increased base which reduces overhead for the Prime.
(4) The single Prime can optimize resource management to improve program success probabilities.
Weaknesses:
(1) The Government may give up some perceived short-term hardware pricing advantages when only item costs are compared.
(2) Government must depend on Prime to exert competitive pressures in acquiring services and COTS on the Government's behalf.
G. The concept of dividing CESAR up into a series of individual contracts with each one managing different functions would result in several things happening.
To make this concept of multiple contracts work, a large prime integration organization would be required to manage coordination of all the diverse activities. Even if the Government hired an integrating contractor, that contractor could not be held responsible for the actions or inactions of the other contractors and the Government would be put in the position of pulling all of the various elements together to make them work as an integrated entity. The prime integrating contractor would have no power over the ascons to effect desired results. In addition, it has been recognized that Government led integration is difficult to work. The resulting Government staff would have to be quite large, diverse and extremely experienced in all aspects of modernization and integration. The results would be a very inefficient process with the Government having to push multiple belly buttons to get anything done or to correct any deficiencies if things didn't go right. The most concerning issue would be the potential increased RISK. Expanded costs and schedules normally accompany expanded risks. A program of this magnitude and complexity has enough risk with out adding more.
The most efficient process would be to hire a single prime integrating contractor that also has thorough knowledge of the existing systems and programs. That knowledge / experience would expedite and enhance the capability to provide the services necessary to make CESAR a success by providing cradle-to-grave support to include full maintenance, modernization and integration. A single prime integrating contractor, being responsible, has the flexibility to replace a non-performing sub with a better motivated company or bring in additional subs to cover special tasks and applications. In addition, a single, responsible prime
contractor would reduce the management burden on the government as well as the potential high risk of the contract. The government should consider primes that have current experience successfully managing large integration contracts and large integration teams. The number of domains, programs and the unique engineering / technical disciplines required for full CESAR support should dictate an experienced prime contractor and sub-contractor team in order to minimize / mitigate the inherent program risks. In turn, the Government will be provided the one point of contact to make the program work and the prime contractor will have the responsibility and the leverage to insure program success and risk mitigation. Management is the key to CESAR success. The winning prime contractor must possess strong management credentials (programs, teams, sub-contractors, personnel, IPT's, metrics and processes).
A single Prime contractor and team would provide the Government with maximum responsiveness, efficiency and cost effectiveness. That contractor would be in a strong position to consolidate numerous programmatic functions and turn the savings back into useful development / integration.
H. While the Government's two alternatives (of one contractor versus multiple contracts) are both viable and practical, we believe the single contractor has greater benefit. The main advantage of one contractor is that the Government would have one POC with whom to deal. This prime contractor would shoulder all the responsibility of the effort throughout its lifecycle -from the womb to the tomb. Companies with great depth and experience can leverage their resources to provide the best effort at the very best price. Adequate competition should not be a problem since there are several large companies with extensive experience on very large integration programs. Past Performance and proven capabilities would be crucial to the success of such an effort, and should therefore play prominently in the selection. If thoughtfully combined with other incentives, award fees for performance will ensure the responsiveness of the one contractor. However, award fees must be both significant and relevant or they will not be effective incentives. Another vehicle which can be used is IDIQ. It provides the flexibility needed in an ever changing budget world, and if administered correctly the oversight required to properly manage the work effort. We would also advise a CLIN structure which allows for Fixed Price and Labor Hour task orders in addition to Cost Plus. Such a CLIN structure makes it possible to match the degree of uncertainty in a particular task to the appropriate contract type. Multiple contract types via different CLINs does not preclude an award fee which is tied to the performance on all task, regardless of the type.
On the other hand, by awarding multiple contracts, it would be necessary to hire a SI to ensure interoperability. The SI's job would be enormous trying to work with different contractors. However, such complexity can be mitigated by choosing an experienced company with SI experience with large, complex programs. The Government must ensure that the SI is held accountable for integration and systems engineering. These two disciplines can not be split up, they need to be tightly coupled to facilitate interoperability and "tweaking" of COTs packages for the operational environment.
I. In various CESAR program documents, as well as in the Government's comments during the September 1996 USSTRATCOM Industry Day one of the prime reasons the Government is pursuing CESAR is that USSTRATCOM will soon be unable to internally support integration efforts on C4 programs. As a planning and operational command, the Strategic Air Command (SAC) had the ability to rotate personnel through various staff and operational assignments over a 2~30 year career thus ensuring a continuum of command C4 expertise. This is not the case for the USSTRATCOM. Personnel are assigned to the Joint Headquarters for 2-3 years and then return to their respective Military Services with no assurances of their return.
The need for the CESAR contractor to provide integration services for C4 and possibly Intelligence programs can best be met by employing a single contractor. If multiple contracts were awarded STRATCOM would still need someone to be responsible for ultimate integration. This is why the Command is looking for an integrator in the first place. A single contract also provides a number of advantages;
· Efficiencies of contract administration and a single source of responsibility for mission accomplishment (no finger pointing).
· The responsiveness the prime could provide in rapidly resolving problems/issues without having to worry about how other contractors can or will respond.
· A single source provides for cost effectiveness day-to-day operations as well as contract administration.
The working relationship between the Government and the prime contractor, and the flexibility of the contract vehicle(s), will be the key to the success of CESAR regardless of the program/contract structure; although a single integration contractor providing integration. equipment. and services would provide the most manageable means for both the Government and industry. Both parties must have a mutual trust and cooperative working relationship for CESAR to be a success.
J. The only contract alternative that will allow USSTRATCOM to cease operating as its own integrator is the award of a single contract that encompasses all of the government's known contract support requirements. If the government awards multiple contracts, then USSTRATCOM will have to continue to manage and integrate the support capabilities of each contract instead of focusing available resources on one integration contract effort. The offering of a single contract will maintain the interest of the top integrators within the defense industry; motivating them to form teams that offer the most effective and efficient overall approaches to supporting USSTRATCOM requirements both on day 1 and beyond the year 2000.
multiple contracts, one for each of the specific activities.
A. This acquisition approach essentially casts the Government in the role of being the overall integrator with the responsibility of ensuring that technical solutions and schedules of all activities are compatible and fully coordinated. In the event that you select the multiple contract approach, we recommend that the Integration Contractor be responsible for the architecture, the Common Operating Environment, and the procedures/methodology and supporting infrastructure. This provides a logical breaking point in issuing multiple contracts for systems integration vs. the development and O&M of the applications. Given the stated objectives of wanting a systems integrator, it appears the most logical approach is one single contract for all system level activities. Individual applications development/support could still be handled as separate contracts if you so choose, with management of the development contractors and their activities remaining the responsibility of the Government. Completed applications could then be delivered to the CESAR contractor for integration into the overall system and its operating environment.
B. Included in B. Above.
C. Multiple Contractors
Strengths -
- Reduces the number of contracts the government is required to manage.
- Supports stabilization of a broader contractor resource base.
- Facilitates retention of contractor expertise in specific functional domains.
- Provides the government with the flexibility to easily direct work share to the preferred domain expert..
Weaknesses - Results in requirement for broader government program management responsibility, but less than currently exists.
Which alternative would work best from the Government perspective?
A multiple contract alternative can be an effective approach to reducing the number of contracts to be managed, and as such may provide lower risk for the government. This alternative also has the best potential for stabilizing the contractor resource base.
Which alternative would work best for the prime?
Alternative 2, assuming multiple contracts/primes, recognizing of course, that that under Alternative 1 the single prime would enjoy a larger per cent of business.
How do issues of responsiveness, efficiency and cost effectiveness affect the government choice of this alternative?
A multiple contract approach preserves more options/flexibility for the government. This approach can facilitate responsiveness, efficiency and cost effectiveness for the government.
D. One government view on awarding multiple contracts is that we need a contractor to take responsibility for the total system of systems. What contracting provisions could the government employ to ensure responsiveness from the prime integrator, if commodity purchasing and/or hardware maintenance were provided by a different contractor?
E. Multiple contracts splitting responsibilities between various contractors. The Bellevue based Strategic Contractors Aerospace Professional Community has survived considerable cyclic swings in business, huge pendulum swings in contract awards, and marginal functional roll-overs. But, corporate pullouts have been small due to an amicable coexistence based on three key elements: recognized expertise (carved niche), equitable market share (piece for everyone), and fair competition (attributable to the experts in 55CONS Special Flight). This state of affairs has fertilized Offutt AFB with a sustained pool of talent through many government political changes. This environment is balanced with expert Integrators, Hardware Specialists, Software Producers, and Domain Functionaries. Although not without rivalry, "fair play" has maintained a strictly business and ethics truce among competitors.
Strengths. The multiple contract arrangement:
Creates competitiveness and cost efficiencies.
Comprehensible requirements and sharper visions.
Ensures availability of qualified domain expertise.
Cultivates innovativeness and forward thinking.
Inherent self encouragement: Creates a sense that contractor has control of own destiny.
