Justification and Approval.pdf

April 3, 2020

Control No. 2020-WHS-0077

JUSTIFICATION FOR

OTHER THAN FULL AND OPEN COMPETITION (JOFOC)

UNDER FEDERAL ACQUISITION REGULATION FAR SUBPART 6.3

1. AGENCY AND CONTRACTING ACTIVITY:

Agency:

The Department of Defense (DoD) Chief Management Officer

Contracting Activity:

The Department of Defense (DoD) Washington Headquarters Services (WHS) Acquisition Directorate (AD), EOSD

2. DESCRIPTION OF ACTION: WHS AD proposes to issue one follow-on a contract to each of incumbents The Boston Consulting Group, Inc. (BCG) and McKinsey & Company, Inc. Washington, D.C. The proposed follow-on contracts will be issued through other than full and open competition. The follow-on contracts are going to be issued as Firm-Fixed-Price and with an estimated value of $50,000,000.00 for BCG and $50,000,000.00 for McKinsey. The anticipated period of performance is for a base period of six months with three 1-month option periods.

3. DESCRIPTION OF SUPPLIES/SERVICES: The Government requires qualitative and quantitative assessments services to conduct the 90+ day sprints, each focusing on approximately $500 million in spend while deploying the capability and training within 9 months. DEPSECDEF tasked the OSD Chief Management Officer (CMO) to partner with MILDEPs and Fourth Estate Agencies in FY18 to implement Category Manage-ment. Since FY18, BCG and McKinsey have successfully executed Sprints 1-4 and kicked off Sprint 5 in FY20. The Department is seeking to improve speed to decision and accountability for more savings sooner to support lethality. This additional work will support the acceleration of the sprint assessments and the Defense Wide Review of the Department Defense Agencies in support of the Secretary’s guidance and must begin in April 2020. The proposed effort to ensure continuity includes:

Qualitative and quantitative assessment of the spend in the contract or cat-egory selected

Assessment of the performance of the contract in terms of output

DEPARTMENT OF DEFENSE

WASHINGTON HEADQUARTERS SERVICES

1155 DEFENSE PENTAGON

WASHINGTON, DC 20301-1155

Acquisition Directorate

Should cost analysis Comparison of the spend in the contract or category to commercial bench-marks for similar goods and services Comparison of the contract performance to DoD-need and to commercial benchmarks for similar goods and services Identification of potential opportunity areas or “levers” which the Govern-ment can use to create cost savings Detailed backup analysis to support how cost savings opportunities were determined Development of a written implementation plan and contract negotiation strategy to measurably improve performance and cost and expected Return-on-Investment

Provide training opportunities, to include On The Job Training, for Govern-ment personnel (train-the trainer scenario)

Integrate ‘Lessons Learned’ from Pilot initiatives; Identify “Lessons Learned” upon completing 90+ Day Sprints to integrate into follow-on 90+ day Sprints

Provide to the Government all data collected in the performance of each 90+ day sprint, to include Government data collected (raw data) and data which has been manipulated by the contractor (filtered data) to arrive at its recommendation.

Organizational clean sheeting to provide an end-to-end view of efficiency and effectiveness opportunities for a specific organization

Support deployment of category management capability

In an effort to standardize process, each 90+ Day sprint shall consist of the following:

Pre-sprint activities inclusive of assisting with data collection and review Joint kickoffs which include:

Charters (scope to be assessed, contracts impacted, organizations in-volved)

Roles and Responsibilities mapping Stakeholder/Leadership reporting plan

Overall Sprint Plan of Action & Milestones (POA&M) to include meeting cadence & delivery of key deliverables

Savings reporting, definitions and quantification.

This effort will also include support to clean sheeting to support the Defense Wide reform activities. This activity is embedded into the qualitative and quantitative assessments.

Establish a detailed baseline for the organization, which may include work vol-umes, performance levels, resource mix, customer experience levels, produc-tivity rates, and cost allocation.

