REDACTED_CAO-18-0069_HQDA_Strategic_Redacted.pdf

Contractor: McKinsey & Company, Inc.

Program/Equipment: HQDA Strategic Management A&AS

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JUSTIFICATION REVIEW DOCUMENT

FAR 8.405-6 LIMITED SOURCES JUSTIFICATION

UNDER THE GENERAL SERVICES ADMINISTRATION

FEDERAL SUPPLY SCHEDULE PROGRAM

Program/Equipment: This acquisition is for the procurement of additional integrated consulting services in support of the effort, “Strategic Management Advisory and Assistance Services,” executed in support of the Secretary of the Army (SA) and Chief of Staff, Army (CSA).

Authority: Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251, et. Seq) and Title 40 U.S.C. 501, Services for Executive Agencies, as implemented by FAR 8.405-6.

Amount:

Prepared by:

Contracting Officer:

Technical:

Requirements:

Reviews: I have reviewed this justification and find it adequate to support limiting competition.

Program Manager:

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Legal Counsel:

Group Manager:

Center Director:

Associate Director:

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FAR 8.405-6 LIMITED SOURCES JUSTIFICATION

UNDER THE GENERAL SERVICES ADMINISTRATION

FEDERAL SUPPLY SCHEDULE PROGRAM

1. Contracting Activity: U.S. Army Contracting Command – New Jersey

2. Description of Action: The Office of the Deputy Under Secretary of the Army (ODUSA) requests a Firm-Fixed-Price (FFP) modification to Task Order W15QKN-16-F- 0089, which was issued under General Services Administration (GSA) Federal Supply Schedule (FSS) GS-10F-0118S, Special Item Number (SIN): 874-1, Integrated Consulting Services, with McKinsey & Company, Inc. (McKinsey), 1200 19th St NW, Suite 1100, Washington DC, 20036. Projected award is 1st Quarter FY18, using

An acquisition plan is not required because this procurement does not meet the threshold at Defense Federal Acquisition Regulation Supplement 207.103(d) (i) (B).

3. Description of Supplies/Services: With steady demands for operational units, a smaller Army, and declining budgets, the Headquarters, Department of the Army (HQDA) must continually seek means to evaluate how it accomplishes its work and streamlines processes, and revises work tempo to focus on strategic value. The stand-up of the “Modernization Command” is at the core of this effort, which will allow the Army to specifically focus on how it accomplishes its work and streamlines processes, as well as revises work tempo to focus on strategic value, ultimately providing the modernization required for success in both the current and future operating environments. Under its existing “Strategic Management Advisory and Assistance Services” contract, McKinsey documented the degree to which the Army’s current organizational design and processes are inadequate for the pace of innovation and adaptation required in the world today. Diffusion of responsibility, an overly stove-piped approach and a narrow focus on present challenges have hindered the Army’s modernization efforts and inhibit its ability to achieve the desired competitive advantage over present and potential adversaries. As set forth in their recent Memo, “Modernization Priorities for the United States Army” (03 October 2017), the Chief of Staff of the Army (CSA) and the Acting Secretary of the Army (SA) concluded that, “to implement the necessary changes, our Army will establish unity of command and unity of effort that consolidates the modernization process under one roof.” The overall goal of this effort is to improve the department’s ability to make higher quality, short term decisions and create room to engage more substantively in strategic decisions. As such, under this modification, McKinsey will continue to utilize its highly relevant knowledge and experience to partner with the SA and CSA to further improve the decision patterns, information, and workflows of the Modernization Command. In addition, McKinsey’s support includes facilitating executive engagement to enable current state assessments, processes, skills, material, strategy refinements, roadmap development, briefing support, and monthly status reporting. While the results achieved to date under the current task order have been beneficial, additional support services are required to conduct an assessment of the Chief of Staff of the Army’s vision for a future modernization enterprise and its corresponding impact across the entirety of the HQDA.

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Specifically, McKinsey will utilize their skillset to achieve the following core objectives under the task order modification:

1. Develop and define a high level leadership/governance structure and pathway to the future operating state, addressing as applicable, various report elements, to include such things as governance functions, processes, and external touch points.

