Competitive Strategies for Systems Acquisition & Life Cycle Management Published by Dayton Aerospace, Inc. 4141 Colonel Glenn Hwy, Suite 252 Dayton, Ohio 45431 937.426.4300 Print and Electronic Distribution Rights This publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without prior written permission of Dayton Aerospace—provided it is distributed in whole, without edit or manipulation, and Dayton Aerospace is properly credited as the source. If you have questions about using this document, please contact Dayton Aerospace at the address above. All photos are US Government works photographed by the US Air Force, US Army, and US Navy. Competitive Strategies for Systems Acquisition & Life Cycle Management Preface Competitive Strategies for Systems Acquisition and Life Cycle Management: A Practical Guide for Program Managers provides both industry and government program and product support managers (PM/PSMs), staffs, and other acquisition officials with a systematic guide to assess, implement, and execute successful competition strategies for government programs. This guide contains chapters on all phases of the weapon system’s life cycle including technology maturation and risk reduction (TMRR); engineering and manufacturing development (EMD); production and deployment; and operations and support (O&S). Numerous acquisition program case studies and examples are included to illustrate various competitive strategies. Finally, this guide draws upon relevant competition studies and literature to develop a decision framework for use in evaluating programs for competition. The competition decision framework (CDF) proposed in this guide has not been endorsed or approved by the US Air Force (USAF) or the Department of Defense (DOD). ii Competitive Strategies for Systems Acquisition & Life Cycle Management iii Competitive Strategies for Systems Acquisition & Life Cycle Management Acknowledgements This guide draws upon research and reports sponsored and/or published by the Department of Defense (DOD), Defense Acquisition University (DAU), Congressional Research Service (CRS), Government Accountability Office (GAO), Naval Postgraduate School (NPS), Air Force Institute of Technology (AFIT), RAND Corporation, Institute for Defense Analysis (IDA), University of Maryland, Technomics, and Dayton Aerospace, Inc. The genesis of this guide is the 1984 DOD Competition Handbook, Establishing Competitive Production Sources: A Handbook for Program Managers. William K. Stockman, PhD, Lt. Col., USAF (Ret) Thomas S. Wells, CFCM, SES, DAF (Ret) ABOUT THE AUTHORS Dr. Bill Stockman is a PhD economist who led, researched, developed, and taught many of the graduate acquisition programs at AFIT, including the cost estimating graduate program which covers the majority of topics in this guide. While on active duty, he developed and led the cost teams’ research and evaluations for the three largest depot competitions in USAF history. He has authored over 75 major study reports, books, and guidebooks—most notably, based on his research for a major USAF effort, a textbook on commercial derivative systems and how they play a major role in weapon system competitions. Mr. Tom Wells possesses an extensive background in government contracting and acquisition theory in the USAF’s largest acquisition and sustainment organizations, including as director, 711th Human Performance Wing, AFRL; director of contracting, Headquarters Air Force Materiel Command (AFMC); and director of contracting and competition advocate, USAF Electronic Systems Center (ESC) (now part of AFLCMC). As a highly-experienced procurement analyst, he has researched and published several USAF guides, handbooks, and templates on acquisition planning and competition strategies. During his multiple director-level assignments, he developed and/or executed many of the current competition strategies used today in the DOD, including authoring or approving hundreds of source selection documents, plans, and procurement policies/regulations. iv Competitive Strategies for Systems Acquisition & Life Cycle Management ABOUT DAYTON AEROSPACE Dayton Aerospace is a veteran-owned small business providing senior-level, hands-on support to both government and industry customers since 1984. All key personnel are retired senior military or US Government civilians, averaging over 30 years of experience in all technical and management disciplines essential to weapon system acquisition and sustainment. Our experts have held important government positions such as center/laboratory commander, system program director, chief engineer, program executive officer (PEO), AFIT department head, and director of various functional home offices such as contracting and financial management. Our team uses this experience to develop tightly focused products to support all phases of the DOD acquisition life cycle—for customers working programs for all military services in the US and internationally. To learn more about Dayton Aerospace, visit www.daytonaero.com. v Competitive Strategies for Systems Acquisition & Life Cycle Management Purpose and Organization Dayton Aerospace authored this competition guide to provide industry and government acquisition workforces with information and practical support for planning and effectively implementing competitive acquisition strategies throughout the systems acquisition life cycle. While this guide is meant to be a first stop for program managers and teams concerning competition, it is not designed to serve as the single source for all relevant acquisition knowledge and supporting tools. Readers should take advantage of the numerous footnotes and extensive bibliography contained within to research supporting topics, as needed, to effectively implement competition for their acquisition program. Government and industry program offices with potential competition opportunities are the primary audiences for this guide. The guide is written for mid- to senior-level professionals with some experience in acquisition and sustainment. Its intent is to help readers think through a wide range of competition strategies, rather than to dictate “schoolhouse” solutions. This guide relies heavily on current guidance and regulation, but the authors are well aware that DOD policies adapt on a regular basis to changes in the political, economic, and defense environments. Therefore, this guide presents strategies intended to cover a broad scope of policy alternatives, as appropriate. The acquisition team should not rely on this guide as an authoritative source for the most current regulation and policy. The guide is organized as follows: Chapter 1 – Competition Environment: The first chapter discusses unique attributes of the DOD acquisition and product support marketplace. While providing some general theory, this chapter’s purpose is to identify benefits of competition, potential barriers to competition, and methods to overcome these barriers. An overview of competition planning for the defense systems life cycle is presented along with an introduction to the competition decision framework (CDF) which is discussed in detail in later Chapters. Chapter 1 also summarizes major laws and regulations relating to competition for defense programs. Chapters 2-5 – Acquisition Process: The next four chapters provide insight into how competition can be introduced and/or maintained during each of the major acquisition phases defined by DODI 5000.02, Operation of the Defense Acquisition System. This guide distinguishes between competition for award of a contract (i.e., competition is used to select a single contractor to perform the effort required during the phase) and competition during the phase (i.e., more than one contractor receives a contract to perform the required effort). Maintaining competition during an acquisition phase can be used as a strategy to ensure that competition for subsequent phases is viable (i.e., avoiding a sole source situation for subsequent phases). Each chapter follows a similar outline intended to help the program manager assess their program, develop a competitive strategy, and then execute that strategy. Each chapter includes the following: ▪ Short introduction and description of the phase as it applies to competition strategies. ▪ Brief review of applicable regulations directly related to the phase. vi Competitive Strategies for Systems Acquisition & Life Cycle Management ▪ Detailed discussion of general and specific competition strategies, methods, and techniques applicable to that phase, and insight regarding the application of the discussed strategies. ▪ Discussion of current phase actions necessary to enable competition in future phases. ▪ Review of best practices and lessons learned applicable to the phase. ▪ Numerous case studies to demonstrate how competition strategies have been used on current and past programs—from brief examples to detailed descriptions of the competitive strategy, its execution, and the outcome. Chapter 6 – Competition Decision Framework: The final chapter presents a competition decision framework (CDF) which guides the evaluation of competition opportunities at each program phase. This evaluation is required at program inception and must be reviewed and updated at each milestone or major program change. The decision framework process has four parts that are detailed in this chapter: ▪ Assess competition considerations (technical, program, and market situations) ▪ Evaluate competitive strategy alternatives ▪ Conduct