Vanceagenda.ppt

Develop America's Airmen Today ... for Tomorrow

AGENDA

4 Apr 06 8:00–8:30 Sign-in

Service Area

14:30- Pre-scheduled One-on-One Sessions

5 and 6 Apr Pre-scheduled One-on-One Sessions

UNKNOWN-0.ppt

Contracting / Most Efficient Organization (MEO) Perspective

Col Teresa Dicks

AETC/LG

Air Education and Training Command

I n t e g r i t y - S e r v i c e - E x c e l l e n c e

POCs: Maj Rese Farrish, HQ AETC/LGCM, DSN: 487-2816 (Primary)

Mr Keith Berger, HQ AETC/LGP, DSN: 487-3121 (Alternate)

MEO

Contractor

In-House (Mil/Civ)

Who Supports Our Mission

Sim MX/Instruction

Survival School

A/C Wash

512 SOS

Sim MX/Instruction

ERRC

CE, A field,V ops

Sim MX/Instruction

21 FS

Rg MX; Sim MX/ Inst.

Sim MX

Sim MX/ Inst.

Backshop

CE

OPR: LGCQ

Base A/C MX Trans Alert Supp Trans Fuels Ops BOS

Altus

Columbus

Fairchild

Ft. Rucker

Goodfellow

Keesler Trainer MX/PMEL

Kirtland ATARS School

Lackland Trainer MX

Laughlin

Little Rock

Luke

Maxwell PMEL

Moody Sim MX/ Inst.

Pensacola

Randolph AIS SIM MX

Sheppard

Tyndall Sim MX/ Inst & AMB MX

USAFA AFS

Vance Sim MX/Instruction

Contract Cost Creep

Monitor and Control it

AETC service contracts represent $1B in “Must Pay” Bills

We’ve paid for a level of service—any changes will cost money—money that we may not have

Arbitrary or unnecessary changes cost $$$ and the contractor may ask for equitable adjustment

Changes in average sortie duration (ASD)

Abrupt changes in weekly/daily flying schedule

Additional CAP and spare requirements

Increase in cross country support

Changes cost money

Most Efficient Organization

A “Contract” Also

Most Efficient Organizations

Must operate within the Work Statement to include meeting contract performance standards

Cannot take on additional requirements (work) without modification to work statement

Like contracts -- Funding and new authorizations must be approved before new requirements can be implemented

Post MEO review conducted by AF Audit agency

Validation of proposed labor requirements (cost) and compliance with performance standards

MEO’s and Contracts work the same way

“pay as you go”

Example Contract Cost Structure

Target Cost

T-1A $ 3,579,922.25

T-37 $ 6,465,021.89

T-38 $ 6,103,928.59

Other Target Cost (Includes management, HR, QA, P&S, Training, MOC, PMEL,TA) $ 3,750,693.22

Total Target Cost $19,899,565.95

Total Target Profit (2.0% of Target Cost) 397,991.32

Total Target Price $20,297,557.27

Ceiling Price (103% of Target Cost) $20,496,552.93

Award Fee Pool (6% of Total Target Cost) $ 1,193,973.96

Award Fee – Powerful Motivator

In a capitalist environment, money tends to influence people to improve quality, responsiveness and productivity

Through positive management, contractors can increase profit potential

Rewards contractor for exceeding command expectations

Emphasizes key areas of management concern

Award Fee

FDO controls large percent of the contractors profit

Contractor profit 2% + a possible 6% award fee

Example: $447,913 profit + $1,185,855 award fee

Profit is paid automatically – contractual requirement

Award fee dollars are not a given – must be earned

Award fee is earned for exceeding stakeholders (internal and external) expectations

Do award for exceptional service – Quality, timeliness, and in a professional manner

Pitfalls to Avoid

Routinely rewarding contractors (via award fee) for just meeting contract requirements

Becoming sympathetic to low profit margins

Being too generous -- losing your award fee incentive power to influence behavior and motivate them to embrace continuous process/performance improvement

“We make money the old fashion way” – “We earned it”

Smith-Barney “80s famous line”

Award Fee Components

40% Technical Operations

Sufficient aircraft to support wing’s flying mission

MC, TNMCM, fleet time, FOD

AGE, PMEL, TA, survival equipment, munitions, MOC support

40% Program Management

Productivity Improvement

Technical evaluations/training

Top management involvement

QC, plans and programs

Flight line operations, corrosion control, aircraft cleanliness, cross country support