2. Determine the conditions and notional timelines and roadmap necessary for successful implementation of a future modernization enterprise concept, to include any statutory, policy or regulatory constraints, as well as budget/resource implications.

3. Describe a future state operating model with design options for achieving an initial operating capability. Options should address the structure and organization of project/functional management teams required to produce the desired end state.

4. Provide any and all strategic and leadership communications/briefings, as well as stakeholder engagement plans.

As a result of adding the above requirements to the effort, it is anticipated that the total value of the current task order will increase by

, and that the additional work will be accomplished during a four (4) month Period of Performance.

4. Authority Cited: Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251, et. Seq) and Title 40 U.S.C. 501, Services for Executive Agencies, as implemented by FAR 8.405-6 and substantiated by the following: FAR 8.405-6(a) (1)

(i) (C): “In the interest of economy and efficiency, the new work is a logical follow-on to an original Federal Supply Schedule order provided that the original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures. The original order or BPA must not have been previously issued under sole-source or limited-sources procedures.”

5. Reason for Authority Cited: The original competitive task order, W15QKN-16-F- 0089, was awarded to McKinsey & Company, Inc. on 23 September 2016 with a total Firm Fixed Price of , and a Period of Performance of twelve (12) months.

The purpose of the task order is for McKinsey to provide integrated consulting services, leveraging their knowledge and experience to partner with the SA and CSA to improve the decision patterns, information, and workflows at the highest levels of the Department of the Army, ultimately resulting in the development of a roadmap with specific recommendations aimed at positively impacting internal processes at HQDA. The original task order was not previously issued under sole-source or limited-sources procedures. The consulting services requirement was competed amongst all GSA SIN 874-1 schedule holders that were identified through Market Research to provide C-suite level consultation services. Upon receipt of proposals, a proper evaluation was conducted, and ultimate selection made, resulting in a final award to McKinsey.

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The requested services are directly connected to the initial task order requirements performed by McKinsey, as this modification will allow the team to build upon the results achieved to date, and now focus on conducting an assessment of the Chief of Staff of the Army’s vision for the future modernization enterprise and its corresponding impact across the entirety of the HQDA. More specifically, this added support will integrate the results of previously completed process assessments and strategies, and assist in determining the roadmap necessary for successful implementation of a future modernization enterprise concept. Once fully operational, the Modernization Command shall produce/execute a single coherent modernization strategy; exercise decision rights on modernization funding (including S&T and RDT&E budgets); define future operating environment/capability gaps/opportunities, and future operating concepts; develop /test/validate concepts; define material/non-material requirements; and serve as the Army’s interface for modernization activities within DOD, industry, academia, and coalition partners. Upon reviewing all recommendations thoroughly, implementation is the next logical step in a process improvement effort such as this, allowing the Government to collaborate with McKinsey on the implementation of only those recommendations that will positively impact HQDA operations to the greatest extent, resulting in sustainable change.

The time required for an alternative vendor to obtain the necessary knowledge and capabilities to continue this effort, would cause the Army to incur undue cost and schedule risk. The immediate impact of a service disruption would be an extensive and costly delay of a successful implementation of strategic initiatives, such as the CSA’s future modernization enterprise concept developed to date. Any contractor other than McKinsey would lack the detailed familiarity and expertise with the research already conducted, and assessments completed over the last year with the ongoing effort.

Specific emphasis is directed to HQDA tracking system data, CSA/SA calendar data, principal officials’ interview data, and strategic priorities data that is required to be fully digested and employed for the follow-on effort. Based on the total value of services obtained from McKinsey in support of the original task order to date, it is estimated that approximately in duplicated costs and a schedule delay would be realized by the Government if a new contractor was utilized to acquire or otherwise develop the skill sets of McKinsey, and ramp up to the Government’s desired state. This equates to about of familiarization at the incumbent's current GSA schedule rate for , which is per week.

The ramp up is reasonable given the volume of in-depth data collected, compiled, and evaluated over the last year, which is unavailable through any other source. A new contractor would be required to obtain and fully comprehend all of this unique data in order to proceed with the execution of the additional effort. If this Limited Sources Justification is not ultimately approved, the SA and CSA’s mission will be harmed, directly impacting the successful implementation of strategic initiatives already in progress, including the CSA’s future modernization enterprise concept. Therefore, based on all of the above information, it is most logical for this next phase of the process to be added to the current task order scope through a modification.