Evaluate all the major functions performed and requirements fulfilled by the organization to assess factors such as i) whether the function/requirement is truly needed, ii) who else in the Department performs this function, iii) is the function/requirement “gold plated”, iv) how that requirement matches the true needs of the customer.

Determine opportunities for each clean sheet organization, including quick wins (e.g., what can be captured for FY22) and longer-term changes (e.g., what can be realized over the FYDP). Opportunity sizes should include savings as well as performance gains (e.g., improved speed, agility, and customer experience)

Create a future state blueprint for the organization, defining the new scope of the organization as well as how it could generate a step change improvement in performance using levers like automation, zero-based process redesign, inno-vative acquisition strategies, demand management, and advanced analytics/AI.

Develop an initial implementation roadmap that illustrates value capture mile-stones, resource requirements, and sequencing of key activities.

Design and deploy a balanced scorecard of core metrics that the clean sheet organization should be measuring on an ongoing basis.

4. AUTHORITY CITED: This action is authorized under provision of 10 U.S.C.

2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.

5. REASONS FOR AUTHORITY CITED: For the foregoing reasons, the Government has determined that only BCG and McKinsey are capable of performing these tasks within the required timeframe. The follow on work for Sprints 6 through 10 and clean sheeting will be based on analysis, proprietary software models and frameworks, learn-ing, confidence building and contacts made in Sprints 1-5 executed by BCG and McKinsey. Any new vendor would take a full year to be at the same level of under-standing and capabilities that the current vendors are now at. These capabilities are critical as Sprints 6 through 10 will be both more demanding and intensive than Sprints 1-5. The government requires inputs from Sprints 6 through 10 to inform POM 2022 and PB 2022 in support of the National Defense Strategy (NDS). No other vendor could move up the learning curve fast enough to meet these requirements. The previous sprints executed by BCG and McKinsey provide key insights into the success criteria that drive financial savings and capability development across DoD programs. These successes cover wide range of stakeholders and programs. As a result, the incumbent team would continue to build on prior work and leverage connections in the field to launch multiple operational pilot tests and design for scale. This would cause OCMO to fail in carrying out specific Secretary of Defense direction and fail to meet mission in support of the NDS

a. BCG and McKinsey & Company were awarded the initial task orders in July

2018. BCG and McKinsey & Company have been successfully performing under task order HQ003418-F-0331 and HQ0034-18-F0326 respectively.

These task orders were competitive awards that were competed on the CMO Reform BPAs and were derived from a Federal Supply Schedules, which delivered a DoD Reform Management Group (RMG) Management Framework Assessment to the Chief Management Officer (CMO). Part of this deliverable was to conduct assessments and analysis of contract categories in 90 days sprints.

The additional work will provide a more disciplined approach to executing sprints through cradle to grave value stream analysis to improve outcomes, apply milestone gate reviews to assess cost, quality and timelines metrics, and capture historical best practices.

b. Secretary Esper directed an aggressive and wide-ranging 2020 reform agenda in his January 6, 2020 memorandum titled “Department of Defense Reform Focus in business performance of Defense Wide accounts and organizations.

As principal for business reform across DoD, the Chief Management Officer will lead these Defense Wide reform efforts.

c. As directed by Secretary of Defense in his memorandum, and by the Deputy Secretary of Defense in his memorandum, Defense Wide Organization Transition to Chief Management Officer Governance, the Chief Management Officer will focus on reform business operations, overseeing resource-planning, allocation, and evaluating business operations against clearly defined performance metrics and goals.