20% Efficient Use of Govt Resources

Reduce O&M cost

Resource Mgt

Env & Haz waste Mgt

Award Fee Process

Aircraft Maintenance Chief QAP / QAE

Contractor RecommendationBriefing

Award Fee Review Board

(AFRB)

Aircraft Maintenance QAP / QAE

Wing Commander:

Chairperson and Fee Determining Official (FDO)

CV, OG/CC, MXG/CC, MSG/CC Voting Members

Contracting Officer is Secretariat and a Non-Voting Member

It’s About Performance

As performance and services increase, award fees should increase

As performance and services decrease, award fees should decrease

Several companies share award fee earnings with employees – encouraged by Air Force leadership

Award Fees build cooperation and participation while focusing on the mission

Award Fees / Performance

Though performance may decrease, events beyond contractors control may still warrant an award fee

Weather related; e.g., ice storms, wind/hail damage

Absence of government provided parts and services

Award fee should reflect

Achievement of Air Force and Command awards

Superior support for special events; e.g., airshows, open house, VIP visits, etc.

Performance / Award Fee Trends

Example

Superior support during ice storm and command awards

Maintenance work areas need management attention; e.g., TO upkeep, tool control, supply management, etc.

Superior performance during contractor changeover

Carrot or Stick?

Why Unions?

Profit margins are low for service contracts (2%)

Dept of Labor (DoL) establishes prevailing wage rates and benefits—with little to no increase each year

If the contractor increases wage rates outside of DoL adjustments, increases comes out of the Contractor’s pocket

A Union derived CBA produces better wages and benefits than DoL derived rates

Contractor pays CBA determined wages and passes increases to the Government—no impact to profit

Allows reasonable wages without hurting profit

Labor Relations

All AETC aircraft maintenance contracts have Collective Bargaining Agreements

Neutrality is required!

Good relations are encouraged but avoid perceptions of favoritism

Politically Sensitive, Emotionally Powerful Issues

Balancing Act

Union

- Invite union rep to attend award presentations involving union workforce

- Okay to invite union rep to social functions but also invite the contractor

- Notify union in advance of information that will be made public

- Involve union rep in disaster response and preparation

A Good Relationship

A Good Idea

Appear to favor the contractor or the union

GOOD

BAD

- Do not discuss planning or business decisions with union representatives

CAUTION

Staff Meeting Protocol

You can invite the Union Rep to staff meetings

. . .but we don’t recommend it

- Always a threat of “Unfair Labor Practice” charges

- Attempt to stop union attendance at a later date

- Claims against actions taken in absence of Rep

- Union Rep not bound or limited with the Press

- It’s not just a local issue--there are over 13M members of organized labor, large corporations and elected officials with a vested interest in the outcome

Labor Relations “9-1-1”

Start with CONS/CC

Labor Strike Plan Guide--a step-by-step guide

HQ AETC Labor Relations Working Group ready to help—not just for strikes, any labor issues

Team led by LGC includes PA, JA, SF, DP and Functionals

Reports to CAT and AETC/CC/CV

If required; can bring in the big boys

AF Labor Advisors, Federal Mediators, senior Union and Company Officials

Labor issues? Rumors of labor unrest?

Call Mr. Ira Garrett, AETC/LGC, DSN: 487-2519

Chairman, Labor Relations Working Group

If a Strike is Pending

News Media will want Wing CC viewpoint – Do not make press release unless approved by your Legal, PA and AF Labor Advisors

Other unions may choose not to cross picket line i.e., BX/Commissary deliveries, construction workers

WARNING

Call your CONS! --strike plans are in place

Pass could be requested from union to come on base and organize – Grant it!

Things to Remember

Motivate the Contractor with the proper Award Fee

Develop good contractor/labor force relationships

Get the Labor Relations Working Group involved early

Make the Award Fee determination on emotion

Obligate the government on your own

DO

DON’T

Questions?

