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Pratt & Whitney Rocketdyne Supplier/Buyer Training July 21, 2009. Presenters. Ed Kasaba Greg Manley Gary Pedersen Jim Scarpati Mike Suever. Supplier Proposal Training. This training is generalized in nature Each Proposal has its specific requirements
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Pratt & Whitney Rocketdyne Supplier/Buyer Training July 21, 2009
Presenters • Ed Kasaba • Greg Manley • Gary Pedersen • Jim Scarpati • Mike Suever
Supplier Proposal Training This training is generalized in nature Each Proposal has its specific requirements No two Proposals are the same, but, many similarities do exist Programs tend to develop boilerplate RFQ/RFP packages tailored to their specific customer requirements Buyer’s tend to modify boilerplates to satisfy their needs – ensuring all requirements are there So, we recognize RFQ/RFPs from various programs/buyers look different – PWR working to standardize the process
AGENDA • Disclaimer Mike Suever • Proposal Cost Overview Greg Manley • Firewall Ed Kasaba • Proposal Process Greg Manley • Proposal Compliance Mike Suever • Generating the proposal Greg Manley • Make/Buy Mike Suever • Types of Estimates Greg Manley • RFP/RFQ Mike Suever • Difference of RFP and RFQ and RFI Gary Pedersen • Source Selection Gary Pedersen • PWR Evaluation Criteria Jim Scarpati & Greg Manley • Completing the PWR Proposal Greg Manley • Change Proposals Mike Suever
Customers PWR has different types of customers and sales as identified below: • Government contracts - Prime. These consist of sales to Department of Defense (DoD) (Army, Navy, Air Force, and other DoD agencies); National Aeronautical and Space Administration (NASA) development centers, laboratories, test centers; and other Government departments and agencies (e.g., transportation, energy, and so forth.). Also included are foreign military sales contracted through a DoD or Government agency. • Subcontract. Programs within PWR may be contracted as a subcontractor or team member to another aerospace company or team of contractors on a Government contract. • Commercial and direct foreign sales. These types of sales are to other companies for products or services not subject to government procurement regulations, and to foreign governments as a direct sale.
Types of Solicitations • RFP -- Request for Proposal • RFQ -- Request for Quote • ITQ -- Invitation to Quote • ECP -- Engineering Change Proposal • BAA -- Broad Agency Announcement • Used by DOD for basic and applied research not related to the development of a specific system or hardware procurement • CAN -- Cooperative Agreement Notice • Used to advance and commercialize technology where government has unique capabilities • NTE -- Not to Exceed Proposal • NRA -- NASA Research Announcement • Used by NASA for research interests in support of NASA programs • PRDA -- Program Research and Development Announcement • Used by DOD for exploratory research that has general application and is not system specific
Contract Types • Contract types are grouped into two broad categories: • Fixed price • Cost reimbursement • The specific contract types range from firm fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance cost and the negotiated fee is fixed. In between are the various incentive type contracts in which the contractor's responsibility for the performance costs and the profit a fee incentives offered are tailored to the uncertainties involved in contract performance. • Time and materials contracts offer characteristics of both fixed-price and Cost-reimbursement type contracts. Indefinite-delivery type contracts also offer unique contracting characteristics
Types of Contracts • Cost Reimbursable (Cost Type) • Cost Plus Percentage of Cost (Illegal) • Cost Plus Fixed Fee • Cost Plus Award Fee • Cost Plus Incentive Fee • Fixed Price • Firm Fixed Price • Fixed Price Level of Effort
Types of Contracts • Time and Material (T&M) Contracts • A T&M type contract provides for acquiring supplies or services on the basis of both a. Direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative (G&A) expenses, and profit. b. Materials at cost, including, if appropriate, material handling (overhead) costs as a part of material costs.