Reduces complexity in dealing with proprietary environments.
Weaknesses. Perceived and real:
Perceived "weakness" that it's business as usual--nothing gained.
The loss of the "Single Integrator" concept.
Prioritizing escapades which will make it difficult to synchronize program enhancements among domains.
F. Alternative #2 - "Multiple contracts, one for each of the specific activities (integration, buying equipment, services, etc.) ..."
Strengths:
(1) The Government may obtain perceived short-term savings on certain COTS buys.
(2) The Government would achieve more opportunities for competition (possibly at the expense of management efficiency).
Weaknesses:
(1) Government must remain more in the integrator role due to the integrator Prime not having contractual control over the other Government contractors. For the multi-award integrator Prime, what would be internal team coordination under a single contract integrator Prime becomes 'Contractual Letters' which must go through the Government.
(2) The Government would have to invest more resources into management of the several contracts.
(3) The multi-contract integrator Prime would have less leverage to direct other contractors unless the Associate Contractor Clause is made much stronger - passing some (or all) control to the multi-award integrator Prime.
Which alternative would work best from the perspective of the Government?
The lower risk alternative of contracting with a single Prime contractor team is the Government's best alternative. Competitive pressures will cause each competing team to put forth their best and the Government must establish evaluation criteria to select the "Best of the Best" in order to realize their objective of obtaining the "Best Value".
Which would work best for the prime?
A single contract with the Prime having full responsibility to meet Government stated objectives would be best for the Prime. The Government's challenge will be to devise an incentive program which will reward those behaviors it would like this Prime to display.
How do issues of responsiveness, efficiency, and cost effectiveness affect the Government choice of this alternative?
Responsiveness, efficiency, and cost effectiveness are all goals which the Government would like the single integrator Prime or multi-contract environment Prime to strive to meet. Again, an incentive program which has goals in each of these areas goes a long way in motivating any Prime's behavior. Of course, the single integrator Prime has much more control over his ability to effectively manage events to satisfy these goals.
G. See G above.
H. Included in H. Above.
I. Included in I. Above.
J. Included in J. Above.
Contractor responsiveness:
A. The prime contractor cannot be held accountable for the responsiveness, technical feasibility or cost efficiency of solutions or activities not under his control. In the event that the Government chooses to issue multiple contracts with the work divided among various contractors/vendors, it must be the Government's responsibility to ensure the responsiveness of each. If, for example, hardware procurement and/or maintenance were to be separately contracted, the Prime integrator could not be held liable for missing schedules if equipment is not available/functioning when needed. It would be the responsibility of the Government to create the appropriate incentives and control the activities of the other contractors. If the prime contractor, however, is responsible for providing those activities either organically, or through subcontracts, then the prime contractor could be held accountable, and would be responsible for ensuring the performance of each subcontractor.
B. If the Government awards multiple contracts, such as hardware purchasing to one contractor, maintenance to another, etc., the Government will have the same problems it faces today. In other words, no contractor wants to accept responsibility when problems arise involving associate contractor agreements. If the Government elects to award multiple contracts, provisions must be included in both the prime integration contract and the individual supporting contracts for the prime integration contractor to have the authority to approve, or at least coordinate, the supporting contractors' activities. Otherwise, maintaining effective configuration control and avoiding significant duplication of effort could become problems.
C. No response.
D. This is a very difficult problem. Again, the primary incentive for the government to use multiple contractors is to save money. As the question is posed, the government should recognize that commodity purchasing presents quite a different set of problems than hardware maintenance. Accordingly, we will discuss each separately.
(a) Commodity Purchasing. In this area there are at least two problem areas which must be considered: (1) problems caused by the late delivery of commodities and (2) problems caused by defects in the delivered commodities. At this time there is no obvious contractual arrangement which protects the government from accepting the consequences of delivering the requisite commodities to the prime late. Unless they can recover the costs from their vendors the government must accept the cost of all delays incurred by the prime integrator. With respect to commodity defects or incompatibilities, the government could include a T&M or cost-plus ID/IQ task order CLIN in the prime contract to pay the prime, on an "as required" basis, to fix bugs or to build software "glue" to make the system work. In addition, and most importantly, the government must make sure that the prime, in their basic bid, includes sufficient resources to cover the requisite systems engineering and integration, the associated commodity requirements documentation and the commodity acceptance testing required to produce the procurement data the government needs to "buy to the prime's requirements" and to cover the testing needed to allow for the prime's acceptance. If the government buys commodities in accordance with the prime's purchase order and specifications and the prime accepts them in accordance with their own testing then the prime should be willing to assume responsibility for the integration of the products and the ultimate performance of the system. A similar argument can be made for any subsystem or application provided to the prime by another contractor via the government.
(b) Hardware Maintenance. Procuring hardware maintenance separately from the integration contract is, at best, very dangerous. The government would find themselves in the position of constantly adjudicating fault.
As the government knows, it is not uncommon to split development contracts and O&M contracts. To do this successfully requires a clean transition or turn-over point from the developer to the O&M contractor. From the question posed, however, we assume that, for CESAR, the government is thinking of a more parallel approach where a separate maintenance contractor is responsible for the equipment the integrator is working on. In this latter case, the government is clearly in the middle. One approach to accommodate this situation may be to fund, on an ID/IQ basis, joint integrator, maintainer and government IPTs to resolve problems as they occur and then again fund on an ID/IQ basis the proposed fixes, which result from the joint IPTs. If you ask the prime to assume responsibility for all possible fixes as part of the initial bid, it is likely that they would have to bid an excessive price to cover all contingencies.
E. An effective provision would be to tie "Award Fee" to overall performance within each contract. If each contractor's receipt of award fee is based to a measurable degree upon the responsiveness of "contract providers" then it motivates all to be more reactive.
The integrator, purchaser, and hardware maintainer should each provide metrics in their respective Technical Proposals. This metric should track problem identification, problem solution, equipment requisition, implementation and maintenance. It will provide assurances that a cost effective and early solution to the problem was sought without delay, and actions were executed immediately to purchase and implement, not to mention responding to maintenance. This metric will be used as a measure of determining award fees.
F. The following are some ideas aimed at giving the integrator Prime (multi-award scenario) more control such that he can influence the other contractor(s) to meet requirements, schedules, and cost objectives:
(1) The Government may enable the integrator to act as an agent for the Government. This could include authorizing the integrator to utilize all applicable GSA and commodity contracts, and specifying the integrator as the Government's integration agent for other contracts awarded by STRATCOM.
(2) The Government uses only the contractor's specifications for the Government's own direct procurements. Furthermore, the integrator would be continuously involved in scheduling, modifying and negotiating deliveries. We would suggest co-location of integrator and Government acquisition personnel in this scenario.
(3) The Government may send out specifications, collect bids, negotiate prices and so on with suppliers, but may then turn over the rest of the acquisition - ordering, installation and so on - to the integrator. This has the advantage of fulfilling the Government's interest in fostering competition and gaining good pricing for the Government, but takes the Government out of the process after the source is selected. It would still be necessary, however, for the integrator to provide the specifications and be involved with the rest of the acquisition process.
(4) The Government could authorize the integrator to qualify sources for equipment, which would include specifying sources in specifications and working with the Contracting Officer to qualify and limit suppliers. Furthermore, the integrator would have the right to approve any source and to approve any change to a specification, source or solution.
(5) The SOW could specify that the systems integrator is responsible for integrating all products. The integrator could then bid the cost of integrating all products. The Government would also tie some factor of the award fee to assure responsiveness of the contractor when other contracts are utilized.
(6) The integrator could hold all warranties for the Government and administer support on the Government's behalf.
(7) The integrator could be allowed to participate on source selections or aid in source selections of COTS suppliers. Also, the integrator Prime could participate on the Award Fee Review Board for the other contractors.
(8) There is considerable synergy when the integration contractor performs a combination of activities. For instance, there are advantages to keeping COTS product buying and the maintenance of COTS products together - the Government realizes the benefit of the integrator's purchasing leverage with the supplier to negotiate lower maintenance prices.
(9) Lastly, by dividing the CESAR requirements the Government is introducing additional complexity and risk which must be managed by the integrator. The integrator's responsiveness to these additional problems should be incentivized to motivate good performance.
G. Again, the role of Government would be expanded and the responsibility and capability of the prime contractor to manage the program progress would be deminished. This in turn could increase the program risk factors and reduce the potential for program success. Using an biased hardware and software "prime integrator" will allow lower burden on component purchases since that company is there to make profit on labor. This will help the government save money.
H. For multiple contracts, it becomes essential that a prime integrator is responsive to the Government and other contractors. One feasible approach is to select one prime contractor with the responsibility of integrating all CESAR activities. The prime contractor will be the prime System Engineer, Integrator and Program Manager for the entire effort to ensure interoperability across the environment. In effect, the other contractors would have a subcontractor or associate contractor role. Alternatively, we suggest consideration of the total system integration responsibility (TSIR) clause. This clause would accomplish the desired end of assuring full system functionality and prime contractor responsiveness regardless of the margins attainable for commodity purchasing. However, the TSIR clause may limit the effectiveness of associate contractor clauses, since the lack of cooperation on the part of an associate contractor could impair the prime's ability to perform to the level required by the TSIR clause.
