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Risk Management and Performance in the Balkans Support Contract

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Risk Management and Performance in the Balkans Support Contract THE ARTS This PDF document was made available CHILD POLICY from www.rand.org as a public service of CIVIL JUSTICE the RAND Corporation. EDUCATION ENERGY AND ENVIRONMENT Jump down to document6 HEALTH AND HEALTH CARE INTERNATIONAL AFFAIRS The RAND Corporation is a nonprofit NATIONAL SECURITY research organization providing POPULATION AND AGING PUBLIC SAFETY objective analysis and effective SCIENCE AND TECHNOLOGY solutions that address the challenges SUBSTANCE ABUSE facing the public and private sectors TERRORISM AND HOMELAND SECURITY around the world. TRANSPORTATION AND INFRASTRUCTURE WORKFORCE AND WORKPLACE Support RAND Purchase this document Browse Books & Publications Make a charitable contribution For More Information Visit RAND at www.rand.org Explore RAND Arroyo Center View document details Limited Electronic Distribution Rights This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. This electronic representation of RAND intellectual property is provided for non- commercial use only. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents. This product is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND mono- graphs undergo rigorous peer review to ensure high standards for research quality and objectivity. Risk Management and Performance in the Balkans Support Contract Victoria A. Greenfield, Frank Camm Prepared for the United States Army Approved for public release; distribution unlimited The research described in this report was sponsored by the United States Army under Contract No. DASW01-01-C-0003. Library of Congress Cataloging-in-Publication Data Greenfield, Victoria A., 1964- Risk management and performance in the Balkans support contract / Victoria A. Greenfield, Frank Camm. p. cm. “MG-282.” Includes bibliographical references. ISBN 0-8330-3733-1 (pbk.) 1. Defense contracts—United States—Case studies. 2. United States. Army— Procurement—Case studies. 3. Bosnia and Hercegovina—History, Military—20th century. 4. Bosnia and Hercegovina—History, Military—21st century. 5. Operation Allied Force, 1999—Equipment and supplies. I. Camm, Frank A., 1949– II.Title. UC267.G754 2005 355.6'212'0973—dc22 2004028146 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. © Copyright 2005 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2005 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 201 North Craig Street, Suite 202, Pittsburgh, PA 15213-1516 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface In 2001, the Office of the Assistant Secretary of the Army for Man- power and Reserve Affairs raised a concern that the Army’s use of contractors on the battlefield did not stem from any clearly articu- lated policy and could well be inappropriate. It asked RAND Arroyo Center to identify the policies and processes that appeared to be driving Army decisions to use contractors on the battlefield and offer ways to increase the likelihood that these policies and processes would yield outcomes consistent with the Army’s high-level goals. Arroyo’s analysis proceeded along two parallel tracks. One looked from the top down at the risks associated with using contrac- tors on the battlefield and what could be done to manage these risks more effectively. The other examined one of the largest contracts supporting deployed Army forces to understand better how Army use of contractors works from the bottom up. This document details Arroyo’s findings from the second track, by applying a risk- management framework to the Balkans Support Contract. The report looks at risk in an ongoing contract. The authors completed most of their analysis in mid-2003, and so the information provided in this document is generally current up to that point. However, in some instances, the authors quote or cite source material predating 2003. In those instances, the names of particular institutions or practices may have changed. Moreover, the authors recognize that since 2003, the contracting environment in other parts of the world has changed dramatically, particularly as it pertains to security. This report should interest those involved in contracting, force structure, or military iii iv Risk Management and Performance in the Balkans Support Contract operations and support planning processes. Arroyo’s findings on the first track are reported in Frank Camm and Victoria A. Greenfield, How Should the Army Use Contractors on the Battlefield? Assessing Comparative Risks in Sourcing Decisions, MG-296, 2005. This research was sponsored by the Assistant Secretary of the Army for Manpower and Reserve Affairs and was conducted in RAND Arroyo Center’s Manpower and Training Program. RAND Arroyo Center, part of the RAND Corporation, is a federally funded research and development center sponsored by the United States Army. For more information on RAND Arroyo Center, contact the Director of Operations (telephone 310-393-0411, extension 6419; FAX 310-451-6952; email [email protected]), or visit Arroyo’s web site at http://www.rand.org/ard/. Contents Preface....................................................................... iii Figures ......................................................................vii Tables and Box.............................................................. ix Summary.................................................................... xi Acknowledgments.......................................................... xxi Abbreviations .............................................................xxiii CHAPTER ONE Introduction.................................................................1 CHAPTER TWO Origins and Characteristics of the BSC ...................................3 Origins .......................................................................5 Key Characteristics......................................................... 12 DoD Agencies’ Roles in Management and Oversight ..................... 17 Contract Structure and Operating Mechanism............................ 22 The Work Scope and WBS ............................................. 23 Obtaining Services ...................................................... 24 The Award Fee and the Evaluation Process............................. 34 The Contract Data Requirements List and Other Tools ............... 39 Summary and Observations ............................................... 40 CHAPTER THREE Risk Management in Theory and Practice .............................. 43 What Is Risk? .............................................................. 44 v vi Risk Management and Performance in the Balkans Support Contract Practical Guidance for Managing Risk .................................... 46 Applying Risk Management Principles to the BSC........................ 49 Identifying Potential Hazards........................................... 50 Mapping Hazards to Root Causes ...................................... 53 Risk Management Strategies and Tools in the BSC .................... 63 Assessing the BSC Track Record .......................................... 70 Concerns About Performance .......................................... 71 Concerns About Safety of Personnel.................................... 85 Summary and Observations ............................................... 89 CHAPTER FOUR Conclusions and Lessons Learned ....................................... 91 APPENDIX A. Scope of Work and Work Breakdown Structure .................... 95 Bibliography .............................................................. 101 Figures S.1. Five-Step Risk Management Process...............................xv 2.1. Source-Selection Organizational Structure ....................... 10 2.2. Orders, Reviews, and Approvals for Unprogrammed New Work ........................................................ 29 2.3. BSC Funding by Location ........................................ 33 2.4. Award Fee Schedule............................................... 38 3.1. Five-Step Risk Management Process.............................. 47 3.2. Risk Assessment Matrix: Assessing Severity and Probability...... 48 3.3. The Proximate Causes of a Generic Performance Failure ........ 55 3.4. “You Get What You Ask For” .................................... 57 3.5. Incentives and Quality-Cost Trade-Offs ......................... 58 3.6. Planning or Coordination Failures ............................... 60 3.7. Evaluation Scores ................................................. 78 vii Tables and Box Tables 2.1. Total BSC Contract Costs ..........................................4 2.2. Estimates of LOGCAP Contract Costs, FY 1993–FY 1996...... 11 2.3. DoD Agencies’ Responsibilities for Overseeing the BSC......... 18 2.4. Recurring
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