Contracting Methods • Formal advertising (sealed bid) is preferred by the Government • Contracting by negotiation is the alternative • Governed by FAR 15-101 • Basis for agreement on terms and price
Cost Type (Cost Reimbursable) • Costs are paid provided they are • Allowable – check FAR • Allocable – charge the right contract and comply with the CAS Disclosure Statement • Direct or Indirect or G&A • Fee is based on “Target Cost” • Proposal and negotiations determine target cost and are used to establish fee
Firm Fixed Price • Used when costs can be estimated with good assurance e.g., based on recent production cost experience • You do a defined job and get a defined payment • Can be used for large production contracts • Risks and opportunities are high
Fixed Price Level of Effort • Used for small contracts or task orders For example – • 200 hours @ $200 / hour. Bill hours at a rate. • Your billing rate includes your profit. • Subtleties about engineering hours vs. business hours • Ensure contract is clear.
Risk vs. Reward • Cost reimbursable contracts inherently have limited risk for the contractor. They are most frequently used for new technology and research and development contracts – not production. • Fixed price contracts involve risk. The contractor needs to deliver a good product no matter what the cost. • Profit opportunities may be greater on FP contracts than on cost reimbursable.
Contract Modifications • The Government uses the “Changes” clause to add or delete work • Must be in scope of original contract • Requires and “equitable adjustment” to contract cost, fee, period of performance, schedule, place of delivery, etc. • Change proposals are submitted and negotiated on a fairly routine basis
What Is A Winning Proposal? • Having defined a proposal, what is a winning proposal? • What are the characteristics of the proposal, the organization, and the solution which make it attractive to evaluators? A business proposal is a written offer from a seller to a prospective buyer. Business proposals are often a key step in the complex sales process--i.e., whenever a buyer considers more than price in a purchase. There are three distinct categories of business proposals: formally solicited, informally solicited, and unsolicited.
What Is A Winning Proposal? Winning proposals have four characteristics in common: • The supplier fully understands the needs and problems. • The supplier knows how to satisfy the needs or solve the problems and offers a suitable plan. • The supplier is well qualified by virtue of experience and resources, including personnel, to carry out the proposed plan; and • The price asked is reasonable and is within the organization's budget.
Governing Laws, Regulations & Policies • Legislation • Truth in Negotiations Act (TINA) • Anti-Trust Laws • Foreign Corrupt Practices Act • False Claims Act • Regulations • Federal Acquisition Regulations (FAR) • Cost Accounting Standards (CAS) • Policies • Government directives • Armed Services Pricing Manual (ASPM) • Defense Contract Audit Agency (DCAA) manual
PWR Firewall Training • Definition of a Firewall: • A process or procedure that limits the flow of information from, to, or within PWR. • It is used primarily where unrestricted access to the protected information might introduce bias or confer an actual or apparent unfair competitive advantage to PWR. • A firewall procedure specifies both how protected information will be treated and with whom authorized PWR employees (or consultants) may share the information.
PWR Firewall Training • Types of Firewall Work Restrictions: • Duration of the Firewall • Physical Segregation of Work • Electronic Segregation of Information • Past Employment Restrictions • Future Work Restrictions • Information Marking Requirements
PWR Firewall Training • Firewall Procedure/Process: • A firewall assures compliance with the terms of a Nondisclosure Agreement (NDA) with another company. • A NDA assures that PWR will use that company’s proprietary information only for the purposes identified in the NDA • A NDA assures that only a defined group (e.g., employees and possibly contract labor and/or consultants) who have a need to know the information will have access to that company’s proprietary information.
PWR Firewall Training • Firewall Procedure/Process (cont): • A firewall is appropriate when a Boeing organization is involved in assisting an agency (or other customer) to define the requirements for a program, and another organization within PWR is likely to bid for the program. - FAR 9.505-1 or 9.505-2 may prohibit PWR participation in the subsequent procurement because of the concern that PWR might craft the requirements so as to give it an advantage against potential competitors. • A firewall may arise where PWR is a participant on more than one team competing for a contract. - It assures that the PWR IPT’s supporting the different teams bidding for the contract do not share information about their team’s proposal with persons supporting any other team.
PWR Firewall Training • PWR Management Responsibilities: • Manages the business. • Primarily handles resource, commitment, programmatic issues. • Assures even and level competition. • Programmatic and technical oversight. • Executive communication with the customer – primarily commitments. • May have knowledge of multiple customer’s projects – must firewall internally. • Must restrict information given to the firewalled teams. • Generally will limit information received from the firewalled teams to a need to know basis. • Should not participate in the development of the customer’s strategy, concepts, program plans or any other competitive aspects of his/her proposal/project.