I. To ensure responsiveness to USSTRATCOM requirements if the prime CESAR contract must integrate commodity purchases and/or hardware maintenance provided by different contractors the Government must have carefully constructed provisions in all contracts. The prime CESAR contractor must be made clearly responsible for ultimate integration, test and acceptance, and operational success. Therefore. there must be provisions in all supplier contracts that make them subordinate "associated subcontractors" responsive to the CESAR prime. Provisions for the inter-relationships between the CESAR Prime Contractor and other "directed' contractors can be laid out in an Associate Contractor Agreement, the provisions of which are stipulated in the CESAR RFP and subsequent contract and which are incorporated into the existing contracts for Associates.
J. In the weapon system arena the phrase Total System Performance Responsibility (TSPR) is used. This is what the government would be conferring on the CESAR prime contractor. Ideally (at least from the CESAR integrator's perspective) all activities related to TSPR would be conducted on his contract. In that case the government role is one of oversight. If there are associate contractors, then both the CESAR contract and others would need to have the recognition that the integrator will be providing the specification and review of associate contractors' activities. The government will probably have to play a more activist role, because only it retains contractual authority for all participants. Any multiple contract award approach will require the government to retain the resources (possibly not an option) to continue to manage and integrate the efforts of its multiple contractors, even if one of the contractors is designated and artificially/financially motivated to coordinate ("integrate") the efforts of the other contractors. Ultimately, award fee is the most powerful contract provision the government has. Responsiveness can be managed by measuring it and making it part of the award fee determination. The response to question 6 amplifies our ideas on award fee.
Incentives:
A. Proper structuring of the contract and the award fee plan can avoid the scenario described. For example, it is common in integration contracts to limit the prime contractor's application of pass through burdens on commodities purchased on behalf of the Government. Normally, commodities purchases are made under a separate CLIN, which can be structured differently from services CLINs. The Government has a great deal of flexibility in establishing a variety of CLIN structures within a single contract. For example, some CLINs could be firm fixed price, some could be cost reimbursable with fixed fee, while still others might be cost reimbursable with award fee. The contract could even be structured so that any commodities required would be purchased through other contract vehicles, such as the various ID/IQ contracts currently available to DoD agencies, or through the GSA schedule.
B. By using the award fee process, the Government has complete control of the CESAR contractor. Any Prime Contractor for CESAR will have to be a large corporation due to the magnitude of the program. The Government can be sure that a cost-plus-award-fee or incentive type contract will motivate any Prime to be innovative and responsive to integration and O&M tasks. The Government should clearly emphasize those areas where it wants to motivate the contractor to achieve exceptional results by preparing an award fee plan rewarding outstanding performance in those areas. Contractors view award fee percentages very seriously, and they recognize that poor award fee performance has a significant impact on past performance ratings not to mention on current company financial results. As to concerns over "so much profit from the sale of hardware", this should not be a big factor if CESAR is a competitive procurement. Contractors will not add huge profit margins on material since this strategy greatly increases the risk of losing a major competitive program. Thus, competition will take care of setting reasonable profits for the hardware items, as well as other portions of the contract. As the FAR directs, the Government should allow competition to set profits, other than maximums established by public law.
C. Contract Architecture - Incentives -- Recommend optimizing incentive fee opportunities.
D. First of all, given the competitive nature of the program, competing contractors should be offering the government the lowest, fair cost, structure for hardware and other ODC markups. Specifics on how the government can guarantee a fair markup are contract type dependent. For example, if the government were to propose the bulk of the support under a T&M contract, the contractor could only pass on the cost of hardware, COTS software and ODCs to the government--no fee would be allowed. If a cost type contract were awarded the government could negotiate or dictate a maximum fee (including zero) on hardware/COTS SW/ODCs. If the government were to insist on hardware, COTS software and ODCs being bid on a firm fixed price basis, then they could have some visibility into the markups during the competition, but post award, if a reduction in cost were to occur, the savings would revert to the contractor not the government.
E. Performance Based. In a single contract arrangement, performance is the logical measurement. A performance based incentive should measure time from when the task was levied, how well the integrator executed, and how reactive and manageable subs completed subtasks.
Solution Based. There's also a solution based arrangement that could award measurable award fee based on acceptability of the integrator's solution to the stated requirement. If considerable effort is spent changing designs, modifying code, or troubleshooting problems as a preamble to a final product, the incentive is proportionately reduced. This is an indication that the Integrator is not in tune with customer requirements and/or did not provide the right expertise to study and comprehend the need.
Application Based. This incentive awards the contractor for innovative ideas which reduce operating costs, through changes in policies, procedures and/or use of applications that are acceptable by the government, maintains the joint technical architecture objective, and continues to satisfy stated requirements. If the "Integrator" doesn't make time regularly, to think ahead, and consider technology advancements in completion of future mission requirements, then the mere excellence in maintaining the present baseline isn't sufficient reason for an award fee.
F. Clearly the Government's objectives for the CESAR contract will only be optimized if the incentives to the contractor are balanced between integration, hardware, and maintenance. One suggested approach would be to tie a portion of the potential profit on hardware sales to performance on integration and/or maintenance. The Government could establish a separate CPAF CLIN for hardware with perhaps a base fee of 3% and an award fee pool of 2%. The 2% award fee pool on hardware would be subject to award fee criteria that are geared to effective efficient and timely execution of the purchasing function. Also, limiting the available fee on hardware to 5% will allow the Government to establish a large award fee pool on integration and maintenance within the fee pool limitation on the total contract value. Since it is probably difficult to determine an accurate dollar value of hardware to be purchased over the life of CESAR the Government should establish a target cost for this CLIN that is subject to adjustment periodically over the life of the contract. For Example:
Estimated Cost for a given year: $10,000,000. Labor $4.0M & Material $6.0M.
Available Award Fee: $1.0M
Base Fee on Material: $6.0M*3%= $180K and Award Fee on Material: $120K
Award Fee on Labor: $700K
If the Material CLIN is increased during the year the fee for material would be increased by 3% base and 2% award. The fee pool on labor would not be changed. If by saving the Government money the material CLIN is reduced, the fee pools are not changed.
As you can see, it is certainly possible to construct a contract incentive plan which will motivate the CESAR integrator to provide the "most efficient, responsive and cost-effective solution". The challenge will be to emphasize those behaviors which the Government wants to reinforce, and to do so by objective, measurable criteria where possible. Here are some other ideas: (1) If the Government has significant concerns about disproportionate incentives for hardware vs. integration, a simple approach might be to address the incentive on hardware, i.e., specify a fixed fee or lower award fee for hardware. (2) The Government may entertain a hybrid style of contract, where services are provided at CPAF while COTS hardware and software are obtained through CPFF terms. This may be appropriate and an easy way to address these concerns. (3) The award fee could be designed during the first year as the integration plans are developed, rather than in the RFP. This would have the benefit of delaying specification of the evaluation factors until the hardware integration solution is better defined. (4) The Government could fix a low profit/no profit on hardware and assign the award fee across both integration and COTS acquisition areas equally having the effect of managing the Prime's performance equally across both areas.
In conclusion, we do not see the relative magnitude between COTS hardware acquisition and systems integration as an area of conflict or misunderstanding. As systems integration, and not hardware procurement, is more important to the success of the CESAR contract, we would expect the award fee to be weighted to that criterion.
G. A sound incentive award fee plan, such as the ones provided as examples earlier, should be incorporated into CESAR. In most cases that we have been involved in, we have always conducted a sound cost benefit analysis before presenting acquisition recommendations to the Government customer. However, the easy way is to simply establish a different fee structure for labor, software, etc. along with different CLINs.
As incentives relate to the prime integrator and the contractor team, it is suggested that the Government conduct an evaluation of the prime with an appropriate award fee. Then let the prime, that is working directly with the subs, conduct an evaluation of them to produce appropriate award fees with the Government relying on and supporting the prime's findings and conclusions.
H. If the Government chose to award the full scope of CESAR activities in one contract, to ensure the most efficient, responsive and cost effective solution and to avoid excessive profit on selling hardware and software products, the Government must ensure that the award fee is structured around the tasks performed as well as the completion of the entire contract. This drives the incentives closer to the work being done and in the case of IDIQ allows each task order to have different incentive criteria. To be effective, the award fee must be measurable with specific criteria.
