GSA Expo 2009. Industrial Analysis: An Integral Part of Acquisition Strategy. Roudy Romulus firstname.lastname@example.org Economist Defense Contract Management Agency. The Agenda. What is industrial analysis? Why it is an integral part of any major acquisition strategy?
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Industrial Analysis: An Integral Part of Acquisition Strategy
Defense Contract Management Agency
“DoD-wide industrial assessments evaluate and address changes and issues in key system, subsystem, component, and/or material providers that supply many programs, and affect competition, innovation, and product availability.”
- Office of the Deputy Undersecretary of Defense (Industrial Policy)
The DoD Industrial Analysis Community
How do we go from the drawing board…
… to the battlefield.
Engineering & Manf. Development
Production & Deployment
Operations & Support
Mat’l Solution Analysis
MaintenanceIndustrial Analysis withinAcquisition Strategy
The IBA community analyze risks and issue options and recommendations…
Assess Manufacturing & Technology Risk
Assess Industrial Capability Risk
Industrial Capability Assessment
Manufacturing Readiness Assessment
…by writing assessments and other analytical reports.
Depot Source of Repair
Defense Infrastructure Protection
Other Acquisition and Procurement Impact Analytics
Armor Components, Kits
Armor Components, Fabr
Auto & Chassis Intg.
Diesel EngineTransmissionTransfer Case
Transfer Case Bearings
Wheels, Run Flat
PowertrainMine Resistant Ambush Protected Vehicle
The Joint Requirements Oversight Council requested the procurement of…
Nov ‘06 4,000 vehicles
Feb ’07 8,000 vehicles
June’07 16,000 vehicles
The Tasking –
“I request that the Defense Contract Management Agency’s Industrial Analysis Center perform an ICA on the MRAP prime contractors and their critical subcontractors to determine their production capacity and delivery capabilities in support of program requirements”
– Deputy Under Secretary of Defense (Industrial Policy) – Feb 2007
Armor Plate, Armor Kits, Capsule Manufacturing, Automotive and Chassis Integration, Tires, Axles, Transfer Cases, Bearings, and Final Vehicle Assembly
Analyzed alternate suppliers capacities and capabilities
Adjusted Acquisition Strategy
* Company names have been altered to protect proprietary information
Automotive Assy & Chassis Integration
Major issue: The stress of the initial requirement of 4,000 vehicles to over 15,000 vehicles caused the supply base to plan production beyond their initial production capacity and capabilities. Certain lead times and learning curves could not keep pace with DoD’s requirements level in a 12 month time frame.
Solution: Prioritize MRAP vehicle requirements by placing the program “first in line”, throughout the supply chain. Advance funding to purchase equipments, materials and labor. Revise the 12 month time frame to 16 months. Seek out more non-traditional DoD firms to enter the Ground Vehicles / MRAP industrial base.
Major issue: Not enough tire molds for MRAP tires.
Solution: Advance funding to Michelin - the DoD tire supplier - to buy more tire molds. Seek out Goodyear to enter the MRAP industrial base.Mine Resistant Ambush Protected Vehicle
Vehicle Requirements vs. Capacity
DoD wanted vehicle production to ramp up to 1,200 vehicles in ten months. However, the “Status Quo” suggested that Industry can only ramp up to 977.
MRAP Vehicle Major Choke Points
DoD Q &T Steel Requirements
“The Pentagon is monitoring the markets and reported the dip in metal prices ….but a top defense official …said…that no one at the Pentagon has flagged the potential to get a better deal because no one has the experience to do so. At one point in time, we did have those kinds of capabilities,” said Shay Assad, the pentagon’s director of defense procurement and acquisition policy. “But during the 1990s, the pentagon’s contacting work force was scaled back...that kind of capability does not exist within the department today.” – Jen DiMascio, May 7, 2009, “Pentagon misses out on big savings”, The Politico
Source: American Metal Market and Macquarie Capital Group
The Defense Industry does not operate in isolation. It is a dynamic industry that reacts and responds to economic, industrial, financial and public policy matters.
Industrial Analysis requires the constant monitoring and analysis of those dynamics, so that the Defense Department continues to pursuit the most efficient programs.
Industrial Analysis requires the monitoring of Capacity Utilization – at the macroeconomic level thru the company level.
Capacity Utilization is an attempt to capture the concept of sustainable maximum output – the greatest level of output a plant can maintain within the framework of a realistic work schedule, after factoring in normal downtime and assuming sufficient availability of inputs to operate the capital in place.
Source: U.S. Federal Reserve
When the Department has to deal with shortcomings in the industrial base, it has a wide variety of tools with which to promote competition, innovation, and product availability:
Directly fund innovation in its science and technology accounts, and encourage industry to do the same via their independent research and development accounts.
Induce innovation by employing acquisition strategies that encourage competition at all levels of contract performance.
Use contract provisions to preclude the ability of contractors to favor in-house capabilities or long-term teammate products over more innovative solutions available elsewhere.
Block exclusive contractor teaming arrangements that effectively reduce the number of suppliers in a given market, especially if the teammates are dominant in a particular market sector.
Establish restrictions within the Defense Federal Acquisition Regulation Supplement (DFARS) on the use of foreign products for certain defense applications, when necessary to ensure the survival of domestic suppliers required to sustain military readiness
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- General Charles De Gaulle, June 18, 1940
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