6. Actions to Increase Competition: The successful execution of this effort will assist in reducing the Government’s reliance on contractor support in the future, allowing HQDA

FOR OFFICIAL USE ONLY Page 6 of 9 to operate more effectively and efficiently, based on the implementation of the best recommendations. Through the execution of PWS requirements, the contractor will essentially train the leadership and associated staff in the proper application of critical procedures and processes, passing their methodology to the Government task force for implementation of the Modernization Command, properly positioning leadership to apply the learned methods throughout the organization in the future, with limited or no consultant support. While the initial task order award was competed, and an effort will be made to compete any future requirements of a similar nature to the greatest extent possible, it is noted that McKinsey will not license their proprietary methodologies, many of which are being leveraged in support of this effort.

7. Market Research: The ODUSA, in conjunction with the Army Contracting Command

– New Jersey, have conducted a significant web-based market research effort, completed 18 August 2016, to determine the feasibility of contractors being capable of performing the effort, “Strategic Management Advisory and Assistance Services.” Market research was conducted by the Government via internet searches and research on GSA Advantage, with a focus on cross-functional, team based consulting services. Personal knowledge in procuring services of this type was also utilized. Based on this research, it was determined that multiple GSA SIN 874-1 schedule holders possessed the required capabilities to execute the Government requirements. A competition was initiated amongst these contractors, and upon receipt of proposals, a proper evaluation conducted, with an ultimate award made to McKinsey for the initial task order scope. The results of the previous Market Research were validated by the ODUSA on 27 October 2017, via internet searches and research on GSA Advantage.

Although there are other contractors that could possibly perform the required additional support, none of them possess the extensive expertise that McKinsey has accumulated through execution of the initial task order requirements. McKinsey’s capabilities and experience are critical to the Army being able to successfully implement the recommendations that will ultimately be developed under the current task order. For the reasons set forth above, McKinsey & Company is the most logical and only source capable of meeting the Government’s immediate requirement for additional integrated consulting services in support of the effort, “Strategic Management Advisory and Assistance Services.”

8. Other Facts: N/A

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9. TECHNICAL CERTIFICATION: I certify that the supporting data under my cognizance which are included in the justification are accurate and complete to the best of my knowledge and belief.

Title: Executive Officer, ODUSA

10. REQUIREMENTS CERTIFICATION: I certify that the supporting data under my cognizance which are included in the justification are accurate and complete to the best of my knowledge and belief.

Title: Executive Officer, ODUSA

11. BEST VALUE DETERMINATION/FAIR AND REASONABLE COST

DETERMINATION: I hereby determine that the modification to be executed under Task Order W15QKN-16-F-0089, represents the best value to the Government in accordance with FAR 8.405-6(c)(2)(v). Additionally, I hereby determine that the anticipated cost or price to the Government for this contract action will be fair and reasonable. As certified cost or pricing data is not required per the exception at FAR 15.403-1(b)(3), this determination will be made using a price analysis, with the Government examining and evaluating the proposed price without evaluating its separate cost elements and proposed profit. Further, it is expected that the price analysis technique at FAR 15.404- 1(b) (2) (ii), will be used in determining the proposed price fair and reasonable.

Specifically, the Government will conduct a comparison of proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items.

Title: Contracting Officer

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12. CONTRACTING OFFICER CERTIFICATION: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Title: Contracting Officer

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Approval

Based on the foregoing justification, I hereby approve the modification to Task Order W15QKN-16-F-0089, for the procurement of additional integrated consulting services in support of the effort, “Strategic Management Advisory and Assistance Services,” under Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251, et Seq.) and Title 40 U.S.C. 501, Services for Executive Agencies, as implemented by FAR 8.405-6(a)(1)(i)(C), “In the interest of economy and efficiency, the new work is a logical follow-on to an original Federal Supply Schedule order provided that the original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures. The original order or BPA must not have been previously issued under sole-source or limited-sources procedures,” subject to availability of funds, and provided that the services or supplies herein described have otherwise been authorized for acquisition.