I. Proper incentives to ensure a single CESAR contractor provides the most efficient, responsive, and cost effective solutions can be developed. This can be accomplished through the incorporation of various contract types, and award fee incentives/penalties. The CESAR contract's prime requirements are for providing integration services - hardware requirements should be secondary when developing RFP requirements including evaluation criteria. The primary rewards structure should therefore be based on integration expertise and services, and not equipment The judicious use of Firm Fixed Price and Cost Plus Fixed Fee contract provisions for various parts of the contract can also provide the Government with control provisions to ensure the contractor is properly motivated to provide the goods and services the Government wants. The proper structuring of an awards fee program that provides a significant portion of the overall compensation package can also provide the Government the needed controls to keep the CESAR contractor properly focused. The package should include up to 3-5% annual award fee incentives in the responsiveness, technical innovation (including Value Engineering provisions) subcontractor management, and cost savings areas. The specifics and measurable criteria in each of these areas would be negotiated at the beginning of each contract year. In this way the Government can focus on their current pressing needs.
J. The government must choose a CESAR contractor team very carefully to ensure that all phases, technical disciplines, and responsibilities required under the CESAR requirements umbrella have been effectively demonstrated by the team's contractors in past performance opportunities. To encourage hardware solutions to be selected on the basis of the best cost/benefit approach, the integrator could be directed to provide all cost/benefit analyses that were used in the selection of a recommended solution. Further, for each major hardware/software upgrade acquisition, the integrator can be directed to provide these analyses for at least three replacement/upgrade alternatives. Further still, the hardware/software upgrade solution development could be provided through a task order approach, working closely with the USSTRATCOM technical staff to ensure that solutions remain requirements centered versus becoming integrator "business case" centered.
Percent of the Business
4. In order to ensure that a competitive industrial base remains viable for follow-ons to the initial CESAR effort, the government is considering a mandate that the prime must subcontract some percentage of the contract value. From industry's perspective, what would be the pros and cons of such a policy? Please identify any short- or long-term consequences of such a policy. Presuming that some subcontract quota is adopted, what would be the appropriate percentage for the quota? 30 percent? 50 percent? 70 percent? Please substantiate your response.
Subcontracting:
A. It is not clear just what the implications of a subcontracting mandate would be for a viable competitive base in the follow-on era to the CESAR contract. We do not see an advantage to a Government mandate for a certain subcontracting percentage, aside from that portion of the CESAR effort that the Government might choose to set aside for small or small disadvantaged businesses to meet goals in that arena. Prime offerors for the CESAR effort should be free to evaluate their capabilities against the contract requirements and select subcontractors accordingly. Given the broad scope of the anticipated contract, it is unlikely that even the largest system integrators will be able to meet all of the requirements without some teaming. If the evaluation criteria are structured to reflect the Government's priorities and desires for experience across the spectrum of anticipated tasks, the Government will have the opportunity during the source selection process to eliminate from the competition those offerors whose collective team credentials and subcontracting arrangements present unacceptable risk to the Government. If the Government is concerned about small/small disadvantaged business (S/SDB) participation, specific goals for such contracting should be identified in the RFP. The percentages for S/SDB should be based on the goals established by federal guidelines, not by the contractors.
B. We concur that a portion of the contract must be subcontracted. We do not believe any one contractor could adequately cover a contract of the magnitude of CESAR. Whoever the prime contractors who pursue the CESAR program are, they will have a major investment in B&P to form a viable team for the proposal preparation and initial job start-up. Depending on the winning team's size, any prime would probably require at least 50% of the early years of the contract for itself to ensure an adequate return on its initial investment. The investment and participation of a subcontractor/team member in the pursuit and proposal preparation should have a direct impact on that contractor's percentage quota. We believe this should be controlled by the Prime Contractor and not the Government. This percentage would be part of the companies' teaming agreement. As options are let or tasks added, this percentage could decrease. If team members pursue efforts that are added to the contract, they should receive the majority of these efforts. The Government could specify that a percentage must be awarded to small or small disadvantaged businesses, but the Prime Contractor should be responsible for selecting the company(ies) as a team member(s).
With the continuing consolidation of companies seeking a shrinking DOD budget, the Government has reason to be concerned about maintaining a viable industrial base for follow-on programs. There are currently an adequate number of contractors that have very good credentials in the different segments of procurement contemplated by CESAR. However, with decreasing budgets, we are starting to see a trend of less teaming and more contractors wanting to do the whole job. There are clearly cost and risk factors associated with the number and quality of subcontractors that the prime brings on his team. The cost advantage associated with bringing on subcontractors who can do portions of the work efficiently has to be weighed against the cost associated with monitoring and controlling those subcontractors' performance. In this regard, one of the problems that faces Prime Contractors is the emphasis the Government places on allowing only reduced profit on subcontracts. This further motivates contractors not to subcontract any work. Prime contractors are continually weighing all these factors to present the best overall solution. What the Government may wish to consider is segregating the types of work to be subcontracted as opposed to dictating percentages for subcontracting. This might produce the desired effect more efficiently. The Government might also want to consider segregating such things as integration of certain C4 components. Another approach might be for the Government to state its goal(s) in Section M and tell all the bidders how it intends to rate the contractors' responses in this area. This would go a long way in motivating the Primes to select good teaming partners/subcontractors to help meet the goals set by the Government. All of the contractors are motivated to present the contractor team they feel the Government will look on most favorably, especially when the Government shows what it is interested in seeing.
C. This question presumes that a subcontracting mandate will help ensure that a competitive industrial base remains viable for follow-ons to the initial CESAR effort. However, due to the myriad of variables and unknowns associated with the CESAR acquisition and the uncertainty associated with what mix of contractor teaming arrangements will surface it would appear that there is a potential risk of destabilizing/eroding the local industrial base regardless of any attempts at subcontracting mandates. Furthermore, the current thinking of incrementally growing the mix of work contracted under CESAR over time (Software Engineering, System Design, Hardware Acquisitions, Systems Integration, Hardware Maintenance, Software Maintenance, Software Acquisitions, Site Preparation, Documentation, Testing, Security, Standards/Non standards implementation) adds complexity to any attempt at assigning requirements based subcontracting quotas.
D. The government can be confident that they will receive several proposals from primes with large robust teams. Few, if any, potential primes see the CESAR program as one which could be successfully accomplished without significant teaming. The government should be able to achieve their objectives by advertising their views and letting the competitive process work. By mandating a percentage, the government gives the subcontractors unfair leverage over the primes. For example, if a subcontractor had to be terminated by the prime, the prime might be required to go "find" a new subcontractor to satisfy the mandate. Unless the government were willing to pay for the reprocurement action this could force the prime to live with the poorly performing subcontractor. Secondly, even if the government were to mandate a subcontractor level, this would not guarantee that the prime's subcontractors could qualify as a prime on the recompete. The government should not view CESAR as a manufacturing job where you could have a leader-follower relationship. The government should be able to achieve its goals without mandates through the normal competitive process and, post award, by acquiring an open system with good data, and maintaining an open dialog with industry elements not directly involved in CESAR.
E. Although the pros and cons of this question are provided below, the most important element of subcontracting is diversification. The government should ensure the inclusion in any contract, a provision which allows the prime contractor to select (bring-on) after award, associate subcontractors that specialize in certain areas. Contracts have too often restricted contractors to stay with original team composition, but find that later delivery orders require different specialties that can be found in another subcontractor.
(Pros): If a single contract is awarded, the tasks as explained above must be done by a team without stripping incumbent "stovepipe" contractors of their most qualified personnel. The total system responsibility will be difficult to discern and too large for a single contractor (too much). The government may consider creation of a "virtual" contractor program management office (CPMO) as well as a clearly stated opportunity for small businesses to participate through a "plant your flag" type process. The process basically means that small business is invited to design, develop, and market products with the CPMOs knowledge and then if awarded, will be permitted to perform with minimal oversight and an extremely low "wheat tax". Assuming a single award, unless addressed directly and ferociously, small and medium size businesses will be excluded. However, if the government includes contract provisions which force the large awardee to subcontract a certain value percentage of the effort the following would be the benefits:
Eliminate large company monopoly.
Guarantee measurable mix of small, medium and large companies.
Stimulate team building and mutual accomplishment.
Ensure task coverage with niche company expertise.
(Cons): The single award with designated subcontract provisions could without cause, preselect team composition, which may not be the best. There are contractors who will automatically join on the efforts, and they will seek subs to fill remaining business percentages. Their willingness to hire a subcontractor may be purely "square filling", with no regard to best qualified in the area being filled.
Open pandora's box for large firms to cover value percentages.
Predispose the government as the expert on what are the best percentages in given domain areas.
F. We see no need for this as a requirement in that no single potential Prime has the requisite knowledge to bid this alone. Also, legislating a percentage of subcontracting does not guarantee having a viable competitor for follow-on business. We anticipate that the two or three teams that will bid for this work will each have three or more major subcontractors with as a minimum of at least 50% of the total business being subcontracted. For example, under another contract, over 7 years, the following subcontracting occurred: Our record -- 40 % to other Large Businesses, 11.6% to Small Businesses and 3.5% to Small Disadvantaged Businesses cumulative (as reported to the Government). We did business with over 75 companies in support of the referenced contract.