PWR Firewall Training • Firewalled Team Responsibilities: • Manages the Project/Program. • Translates Prime requirements into specific PWR technical system requirements and requests. • Handles All Programmatic, Technical, and Business Communication with the customer. • Communicates technical and business data to the customer. • Communicates task requirements and outcomes with process support personnel outside the firewall. • Controls (i.e. filters & sanitizes) information flowing to both the customer and the non-firewalled process area support personnel to assure that competition sensitive data, including both hard data and abstract information is not transferred.
PWR Firewall Training • Non-Firewalled Process Area Support Team Responsibilities: • Defines task assignments with PWR Firewalled interface • Performs & reports task outcomes to PWR Firewalled interface • Does not communicate with the customer • - Should limit work on more than one customer to the extent possible
PWR Firewall Training • Restrictions: • Non-firewalled personnel SHALL NOT perform or participate in the following: • Development of the customer’s strategy, concepts, program plans or any other competitive aspects of his/her proposal/project. • Generating, reviewing, or negotiating the customer’s proposal, or of PWR’s proposal to the customer that would be embodied by the customer’s proposal other than to provide generic PWR data such as past performance, etc., or to review specific portions of PWR’s proposal that clearly are not competitive discriminators between the customer’s proposal (e.g. PWR pricing data). • Push suggestions that could “cross pollinate” a customer’s ideas to other customer or PWR interfaces or otherwise influence a customer’s competitive position on knowledge of another customer’s proposal.
PWR Firewall Training • Third Party Proprietary Information • When PWR is working cooperatively with another company, the obligation in the firewall should be limited to protect proprietary information of the other party. • - Even where the information is not marked, however, it must be treated as protected if its contents are clearly proprietary information, such as financial information or trade secrets. • - This information should not be shared with another part of PWR or any other defined group.
What is a Non Disclosure Agreement (NDA) • A Non Disclosure Agreement is an Agreement between the Parties that: • Protects trade secrets and proprietary information • Defines rights and obligations of parties with respect to information being shared • Describes nature of information, permitted use, type of protection, how long will the information be shared, with whom, etc. • An NDA is a legally binding contract when executed by all parties
When is An NDA Needed • NDAs are used generally when disclosure of Proprietary Information will take place in the course of discussions prior to execution of a definitive business contract. • Prepared in connection with specific programs or business or technical discussions
Non Disclosure Agreement (NDA) • An NDA is not required when the exchange of data occurs under the scope of a purchase order (PO) that incorporate proprietary information protection in the Pratt & Whitney Rocketdyne, Inc. (PWR) General Provisions unless there is a PWR/program requirement to obtain a separate agreement even though PO includes the proprietary information.
Pre-RFP Planning • Identify customer needs/funding constraints • Understand market needs • Identify competition and determine their approach • Evaluate your strengths & weaknesses vs. competition & customer expectations • Identify your proposal team and sub-tier suppliers • Generate capture strategy - win factors, themes • Identify key personnel -capture team (Engineering processes, OPS, C&P, QA, others as needed) • Identify requirements • Develop PA budget for management and team (inchstone level) • Identify IR&D/capital requirements
Proposal Process Programs Marketing Business Plans Should Cost Program Manager Project Engineer Cost Volume/BM Mgr. Program Manager Contract Manager Cost Volume/Business Manager Program Manager Project Engineer Cost Volume/Business Manager Market Price Develop Proposal Strategy Program Definition Function Overview RFP RFQ • Establish: • Due Date • RFP Requirements • Deliverables/MIR’s, T&C’s • Estimating Methodology • “Similar To: Programs • Make/Buy • Affordability/DTC Goals • Prepare: • Program Plan • Program Schedule • Test Plan • Bill of Materials (M/B) • Work Breakdown Structure • Resp. Assignment Matrix • Present/Discuss: • Program Approach • Pricing Strategy • Estimating Assistance • Identify “Similar To” Program Manager Project Engineer Cost Volume Mgr. Functional Mgr. Technical & Cost Volume Manager Profit Analysis Risks and Opportunity, Capital Investment Estimating & Pricing Function Directors/VP • Detail Estimating • Task Descriptions • Estimate • Basis of Estimates • Functional Review • Evaluate Estimating • Access Cost Risk(if any) Publish Cost/Technical and Mgmt Volumes Risk Assessment/ Commitment Complete Technical Volume Pricing Actions & Prepare Cost Volume • Cmt Review Cycle • Est. & Pricing • Contact Mgmt. • Executive Mgmt. • Evaluate Risk • Assume Risk • Revise Estimate • Rescope Program Manager Contract Manager Cost Volume Mgr. • Labor Standards • CERs • Detail Estimates • Parametrics • “Similar To’s” • Round Table/Expert Opinion • Supplier Quotes • P.O. History • Catalog Prices • Substantiation (-3’s) • Labor • Material • ODC • Support • Audit • Fact Finding • Negotiations
Analyze the Proposal Requirements • Read the request for proposal (RFP) • Understand the statement of work (SOW) and proposal type • Generate ground rules and assumptions • Proposal preparation guidelines • Due date • Required volumes • Page and print specifications • Evaluation criteria • Technical description (SOW) • Expected program length • Expected program cost • Procurement contract type • Deliverable items (hardware, data, etc.) Create and generate a compliance matrix early
Think of the RFP as a Quiz • Answer the questions clearly and explicitly • What? -- SOW/WBS/program plan • How? -- Baseline/tech approach • When? -- Master program schedule • Who? -- Organization/RAM • Where? -- Facilities • Why? -- Discriminators, themes, trades
Beginning of the Proposal Process • Proposal manager identified • Review available data • Capture strategy • Program overview • MIRs or selection criteria - Win factors, themes • Develop WBS & dictionary • SOW & specifications • Design-to-cost targets • Program schedule • Risk management plan • Business plan (Program Performance Plan) • Establish technical concepts • Program organization • Make/buy plan • Hardware list • Test plan • Determine profit objective
Proposal Compliance Developing Requirements Matrices
Proposal Receipt RFP receipt by PWR Contracts Accounting Established Proposal Plan of Action Developed Proposal Manager Calls Kick-off meeting Proposal Team begins the Requirements Review and Shred Systems Integrity develops Supplier Flowdowns
Purpose • Ties proposal response to requirements and evaluation criteria • Flows RFP requirements to proposal outline • Tool for establishing proper page count • Ensures compliance with proposal requirements
How Matrix Developed • We use a macro developed in house that parses a Word document into an Excel spreadsheet* • We then use the spreadsheet to develop an annotated proposal outline with descriptive headings, section assignments, page allocations, graphic notes, themes, writing assignments/instructions, and linkages to customer’s evaluation criteria *This is an inexpensive option, but there are products available on the market that will parse RFPs. See APMP.org
Requirements Matrix • Each requirement should be a separate line • Most Important Requirements (i.e., Evaluation Criteria) drive page allocation
DRD Matrix Develop a separate matrix for Data Requirements Deliverables
How Suppliers Can Help • We recommend that Suppliers use a similar principle in reviewing PWR Requests for Proposals or Quotations • Often, we have tried many ways of identifying key/critical elements needed within the proposal and with rare exception they’re missed • In the past, we have bolded the key/critical elements, developed checklists, etc. to no avail. • We welcome any ideas on how to get our RFP’s read by the Suppliers!!
Proposal Preparation • Proposal Outline • Themes • Mockup • Technical & Cost are to be Prepared Together • Approach must be Life Cycle Oriented • PWR Affordability Process • Proposal Schedule
Customer RFP Requirements Ground-Rules and Assumptions Terms and Conditions RFP-Statement of Work Design to Cost (DTC) Targets Work Organization & WBS Task Description Program Plan WBS Integrated Program Master Schedule/Major Milestones and Activity Schedules Make/Buy Work Decomposition Contract Data Requirements/Data Requirements etc Task Planning Scope Risk and Opportunities Identify R&O’s when Estimating Assess/Identify Scope for Reduction No Estimate Development Identify Historical References or other Basis for Estimate – Data Driven Estimates Estimate Development Hrs, mat’l, ODC Within DTC Target? Price Tasks within WBS – 1st Pass, Compare to Target Price Tasks Target Assessment Yes Proposal Steps Price Task