UNKNOWN-1.ppt

SOLICITATION

Fixed Fee Incentive Portion

Target Cost

Each Aircraft (T-1A, T-6 and T-38C plus IFF)

Precision Measurement Equipment Laboratory

Other Direct Cost

BOS

Target Profit

Ceiling Price

Share Formula: Gov/Offeror

Over Target ___/___ *

Under Target __/__

* The government will expect contractors to absorb at least 50% of cost overruns

Adjustment Rates

Total Active Inventory (TAI) rate

Flying hour adjustment rate

Firm Fixed Price

Mobilization/changeover

Award Fee – A set amount per year, possibly $2M

(Award Fee is NOT profit)

Profit – A minimum Target Profit Rate of 3%

Total Evaluated Price will be used in the source selection decision

CLIN Prices evaluated for realism and reasonableness

Mobilization

Adjustment Rates

Other Direct Costs

CBA wages, including H&W fringe benefits

Technical proposal match cost proposal

Cost Items to Notice

Vehicles- all vehicles will be contractor furnished (except fire and fuel and large tow)

Clearances - National Agency Checks required on all employees with access to government network

Provider Furnished – Look at Part 23 of Applicable to All Services, plus each function may have additional

Mr Keith Berger, HQ AETC/LGP, DSN: 487-3121 (Alternate)

Survival School

A/C Wash

512 SOS

ERRC

CE, A field,V ops

21 FS

Rg MX; Sim MX/ Inst.

Sim MX

Sim MX/ Inst.

Backshop

CE

OPR: LGCQ

Base A/C MX Trans Alert Supp Trans Fuels Ops BOS

Altus

Columbus

Fairchild

Ft. Rucker

Goodfellow

Keesler Trainer MX/PMEL

Kirtland ATARS School

Lackland Trainer MX

Laughlin

Little Rock

Luke

Maxwell PMEL

Moody Sim MX/ Inst.

Pensacola

Randolph AIS SIM MX

Sheppard

Tyndall Sim MX/ Inst & AMB MX

USAFA AFS

Vance Sim MX/Instruction

AETC service contracts represent $1B in “Must Pay” Bills

We’ve paid for a level of service—any changes will cost money—money that we may not have

Arbitrary or unnecessary changes cost $$$ and the contractor may ask for equitable adjustment

Changes in average sortie duration (ASD)

Abrupt changes in weekly/daily flying schedule

Additional CAP and spare requirements

Increase in cross country support

Most Efficient Organizations

Must operate within the Work Statement to include meeting contract performance standards

Cannot take on additional requirements (work) without modification to work statement

Like contracts -- Funding and new authorizations must be approved before new requirements can be implemented

Post MEO review conducted by AF Audit agency

Validation of proposed labor requirements (cost) and compliance with performance standards

T-1A $ 3,579,922.25

T-37 $ 6,465,021.89

T-38 $ 6,103,928.59

Other Target Cost (Includes management, HR, QA, P&S, Training, MOC, PMEL,TA) $ 3,750,693.22

Total Target Cost $19,899,565.95

Total Target Profit (2.0% of Target Cost) 397,991.32

Total Target Price $20,297,557.27

Ceiling Price (103% of Target Cost) $20,496,552.93

Award Fee Pool (6% of Total Target Cost) $ 1,193,973.96

In a capitalist environment, money tends to influence people to improve quality, responsiveness and productivity

Through positive management, contractors can increase profit potential

Rewards contractor for exceeding command expectations

Emphasizes key areas of management concern

FDO controls large percent of the contractors profit

Contractor profit 2% + a possible 6% award fee

Profit is paid automatically – contractual requirement

Award fee dollars are not a given – must be earned

Award fee is earned for exceeding stakeholders (internal and external) expectations

Do award for exceptional service – Quality, timeliness, and in a professional manner

Routinely rewarding contractors (via award fee) for just meeting contract requirements

Becoming sympathetic to low profit margins

Being too generous -- losing your award fee incentive power to influence behavior and motivate them to embrace continuous process/performance improvement

Sufficient aircraft to support wing’s flying mission

MC, TNMCM, fleet time, FOD

AGE, PMEL, TA, survival equipment, munitions, MOC support

Productivity Improvement

Technical evaluations/training

Top management involvement

QC, plans and programs

Flight line operations, corrosion control, aircraft cleanliness, cross country support

Reduce O&M cost

Resource Mgt

Env & Haz waste Mgt

Award Fee Review Board

(AFRB)

Aircraft Maintenance QAP / QAE

Several companies share award fee earnings with employees – encouraged by Air Force leadership

Though performance may decrease, events beyond contractors control may still warrant an award fee

Weather related; e.g., ice storms, wind/hail damage

Absence of government provided parts and services

Award fee should reflect

Achievement of Air Force and Command awards

Superior support for special events; e.g., airshows, open house, VIP visits, etc.