The pros and cons for establishing mandatory subcontracting goals are as follows:
Pros -
We see none.
Cons -
In the short run, this practice may even limit competition by limiting the flexibility and the combinations of companies which will form bidding teams. Also, by limiting competition, the cost to the Government will increase. In the long run, if the incumbent expertise is needed incumbents will be used regardless of contracting limit; conversely, if their expertise is not needed, incumbents may not be used.
Competitive procurement already encourages teams.
If the percentage is set too high, it limits competition.
In conclusion, all that is necessary is that the Government clearly communicate the requirement for continuity and domain experience. The prime bidder's will be responsive with the appropriate team or will be eliminated. The evaluation criteria will determine the kind of responses. Put the goals for domain expertise coverage in the evaluation criteria.
G.
H. It is not recommended for the Government to mandate that the prime must subcontract some percentage of the contract value. By providing percentages, the government risks unqualified work and probable low performance, if a program is descoped or enhanced. Once a subcontractor is guaranteed a certain percentage of specific work, if that work goes away for any reason, he may not be qualified to do other work which may be beyond his capabilities to be guaranteed that certain percentage. Work share for subcontractors (we like to use the term teammates) should be assigned by tasks, not by percentages. In addition, by assigning subcontractors based on technical expertise the prime ensures that the best subcontractor is performing the task.
I. Any prime contractor that believes they can provide the breath and depth of the integration, equipment and support services envisioned for CESAR without the use of major teaming partners and/or subcontractors, does not understand the requirements. The team make-up and percentages will depend on the individual capabilities of the team members. Outside of possibly small business participation requirements, the Government should not stipulate any mandatory percentage of the contract value that the prime must subcontract - let the normal flow of competition serve as the control mechanism. The Government can best stimulate and guide this effort through a well constructed RFP that is firmly based on past performance and incentives to perform in the manner desired.
J. The CESAR contract qualifications seem to focus on the prime contractor's experience and ability to provide integration support in a large scale highly complex environment. The government could therefore specify that the high level, overall integration support will be provided by the prime contractor, but that only in a rare circumstance would the prime be allowed to retain as much as 50% of the work involved in the implementation of approved projects. Instead, the prime would provide the government a project staffing plan that would identify appropriate team members/subcontractors that were selected and justified on the basis of their ability to successfully perform the specific tasks at hand. The prime would provide the systems integration and "single button" management support, the other team members would provide significant portions, if not all, of the actual implementation resources.
Breadth of Expertise
5. Presuming the full scope of the CESAR effort is awarded to one integrating contractor, how can the government ensure that the most qualified domain expertise is available in every mission area and every business area? What would be the best government approach to protect against a situation where the CESAR contractor has exceptional expertise in four or five business or mission areas, and is bankrupt in another?
Domain Expertise:
A. The best way to ensure against a scenario in which the CESAR contractor has exceptional expertise in several of the business or mission areas, but is bankrupt in others is to establish minimum objectives to be satisfied by identifying past performance data and experience on contracts of similar size and scope as the major evaluation factors. The Government can then establish experience and successful performance in each individual business or mission area as a specific criterion against which the proposals will be evaluated. This will provide the Government with a set of evaluation items that will reduce risk due to inexperience in the various business/mission areas, and will encourage potential prime integrators to structure teams with the collective experience to meet the Government needs, and to identify in their proposals the roles and responsibilities for each of their team members.
Since the CESAR effort, as presented by the Government at the recent USSTRATCOM Industry Days, is not envisioned to initially incorporate development of the applications software, immediate expertise in the functional war planning and C2 domains would appear to be of somewhat lesser importance than proven expertise in software engineering/integration—especially in the early phases of the contract. The Government can significantly reduce the risk inherent in complex software/systems engineering and integration by selecting a prime contractor with an established maturity level of at least three, as measured against the Software Engineering Institute's Capability Maturity Model.
B. It is essential that the Government produce a complete, clear, and concise statement of work that leaves little or no room for interpretation of what the CESAR program requires. The importance of the Government's statement of work in insuring that the Prime Contractor provides a completely qualified team for the CESAR program, without any gaps in expertise of personnel, cannot be overstated. A prime contractor will put a team together to cover all areas of responsibility based on the statement of work. A contract of the magnitude of CESAR must insure that all Primes assemble the best teams they possibly can. The Government should require the Prime to identify which team member, or combination of team members, will perform which tasks. Past performance of the Prime and all team members in performing work similar to that required for the CESAR program should be a major consideration/evaluation criteria in the selection process.
C. It’s very likely that regardless of the best efforts to put together an all encompassing contractor winning team there will be areas of strengths and weakness associated with each team resulting in a potential trade off of required expertise in some areas.
The ability to deal with this issue may be further complicated by the nature of the subcontracting arrangements between the winning team members (ref question 4) or the timing of the tasking requiring the expertise in question.
D. Given that there will be several qualified teams competing for CESAR it is unlikely if not impossible to guarantee that one team would capture all the most qualified expertise in every mission area and every business area. At best the government would be able to select the best sub-optimized team.
Post award the government should allow the prime to add additional subcontractors to the team to fill in the gaps. As part of the initial submission the prime could be asked to identify areas which would be proposed as "make-or-buy" areas. These areas would be set aside for formal evaluation, post award. Depending upon the results of the make-or-buy evaluation, these areas could lead to either competitive or sole-source awards to non-team experts. The awareness or sensitivity of the prime, up front, to the need for "make-or-buy" areas would underscore the prime's understanding of the problem and its realistic assessment of its team's qualifications. Failure on the part of the prime to try, in good faith, to acquire the "best of breed" in any area could be reflected in the government's award fee evaluation.
E. The government could place an OCI clause on all current application contractors, leveling the playing field for the integration contractors or the government could state that only application contractors need apply. Another approach could be to include Domain Expertise as a critical evaluation factor, whereby the bidders must meet certain criteria in each domain in order to qualify for the award consideration. The weights placed on this factor should be directly related to past performance which demonstrate expertise within the specific domain.
F. In a competition, the question is usually not "the most qualified domain expertise is available in every mission area and every business area", which seems to be a substantially greater criteria than "best value" or "technically responsive". However, if that criteria is communicated in the RFP the bidders will attempt to provide it. In this regard, the following should be noted in regards to CESAR.
Competition drives us to team.
The Government needs to clearly communicate the requirement for continuity and domain expertise in every domain area by establishing evaluation criteria. The bidders will be responsive with the appropriate team or will be eliminated.
The evaluation criteria will determine the kind of responses. If the criteria values teaming to gain certain kinds of experience, the Primes will team and bid it.
If no bidder proposes a correct solution in a particular area of the contract, they should all receive deficiencies and should be asked to correct their proposals.
In conclusion, we recommend that the Government specify the requirements for expertise in the solicitation. Make domain expertise in each of the various areas an evaluation criteria. This would guarantee that the winning team would not be bankrupt in any area.
G. To ensure complete domain, program and technical discipline coverage, the smart prime contractor will form a team that will provide everything that the Government has indicated to be important. The Government, on the other hand, should carefully select the team that can offer the best coverage of core disciplines, programmatic experience and capabilities, and proven STRATCOM related credentials. Basically, the Government should be careful to award the program to a team that cannot properly respond fully to all requirements. Low risk should be the primary awarding factor. In other words, state the technical and management requirements and expectations in the RFP and require they be fulfilled.
H. Evaluating a bidder's past performance provides the government with a powerful mechanism for predicting performance on future contracts. Such experiences must not be isolated or selective successes, but rather a pattern of repeatable and consistent superior performance on relevant programs. To ensure that the prime contractor is fully qualified to provide all the required services, teaming should be greatly encouraged, with appropriate set-asides for minority and AAA firms. Selecting teammates with similar exemplary records of past performance and selective combination of skills to augment the prime is essential. Also, the prime contractor must be committed to supporting and monitoring these emerging members of its team. The goal is to form a robust team, optimized to deliver proven high-quality, cost-effective, and closely integrated support. Assured performance, the ability to get the job done right, must be the driving force in selecting a contractor.
I. As outlined in paragraph 4 above, the breath of experience of a CESAR prime contractor has to be based on the "team" that he puts together. Its the team's collective experience that needs to be evaluated. A well structured and comprehensive past performance qualification section needs to be in the RFP. The use of a "down-select" process based on past performance criteria provided by the Government to pre-qualify prime bidders should be considered. This process has been successfully employed by several Departments including recently by the Department of Energy for their Telis program.
As a part of this process, USSTRATCOM could request that only those contractors who wish to be considered as primes respond to the pre-qualification past performance questionnaire. They would be required to respond as a prime with no mention of proposed subcontractors for CESAR; however, their experiences should include how they have successfully managed large and small subcontractors on integration contracts similar in size and scope to CESAR. Only after the Government selects those contractors qualified to bid as primes would teams be encouraged to form for the actual bidding on CESAR. If the Government properly structures and manages the RFP process, industry will respond with teams that will be able to provide exceptional expertise and services in all mission areas, The Navy's ViViD procurement provides an example of how a past experience questionnaire can help in ensuring only qualified contractors bid as primes. This saves both the Government and the contracting community a lot of time, effort, and dollars in preparing and evaluating bids.