The Department kicked off Defense Wide efforts in early February 2020. This work requires sprint analysis beginning in April 13, 2020. Additionally, the memo assigns the CMO new duties which now include establishing the defense wide budget. With this new responsibility, the CMO needs to do this work starting in April to inform the next DoD Program Objective Memorandum (POM) cycle which creates the next Presidents Budget.

d. The work to accomplish the tasks required to identify savings as part of the overall reform efforts as well as helping to meet the additional requirements levied on the CMO. This bridge contract will space 2-3 sprints which will accomplish significant analysis and identification of savings to inform the POM process and meet budget requirements. Only BCG and McKinsey can accomplish this work at this time although the Government intends to compete this work in the future to coincide with the completion of these bridge contracts.

e. The Government is well into its second quarter of FY20; therefore, it would be impossible to meet the accelerated sprint analysis phase which is targeted to begin in mid-April 2020, if the current vendors did not continue this work. As a result, in order to continue into the final phase of this work, the Government determined that the current vendors are the only vendors that could reasonably provide the work necessary to meet the deadlines staring in April 2020.

6. EFFORTS TO OBTAIN COMPETITON: On March 13, 2020, Washington Head-quarters Services issued a “Notice of Intent to Sole Source” on beta.SAM.Gov. The Notice of Intent was posted for fifteen days and closed on March 28, 2020 Based on the Notice of Intent, no vendor challenged the bridge contracts to BCG or McKinsey.

As previously mentioned, the Government will conduct a competitive acquisition and anticipating an award in Fiscal Year 2021. The Government will publicize a notice in beta.SAM.Gov, as required by FAR Subpart 5.102(a) and 5.2 to obtain competition.

7. FAIR AND REASONABLE COST DETERMINATION: The Contracting Officer hereby determines that this action represents the best value to the Government, in that the level of effort agreed upon, is appropriate; the firms have vast experience in this area; and the contractors propose a price that is reasonable and in accordance with their published and historical pricing. Additionally, the Contracting Officer will review prices and conduct price analysis to ensure that they are fair and reasonable in accord-ance with FAR 15.404.

8. MARKET RESEARCH: WHS-AD issued a notice to industry of intent to award two short-term sole source bridge contracts for Qualitative and Quantitative Assessment Support Services to (1) The Boston Consulting Group, Inc. and (2) McKinsey & Com-pany, Inc. on March 13, 2020 with a 15 day suspense of March 28, 2020. No vendor responded to this notice.

WHS/AD will solicit this effort as a follow-on bridge contract in order to maintain continuity of support for CMO. The bridge contract will be issued as the most logical and cost effective strategy and solution to the Government which will avoid duplicative costs and unacceptable delays in fulfilling the agency’s requirement and a potential gap in performance of critical services while a competitive acquisition occurs.

9. OTHER FACTS: N/A

10. INTERESTED SOURCES: As previously mentioned above, no vendors challenged the Notice of Intent to issue the two sole source contracts.

11. ACTIONS TO INCREASE COMPETITON: The Government is in the planning phase for a 5-year contract for the same or similar services. This long term contract will be competed in accordance with FAR 8 or 12, depending acquisition strategy and mar-ket research. Either process will include the posting of Sources Sought on either beta.

SAM or GSA to obtain capability statements from industry, or other market research techniques listed under FAR Part 10. Based on market research, the Government will determine whether to solicit long-term requirement as a full and open or to set it aside to small businesses. Therefore, a competitive acquisition is currently being planned by WHS AD, and the anticipated award date for the new contract is scheduled for Fiscal Year 2021.

12. Is this acquisition for a non-competitive follow-on acquisition previously awarded on a non-competitive basis?

☒No. The original acquisition was conducted on a competitive basis.

CERTIFICATION

I, hereby, certify that the supporting data under my cognizance included in this justification are accurate and complete to the best of my knowledge and belief.

Jennifer L. Marroig Contracting Officer Representative/Program Office

Date (If not CAC signed)

Nikita N. Wimper Contracting Officer

CONCURRENCE

Base on the foregoing, I hereby concur with this justification and recommend for approval.

David H. Kao, Competition Advocate

David D. Sanders, Director, Acquisition Directorate

APPROVAL

Thomas M. Muir, Director, Washington Headquarters Services Date (If not CAC signed)