Maintenance work areas need management attention; e.g., TO upkeep, tool control, supply management, etc.

Profit margins are low for service contracts (2%)

Dept of Labor (DoL) establishes prevailing wage rates and benefits—with little to no increase each year

If the contractor increases wage rates outside of DoL adjustments, increases comes out of the Contractor’s pocket

A Union derived CBA produces better wages and benefits than DoL derived rates

Contractor pays CBA determined wages and passes increases to the Government—no impact to profit

All AETC aircraft maintenance contracts have Collective Bargaining Agreements

Neutrality is required!

Good relations are encouraged but avoid perceptions of favoritism

Appear to favor the

- Always a threat of “Unfair Labor Practice” charges

- It’s not just a local issue--there are over 13M members of organized labor, large corporations and elected officials with a vested interest in the outcome

Start with CONS/CC

Labor Strike Plan Guide--a step-by-step guide

HQ AETC Labor Relations Working Group ready to help—not just for strikes, any labor issues

Team led by LGC includes PA, JA, SF, DP and Functionals

Reports to CAT and AETC/CC/CV

If required; can bring in the big boys

AF Labor Advisors, Federal Mediators, senior Union and Company Officials

News Media will want Wing CC viewpoint – Do not make press release unless approved by your Legal, PA and AF Labor Advisors i.e., BX/Commissary deliveries, construction workers

Call your CONS! --strike plans are in place

Pass could be requested from union to come on base and organize – Grant it!

Motivate the Contractor with the proper Award Fee

Develop good contractor/labor force relationships

Get the Labor Relations Working Group involved early

Make the Award Fee determination on emotion

Obligate the government on your own

UNKNOWN-2.ppt

Fixed Fee Incentive Portion

Target Cost

Each Aircraft (T-1A, T-6 and T-38C plus IFF)

Precision Measurement Equipment Laboratory

Other Direct Cost

BOS

Target Profit

Ceiling Price

Share Formula: Gov/Offeror

Over Target ___/___ *

Under Target __/__

* The government will expect contractors to absorb at least 50% of cost overruns

Adjustment Rates

Total Active Inventory (TAI) rate

Flying hour adjustment rate

Firm Fixed Price

Mobilization/changeover

Award Fee – A set amount per year, possibly $2M

(Award Fee is NOT profit)

Profit – A minimum Target Profit Rate of 3%

Total Evaluated Price will be used in the source selection decision

CLIN Prices evaluated for realism and reasonableness

Mobilization

Adjustment Rates

Other Direct Costs

CBA wages, including H&W fringe benefits

Technical proposal match cost proposal

Cost Items to Notice

Vehicles- all vehicles will be contractor furnished (except fire and fuel and large tow)

Clearances - National Agency Checks required on all employees with access to government network

Provider Furnished – Look at Part 23 of Applicable to All Services, plus each function may have additional

Mr Keith Berger, HQ AETC/LGP, DSN: 487-3121 (Alternate)

Survival School

A/C Wash

512 SOS

ERRC

CE, A field,V ops

21 FS

Rg MX; Sim MX/ Inst.

Sim MX

Sim MX/ Inst.

Backshop

CE

OPR: LGCQ

Base A/C MX Trans Alert Supp Trans Fuels Ops BOS

Altus

Columbus

Fairchild

Ft. Rucker

Goodfellow

Keesler Trainer MX/PMEL

Kirtland ATARS School

Lackland Trainer MX

Laughlin

Little Rock

Luke

Maxwell PMEL

Moody Sim MX/ Inst.