J. This issue touches on a fundamental business question for both the government and the bidders: Does "CESAR integrator" refer to the prime contractor or to the team the prime contractor assembles and proposes in the initial procurement. The way for the government to TRY to attain the most qualified domain expertise is to structure the procurement so that the bidders are dissuaded from forming large, encompassing teams. The IMDS procurement at ESC is one such. In this case the government is buying the system engineering and integration expertise and process, but postponing knowing much about specific technical solutions or approaches. As specific problems or domain areas must be addressed, the integrator accomplishes a make-buy and conducts procurements as necessary. Government insight and approval of all these decisions depends on the how much total responsibility is given by the government. This is related to question 2. Whether or not the "best" is brought to bear is problematic. At a minimum the issues raised in questions 3 and 6 are relevant here.
The alternative approach is to require that the bidding CESAR integration teams demonstrate they have expertise in all major mission and business areas. This proof could come through a series of sample problems that test core expertise. The government should pay special attention to the teaming agreements and management approach. While the government is not a partner in the teaming arrangement, the agreements can give insight into roles, responsibilities and level of involvement of the teammates. The management approach will show whether the teaming agreements are likely to be executed as written. The value to the government of comprehensive teams is that the government knows from the beginning where solutions will come from. Given the strategies and vagaries of teaming, the government may not get the best individual expert in each area, but it should be getting the best integrated expert team. The government then knows that the integrator is not bankrupt and puts a bound on CESAR risk.
Award Fee
6. Please provide your recommendations on how the government should structure the award fee to optimize the benefits for BOTH the prime and the government.
Award fee structure:
A. The evaluation factors for award fees should closely parallel the evaluation factors for contract award, and should clearly measure the performance of the contractor in those areas most critical to the Government. In other words, the Government has certain requirements it expects the contractor to fulfill. The evaluation factors for contract award should be structured to allow the Government to determine which offeror provides the lowest risk approach to meeting those requirements. The Award Fee Plan should then establish performance measures similar to the evaluation factors to allow the Government to determine how well the offeror is actually performing the work they committed to do in their proposals. The Award Fee Plan and the Evaluation Factors for Award (Section M of the RFP) should be published in draft form for industry review and comment prior to release of the solicitation.
B. We recommend that the Government get away from global statements in the award fee plan and be more specific in describing the performance expected. Under a cost type contract, some things have to be general in nature such as incentivizing the contractor to meet or underrun the estimated cost of the program. However, there are technical areas, such as those related to the performance characteristics of a given system, or improved timelines, or things of that nature, where the Government could provide specific objectives for the contractor to meet. In addition, as part of the award fee process, the Government could provide written objectives for the upcoming evaluation period specifying where special emphasis should be placed during that period.
Consideration should be given to making the award fee periods no longer than six months, with an interim assessment period of three months. This would allow the Government and Contractor team to focus more on activities that have a significant impact on program performance in the near-term. In this way, the Team would be focusing on the immediate issues/concerns of the Government, and desired results would be more likely to be achieved. We realize that short award fee periods place a larger administrative burden on the Government, but we believe the benefits would outweigh this extra administrative burden.
C. No recommendations; optimizing incentive fee may be best strategy.
D. There are several factors the government should consider in structuring a fair and equitable award fee pool. First and most importantly is that the criteria should be measurable and achievable. Too often award fee criteria are too subjective and are consequently subject to the whims of individuals. Although some subjectivity is necessary, the government should strive to select measurable criteria as much as possible. Secondly, the government might consider implementing a multi-phase award fee pool wherein the contractor could receive evaluations for selected elements of the award fee plan over relatively short performance periods, i.e. 3 months, while other elements would be evaluated over a 6-month or 12-month basis. Finally, given the complexity and scope of the program the government should only consider putting into place, prior to award, a general award fee plan for the entire program. Post award, the government should work with the prime to definitize the criteria for the initial periods. As the program unfolds they should continue to work with the prime to refine or update the plan prior to each new award fee period. This would give the government a planned milestone for a given period to reallocate the award fee dollars to the most important criteria.
E. Award Fees should be objective--government and contractor should agree on each and ensure that subjectivity is totally removed from the measurement.
The Award Fee should concentrate on the "Hot Buttons". Government and contractor should incorporate the hot critical areas whether they are schedules, funds, people, etc., that are important and must be superbly accomplished.
The Award Fee should be based on each Delivery Order. The government should ensure the removal of any Award Fee consideration based on the total contract.
CPAF. Involves architecture development and systems integration(both involve risk and uncertainty.
Make the Award Fee criteria progressive 50, 60, 70% performance, solution or application based (or mixture of all, e.g., accomplished technical solution, costing, and implementation without problems in less than 30 days from task, etc.)
F. Assuming that CESAR results in a single contract, we agree that the award fee structure provides the greatest flexibility for the Government to create incentives to achieve outstanding performance in each of the various types of activities under the contract. It also provides the Prime with adequate rewards for innovation and risk taking.
Benefits to the Prime:
(1) Significant earnings enhancement,
(2) Timely feedback on performance by the Government customer.
Benefits to the Government customer:
(1) Higher program success probability,
(2) Ability to encourage desired behaviors, and
(3) Ability to focus attention on any area as desired/required.
In conclusion, an effective incentive/award program should have the following characteristics:
(1) Specific Metrics,
(2) Meaningful Award Pool,
(3) Timely reviews and execution,
(4) Objective administration, and
(5) Positive attitudes by Government and Prime personnel.
We would be glad to put you into contact with a contracting officer using a similar plan.
G. We have already provided some excellent examples of different award fee programs and we will continue to evaluate others for possible submission.
H. To maximize the benefits for BOTH the prime and the government, a Cost-Plus-Award-Fee would be optimal. The contractor is reimbursed for all "allowable" costs (precluding the need for protective margins on Fixed Price hardware and software), and receives an award fee based on performance, quality, timeliness, and ingenuity. There will be low risk and high incentive to succeed for both the contractor and the government. In an IDIQ scenario an approach can be crafted that matches contract type with the task risk by using a CLIN structure which allows for Fixed Price and Labor Hour task orders in addition to Cost Plus. This CLIN structure can be further augmented with an award fee tied to the performance on all tasks, regardless of the type.
I. A comprehensive awards fee program can benefit both the Government and prime CESAR contractor. Several ideas are presented paragraph 3 above. The structure of the awards fee program in the Department of the Treasury's, Treasury Communications System (TCS) program, might provide some ideas to USSTRATCOM as you develop your CESAR procurement strategy.
J. The government is on the right track when searching for the structure that would optimize an award fee system for both the contractor and the government. Ideally, the award fee approach creates a win/win situation. The government wins by granting additional fee when it receives superior contractor performance in the areas most valuable to the government. The contractor wins when given the opportunity to secure additional fee for providing superior support. The performance areas selected must be important to the government's mission accomplishment, relatively easy to measure without controversy, and completely understood by both the government and the contractor. The government could determine the award fee areas and amounts prior to contract award and then develop the final award fee structure in contract negotiations with the CESAR winner.
On several programs (I-CASE, TBMCS) Mr. Gilligan has created a two-tier award fee structure. The first tier is the classic award fee approach: a set of areas with weights; a set of evaluation criteria for each; and definitions of the possible grades or scores. These areas represent the specific responsibilities and activities called out in the SOW and program plan. This award fee measures how well the contractor is executing the contract. The second tier is what could be called a "bonus." It is an annual pool used to reward/incentivize the contractor to further the goals and mission of the customer. One way to view it is that it is reward for performance "above and beyond the call of duty." This structure works very well for an integration contract, where the big picture (organization mission, for example) may not be captured in the current contract.
We recommend that he government make award fee approach on of the things that is proposed by the contractor, not dictated by the RFP. Despite the common contractor objective of making a profit, different companies (and teams) can be more effectively incentivized by different approaches. This is in line with the acquisition reform goals of allowing companies to bid for work using their own best practices.
Lastly, the government should consider how the prime contractor will use award fee to motivate his subcontractors.
7. There is concern that the Omaha area does not contain the required expertise in the numbers needed to support the CESAR contract. Do you foresee finding and retaining qualified personnel in this area as a potential problem? How would you address this issue?
Finding and retaining qualified personnel in the Omaha area:
A. There is adequate expertise in the numbers required to support the CESAR contract in the Omaha area. The real issue is the ability to attract and retain that expertise on Government contracts as opposed to losing the qualified personnel to jobs in the commercial sector. A number of employers in the Omaha area have enticed qualified personnel to leave the defense-related industry in favor of commercial sector information systems employment in industries such as banking, insurance, and credit card transaction processing. They have been successful in their recruitment because they offer job stability (jobs are not up for re-compete every three to four years), higher salaries, and lucrative fringe benefits. Defense industry has a difficult time competing with the commercial sector for qualified technical personnel because contract awards are often based on low price. This forces offerors to bid labor rates that are lower than the prevailing commercial rates, leading to either staffing difficulties and performance issues or cost overruns. Industry cannot solve this problem alone.
Contractors must structure a full compensation package including salaries, incentives, and benefit plans if they are to compete for qualified personnel, retain a stable work force, and ensure that the Government gets the best talent available to meet their requirements. CESAR should be viewed as a team effort between the Government and the contractor. The Government has a vested interest in obtaining and retaining a good contractor team. Over time, the Government will have invested time and money in contractor personnel who have worked on the project, trained with Government personnel, and learned local users' procedures and unique requirements.
It is in the Government's best interests to make "Best Value" awards wherein cost is evaluated for realism, but is not the major factor in determining award. Procurements that make an initial technical cut and then select the lowest bidder from among those "technically qualified" are a recipe for failure in a highly competitive job market. In the same vein, "cost realism" assessments must be based on actual conditions in the prevailing local market, not on national averages, or wage determinations which are usually based on data that is collected from a wider geographic area, are often too outdated to reflect the dynamics of the technology job market, and are frequently based on job descriptions that do not truly match the requirements of the work that must be accomplished.
B. The Omaha area currently has people available who possess all the disciplines we believe will be required for the CESAR program ( many of these individuals with STRATCOM experience). In addition, most of the contractors providing technical personnel to STRATCOM also have other resources, both in the local area and within their respective companies, to draw on to fill shortfalls if necessary. However, as discussed in Question 8, there is keen competition for these human resources. We will carefully analyze the technical experience required for the CESAR work force to ensure that the proper levels and mix of personnel are identified for the program and then propose a compensation and benefit package that will be competitive in the Omaha area to ensure that qualified personnel are retained. Moreover, we would make technical resources availability a significant selection criteria for teammates for the program.
C. Recruitment and retention is becoming more challenging to Omaha based contractors. There is an increasingly high demand for information technology skilled personnel in the Omaha commercial sector (ref 10/28/96 ABC News item). Uncertainty associated with reduced DoD budgets, real/perceived impacts on job stability and career advancement opportunities for DoD contractor personnel contributes to the challenges of recruiting and retaining staff in the face of the competition from the local commercial sector. There is the “potential” that a single CESAR contract will increase contractor employee uncertainty associated with defense work and further complicate the ability to recruit and retain staff.
D. Yes, this is a definite problem in Omaha as well as throughout the Defense industry in general. One way our company would address the problem is to give incentives to our employees to help recruit qualified people. We would also use proven professional search firms to help find people. In addition we would offer incentives to current employees in other locations to relocate to Omaha. In this latter case STRATCOM should be willing to pay for some relocations vice having the contractor pay out of overhead which passes the burden on to all other contracts. Over and above all the actions we would take to staff CESAR from within our company, we also intend to organize a large robust team of subcontractors. Having a large qualified team should mitigate many of the staffing problems.
With regards to retaining people once they are assigned to CESAR our plan is to establish a team incentive pool for all team employees. The pool would be paid for by a portion of our award fee pools. The employees would receive their award fees at the end of each contract period. We have used this in the past and it has proven to be a good retention incentive, particularly if it is over and above their normal salary and bonus compensation.
E. The Omaha based DoD Contractor force offers exceptional depth and breadth of successful experience in providing services and products to the Government, and collectively they are keenly aware of the uncertain threats that face our nation, and the challenges of meeting them with decisive and overwhelming force anywhere in the world. Omaha employment pool brings together a broad spectrum of demonstrated corporate capabilities and strengths that best apply to meeting the demands of successful support to USSTRATCOM. Typically, Omaha based contractors offer key personnel with decades of directly related experience who are currently involved in strategic nuclear-related endeavors, requirements definition, linkage to the warfighter, open systems architectures, development and integration, test and evaluation, training and education, configuration management, command, control, communications, computer, intelligence, reconnaissance and surveillance, as well as many other technical and functional areas of support to the military. As DoD downsizing continues, so will the transfer of knowledgeable personnel, through attrition, from military service to industry. However, the business climate at Offutt AFB is key to continued success of this cycle--decline in business means a decline in contractor expertise. In summary, yes the Omaha area contains the right expertise in the right numbers needed.
F. The size of this problem depends a lot on the size of the CESAR Prime and teammates staffs at contract startup. Those who have small staffs or are not present in the local area will have a very difficult startup.
Past performance within the Omaha area has shown us that talented, well trained personnel will pursue a quality employer who has challenging and rewarding work available. We had 120 employees in the local area with an ability to draw upon our home office for additional expertise when necessary. We are able to find and retain employees. Our turnover rate was under 4% for the first few years of the contract. Later we experienced about an 8% turnover rate. (As you know, this is still much lower than what is experienced by the Government.) We see no major problem in this area, although, employee retention is always a concern. However, not withstanding the above, we share the Government's concern for finding and retaining qualified personnel in the Omaha area, which has become very competitive for personnel.
We believe there are alternatives which Government and industry can take together to improve the development and retention of employees. Among these are:
Allow more flexibility for team composition and grow qualified personnel by accepting, developing and enculturing new college graduates. This also results in a lower average employee cost.
Provide a rich environment for education, growth and employment stability, which is easier with a single large contractor.
Look closely at existing work, and identify classes of work, testing, etc., which are routine and could be assigned to non-degree personnel, providing entree into the software profession for non-degree persons. Likewise, be willing to substitute experience for a degree.
Explore in-home office options and/or use more part-time employees.
Don't limit contract performance to local area; use team resources outside of Omaha where economical and practical.
We have managed to keep attrition to below 10% per year, which we believe is a threshold value for information systems employees. Many of the larger defense industry employers in the Bellevue area have similar statistics. However, to continue this level of success, there are a few necessities which must be observed such as:
(1) benefits must be competitive,
(2) salaries must be at the market, and
(3) employees must have some security in their positions and a path for advancement.
To assure that our human capital is not lost to non-defense industries we must honor these guidelines. Closely review the cost reasonableness of bids to insure the government gets what it expects.
G. Currently, the STRATCOM contractor community embodies sufficient numbers of qualified personnel to work the existing programs. While some growth in qualified people may be necessary in the initial stages of the program to manage the emerging modernization and integration aspects of CESAR, the overall objective is to reduce manning by consolidating certain functional operations that are currently being carried out by each of the existing programs. In addition, it is anticipated that there will be a shift to add some additional skills. It will be the prime contractor's responsibility to both consolidate like functions while maintaining the best qualified engineering force. Everyone seems to know that the wage rates of the civil sector in Omaha are quite competitive and cause a drain on the DoD contractor community. The first step is for the Government to openly recognize this factor. The suggested second step is to reduce the competition weighting factor for lowest cost and provide a realistic best value factor that might help reduce the competition for highly experienced engineers.
H. Most companies have found it necessary to establish formal programs that establish an efficient and effective process to hire and retain qualified personnel. For example, the Proposal Manager for a specific pursuit/opportunity coordinates with management to obtain commitment for key proposal and program personnel early - during pre-proposal activities. There are several avenues available to bring the right people at the right time with the right skills to a specific effort. For example, the company's Human Resources department starts recruiting for the pertinent skills early in the process, drawing from the work force, dozens of premiere colleges throughout the country, and the various in-company professional development programs. In our company these programs include TLDP (technical leadership development program), ELDP (engineering leadership development program), and PMDP (program manager development program). In-house employees are also provided the opportunity to become members of new efforts so they can further their experience in their chosen career path. In addition, all of our employees can pursue graduate studies as part of a tuition reimbursement program in order to improve their skills. Also, numerous in-house training programs are available to ensure that employees stay abreast of the latest technological trends and achievements. A comprehensive benefits package is also needed. For example, our retention rate is better than the average, due to generous health benefits, 401K contributions, non-contributory pension plan, and congenial work environment. Each member of the team is a viable, productive and crucial component to achieve the optimum synergy for the whole company.
Let's look at the situation this way. First, we can safely assert that, while not the only factors, salaries and benefits are chief factors in ensuring a stable and capable work force. Next, we take as a given that the winning contractor's bid will largely establish the salaries and benefits paid to contractor personnel. Another safe assertion is that the contractors will bid as low a value as necessary to win. Now, if the Government establishes cost as the most significant factor, then the contractors will bid as low as they think is achievable -- the lower they bid the better their chance to win. That will by necessity lead to low salaries and benefits, which brings us back to an unstable and weak work force. Therefore, for a complex program like CESAR, cost must not be the most significant factor in the evaluation because a stable and capable work force is important. We suggest that the cost evaluation be based on what is reasonable for the work required, the location in which it is to be performed, and the contract type (i.e., the risk) associated with that work.