Pensacola

Randolph AIS SIM MX

Sheppard

Tyndall Sim MX/ Inst & AMB MX

USAFA AFS

Vance Sim MX/Instruction

AETC service contracts represent $1B in “Must Pay” Bills

We’ve paid for a level of service—any changes will cost money—money that we may not have

Arbitrary or unnecessary changes cost $$$ and the contractor may ask for equitable adjustment

Changes in average sortie duration (ASD)

Abrupt changes in weekly/daily flying schedule

Additional CAP and spare requirements

Increase in cross country support

Most Efficient Organizations

Must operate within the Work Statement to include meeting contract performance standards

Cannot take on additional requirements (work) without modification to work statement

Like contracts -- Funding and new authorizations must be approved before new requirements can be implemented

Post MEO review conducted by AF Audit agency

Validation of proposed labor requirements (cost) and compliance with performance standards

T-1A $ 3,579,922.25

T-37 $ 6,465,021.89

T-38 $ 6,103,928.59

Other Target Cost (Includes management, HR, QA, P&S, Training, MOC, PMEL,TA) $ 3,750,693.22

Total Target Cost $19,899,565.95

Total Target Profit (2.0% of Target Cost) 397,991.32

Total Target Price $20,297,557.27

Ceiling Price (103% of Target Cost) $20,496,552.93

Award Fee Pool (6% of Total Target Cost) $ 1,193,973.96

In a capitalist environment, money tends to influence people to improve quality, responsiveness and productivity

Through positive management, contractors can increase profit potential

Rewards contractor for exceeding command expectations

Emphasizes key areas of management concern

FDO controls large percent of the contractors profit

Contractor profit 2% + a possible 6% award fee

Profit is paid automatically – contractual requirement

Award fee dollars are not a given – must be earned

Award fee is earned for exceeding stakeholders (internal and external) expectations

Do award for exceptional service – Quality, timeliness, and in a professional manner

Routinely rewarding contractors (via award fee) for just meeting contract requirements

Becoming sympathetic to low profit margins

Being too generous -- losing your award fee incentive power to influence behavior and motivate them to embrace continuous process/performance improvement

Sufficient aircraft to support wing’s flying mission

MC, TNMCM, fleet time, FOD

AGE, PMEL, TA, survival equipment, munitions, MOC support

Productivity Improvement

Technical evaluations/training

Top management involvement

QC, plans and programs

Flight line operations, corrosion control, aircraft cleanliness, cross country support

Reduce O&M cost

Resource Mgt

Env & Haz waste Mgt

Award Fee Review Board

(AFRB)

Aircraft Maintenance QAP / QAE

Several companies share award fee earnings with employees – encouraged by Air Force leadership

Though performance may decrease, events beyond contractors control may still warrant an award fee

Weather related; e.g., ice storms, wind/hail damage

Absence of government provided parts and services

Award fee should reflect

Achievement of Air Force and Command awards

Superior support for special events; e.g., airshows, open house, VIP visits, etc.

Maintenance work areas need management attention; e.g., TO upkeep, tool control, supply management, etc.

Profit margins are low for service contracts (2%)

Dept of Labor (DoL) establishes prevailing wage rates and benefits—with little to no increase each year

If the contractor increases wage rates outside of DoL adjustments, increases comes out of the Contractor’s pocket

A Union derived CBA produces better wages and benefits than DoL derived rates

Contractor pays CBA determined wages and passes increases to the Government—no impact to profit

All AETC aircraft maintenance contracts have Collective Bargaining Agreements

Neutrality is required!

Good relations are encouraged but avoid perceptions of favoritism

Appear to favor the

- Always a threat of “Unfair Labor Practice” charges

- It’s not just a local issue--there are over 13M members of organized labor, large corporations and elected officials with a vested interest in the outcome

Start with CONS/CC

Labor Strike Plan Guide--a step-by-step guide

HQ AETC Labor Relations Working Group ready to help—not just for strikes, any labor issues

Team led by LGC includes PA, JA, SF, DP and Functionals

Reports to CAT and AETC/CC/CV

If required; can bring in the big boys

AF Labor Advisors, Federal Mediators, senior Union and Company Officials

News Media will want Wing CC viewpoint – Do not make press release unless approved by your Legal, PA and AF Labor Advisors i.e., BX/Commissary deliveries, construction workers

Call your CONS! --strike plans are in place

Pass could be requested from union to come on base and organize – Grant it!

Motivate the Contractor with the proper Award Fee

Develop good contractor/labor force relationships

Get the Labor Relations Working Group involved early

Make the Award Fee determination on emotion

Obligate the government on your own