I. The successful execution of the CESAR contract is not necessarily dependent on having all the required expertise in the Omaha area. The breath and depth of the winning team's capabilities is what is important - not necessarily were they are located. Today's communications capabilities make the virtual office a reality. Expertise can be scattered geographically yet still be instantly available through networks, video conferencing, etc. Program management is the key to successful integration work regardless of where the assets are located. There will be a definite requirement for a core group of people in the Omaha area required to manage the program and provide various on-site functions that must be accomplished in the local area. The mandatory functions that USSTRATCOM believes must be performed in the Omaha area should.. be identified in the RFP. Teams capable of satisfying CESAR requirements should have major problems recruiting for the Omaha area.
J. Recruiting and retaining technical experts is a problem today in the defense industry because defense contractors are frequently outbid by commercial industry for the services of top people. With a few highly specialized exceptions (that could be managed through off-site support) the necessary people can be found in the Omaha area and they seem to find the quality of life acceptable enough to stay. Finding the people should not be the problem. Retaining these qualified people at acceptable turnover rates is an on-going management problem. Job stability and quality are two key factors. If a stable, predictable, and financially competitive contractor working environment is provided, then the CESAR contract could provide the technical working environment of choice. To implement this environment, the winning CESAR contractor team and the government would need to work together; first, to establish the positive working conditions, and then to continually monitor the competing career environments to ensure that USSTRATCOM does not continue to be a computer technical staffing supplier to local industry.
8. How can the government ensure that CESAR contractor personnel are paid at competitive market rates in the area to ensure a stable, capable work force, and still obtain the most cost-effective services?
Salaries vs. cost-effective services:
A. Salaries are only one component in the overall cost of services provided. Other factors such as overhead rates, efficiency and maturity of key processes, management techniques, experience and domain expertise of the staff, etc., all play a significant part. If the solicitation requirements emphasize technical merit, relevant experience, and past performance on similar contracts, and do not turn the acquisition into a "price shoot-out" because of the way the evaluation factors are presented in the RFP, offerors will be able to hire and retain the appropriate staff and provide services that are cost-effective.
B. It must be stressed that competition for technical personnel in the Omaha area is very keen (and increasing) due to significant expansion of commercial activities in the area. Therefore, since it is very important to the Government that industry maintain a stable technical work force throughout the life of the CESAR contract, We recommend that the Government select a contractor who purposes realistic salaries and benefits in light of competition for technical resources and that the Government and the CESAR Prime Contractor perform periodic salary and benefit surveys throughout the life of the CESAR contract, so that appropriate adjustments to the contract labor rates can be made, if necessary, to ensure that adequate technical resources can be retained and that personnel turnover is kept at acceptable levels. Moreover, the Government may wish to consider making personnel stability one of the award fee criteria.
C. Flexibility and adaptability of rate structures/contract types is probably the key to this issue. The nature of the work/tasks skills required and technical difficulty are factors that need to be considered when determining competitive market rates. Under one set of circumstances a Cost Plus Award Fee contract will be more advantageous to provide the appropriate level of expertise than another contract type/rate structure. The more restrictive the rate structure/contract type the more difficult it will be to ensure competitive market rates.
D. The competitive process should guarantee that the bid salary structures are at competitive market rates. Post award, over the life of the contract, the award fee and any imposed cost sharing structure should ensure the provision of cost-effective services.
E. It requires a close partnership arrangement between industry and government, which is a key element being cradled in new procurement legislation. The fundamental strategies in new markets, which CESAR can easily be considered, investment in people, engineering, tools, processes, and the market itself. The absence of any one of these elements has an impact on salaries, performance and the workforce. In perspective, DOD contractors are becoming more competitive by delivering more quality at less cost to government with realistic bids, achievable schedules, competitive costs, risk mitigation, and integrity in people, operations and products. The direction is to replace fixed price contracts with a market-driven approach, that includes appropriate incentives, and cultivates innovative thinking and growth. The willingness of a firm to pay competitive salary depends on whether the market will bear the investment. The government can have some control of this by ensuring continued dependence on industry to meet growing mission requirements, and through creating contract vehicles that retain a competitive market environment.
The best method to ensure competitive salaries and market rates is to steer clear of any contract award based on price. The contract evaluation should be based on management, technical expertise and best value. Invariably, low price equals low salaries, which equals lower quality of people and services.
F. There is an old saying that says, " You get what you pay for!" The same holds true for labor. In past contracts, the Government has passed most of the risk of a tight labor market onto the contractor by having him propose fixed labor rates based on fixed salary and inflation estimates. What has happened in the past is that the contractor in his zeal to win fixed rate contracts has taken a risk by bidding lower rates based on lower salaries than would likely exist in a tight labor market. The Government, in its zeal to get a good deal, has allowed this to happen with no challenge. Neither party's expectations were met. The contractor finds himself unable to recruit the level of talent required and the Government is unable to get the job done for the price bid.
Getting the best people at a fair price is the prime factor in cost-effectiveness. The Government could do a market survey of salaries and combining this with the information already possessed concerning fringe rates and overhead make an assessment of what reasonable rates should be. By making a comparison of contractor rates against the Government assessment, the Government would then have a mechanism for determining what is fair and reasonable. Contractor rates set too low induce risk and should be questioned just as rates set too high should be questioned.
Please realize that contractors will pay the market rate if they are able to pass increased costs on to the Government in the form of higher labor rates. If the Government is willing to allow the labor rates to adjust to labor market costs, then there will likely be few problems in obtaining the requisite experienced employees. Thus, the laws of supply and demand will insure employees are paid at competitive rates. Employment is a matter between the employer and employee. However, the Government could help by removing as much turmoil as possible from the ebb and flow which occurs within the taskings process. Longer duration and fewer numbers with larger numbers of hours called out will help the contractor in convincing the prospective employee of some modicum of stability.
To ensure that CESAR contractor personnel are paid at competitive market rates in the Omaha area, we recommend the following:
Make good past experience in staffing a evaluation criteria for contract award.
Make on-time staffing of quality individuals a factor in the program award fee.
Do an area economic salary review and develop estimates of labor price reasonableness of bids.
Don't award to a bidder whose prices are unreasonably low.
G. The Government should analyze local DoD and non-DoD contractor rates to establish realistic guidelines for key / essential personnel. These rates could then be used to assess the reasonableness of the cost proposals. Part of our personnel management plan calls for sharing of incentives and awards to recognize and reward exceptional support and service. This is part of our standard variable compensation plan. We periodically assesses the pay scales in area such as Omaha to assure personnel are being equitably compensated. Good personnel management is one of the keys to this problem. The Government could also look at each offeror's "total compensation" and benefits packages to see which would be most conductive to maintaining qualified people. This should be part of the best value procurement process. We have examples of RFPs where the contractors were required to describe how they planned to maintain their labor force.
H. See Item 7 above.
I. The prime way the Government can ensure that CESAR contractor personnel ate paid at competitive market rates and that they receive quality services is to evaluate the CESAR bids on a "best value" basis. CESAR cannot be a low-price shoot-out Pricing realism can be used as part of the evaluation process, but the award has to be based on technical and management competencies. Past experience, and the breadth and depth of the prime contractors team, are of prime importance. Competitive forces in the marketplace ensure a stable, capable work force.
J. It is important for the government to realize that ultimately they get what they pay for. To staff CESAR with a stable workforce of motivated, appropriately experienced, superior engineers, analysts and technicians, government and contractor management must recognize the realities of the market place. By cooperating and participating in the establishment of a defined, equitable, and continually monitored contractor acquisition and management approach as outlined in the discussion question 7, the government and the CESAR contractor team can hold turnover to an acceptable rate. Compensating contractor personnel at competitive benefit and salary rates is essential to stability and therefore provides the basis for the most effective and efficient approach to staffing USSTRATCOM contractor requirements.
9. Other comments:
A. None
B. None
C. None
D. None
E. Comments. There is a growing wave of technology transfer, shifts in focus, contractor streamlining, and freshly acceptable ideas that exploit our strengths in the commercial markets. The umbrella contract process has been successful in some environments and not as fortuitous in others. The real scope of CESAR lies predominately within the boundaries of software, and integration becomes a natural precursor to its application. The major activities will be achieving and maintaining Level-3 certification, software exportability, functionality, distributed data processing, capability maturity models, heavy configuration management, end-user efficiency, complex processing, reusability of old code, operational ease, performance, multilevel security and a host other of interrelationships that permeates the essence of data processing. The discriminators, how, what, when , where and who become easier to identity in responses from industry as in this series of questions, but we may want to consider that ingenuity may be the best recipe for CESAR in the long run. There are good integrators and apathy in management; excellent software developers and poor planners; and great maintainers with disconcerting knowledge of the real mission. The optimum is to build CESAR with pillars of strength from industry, and establish contractual arrangements which offer the government latitude to be flexible and methodical in considering special cases. The umbrella contract may not be the best approach.
G. None
H. None
I. None
J. None