PM TRADE Acquisition Development Seminar Understanding Our Industrial Base

1. PM TRADE Acquisition Transformation: Process / Product / Organization PM TRADE Acquisition Development Seminar Understanding Our Industrial Base Unintended Consequences in Developing and Releasing RFPs 21 January 2011 1st in a Series of CLP Seminars focused on Improving PM TRADE Business Practices

2. Panel Discussion Objectives Have an appreciation for our Industry Base Processes, Timelines, and Constraints in responding to our RFPs. See the Problem Recognize the need for PM TRADE RFP product and process consistency resulting in higher quality RFPs. Understand the Problem Take individual ownership in every step of the process to improve our products Solve the Problem

3. Rules of Engagement • No Knives • No Guns • No Hand Grenades • No Attitudes • No Slimy Contractor Jokes • Panel will be blunt, passionate, and respectful in their discussion to convey key points. • Yes, Please Ask Questions!

4. Industry Survey of PM TRADE Issues • Tiger Team Interviewed 11 Major PM TRADE contractors • 9 large business and 2 small business • Not Surprisingly - Consistent message from all contractors interviewed • Level of Frustration Higher than Anticipated Industry's Major Areas of Concern: • Consistency: Unpredictable timelines and process across programs • Information: Not enough / inconsistent Industry interface during Sources Sought & Requirements Development • Business Decisions: Sources Sought/Draft Requirements Docs. do not include Business Case information • Industry Base: Cost of Proposals, impacts growing an Industry Base

5. Project Teams.… do these sound familiar? … Ever feel rushed to put a draft or final RFP on the street? … Ever have to change your Acquisition Strategy? … Ever have major RFP changes from Draft to Final? … Ever postpone release of a draft or final RFP? … Ever have requirements changes mid-stream? … Ever release a draft and final RFP back to back? … Ever release a draft and final several months apart? … Ever have weeks on end before releasing answers to RFP questions? … Ever provide vague or delayed answers to industry questions? … Ever have key team members reassigned…. new team = new “ideas”? … Ever publish your contract ceiling as the program budget? … Ever ask for CLINs or CDRLs you really didn’t need? … Ever release a draft or final RFP before the holidays? … Ever provide/brief inaccurate or incomplete TSIS slides?

6. Industry Business Rhythm JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Q1 Q2 Q3 Q4 Revenue Revenue Program X RFP Slips Program X RFP Expected B&P Package X B&P Package X + Y Line Forecast - Annual Revenue - Annual Profit - IR&D Objectives Forecast Identifying Future Business Opportunities 2-5 years in Future FY Planning Guidance (Corporate) - Revenue Targets - Profit Targets - IR&D Priorities Plan Allocating resources, budgets, and schedules for next year’s work Line Execution - Quarterly Revenue Goals - Quarterly Award Goals - IR&D Progression Revenue Drives - Staffing Levels - Indirect Generation - Bid & Proposal Funding - IR&D Funding QUARTERLY REPORTS - To Corporate - Corporate to Wall Street Execute– Current year programs

7. Schedule Planning is Paramount • Industry must meet quarterly and annual plans … reductions cause reduction to quarterly and annual reports or projections to Wall Street • De-rate opportunities substantially based on percentage of win • Qualify the customer • Changes to anticipated RFP releases, award delays, protests … all equal delays in revenue and additional costs to maintain staff • Over time these costs are added back into rates … more cost to the USG assuming the industry member survives • Resource planning becomes chaotic • Impacts organizational credibility • Ultimate concern becomes reduction of industry base … less technology and less competition

8. Industry Business Planning- Proposals • Timing is linked to Revenue and Award goals • Value linked to pipeline growth • De-rated by Probability of Win (pWin) • pWin established by team, technology, customer relations, overall fit • As RFP slides right, revenue slides right and B&P increases • As Award slides right, award goals are adjusted right • Track (opportunity not yet qualified; no RFI, no defined requirements, no funding) • Pursue (only after approval at BSC with B&P requirements and anticipated ROI presented and approved) • Capture (after RFP … authorized expenditure of B&P) • Proposal Costs Vary • Fixed Price Reviews – must go to higher for above $30 million (Delta BARS required if the proposal varies by 5%) • Cost reimbursable not as stringent

9. Industry Proposal Processes Typical Opportunity Gate Controls • Industry: • - is strategically focused with deliberate business planning cycles • - has a disciplined business development processes • - uses gate controls just like Army Acquisition Milestones • - needs to make the right staffing decisions to meet Customer’s needs Open & Consistent Communications are a Must ! Industry needs open, honest, consistent, predictable, and frequent communications to identify gaps in solution space that drives teaming decisions to make effective decisions on resources, people, investments and teaming

10. Initial Assessments Initial Assessments Initial Initial Initial Customer Customer Initial Initial Customer Customer Initial Initial Initial Win Initial Win Initial Win Initial Win Opportunity Opportunity Opportunity Opportunity Competitive Competitive Competitive Interaction Interaction GDAIS SWOT SWOT Interaction Interaction GDAIS SWOT GDAIS SWOT Assessment Assessment Strategy Strategy Strategy Strategy Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Assessment Customer Absolute Musts Customer Absolute Musts Competitive Teaming Competitive Teaming Customer’s Need to Buy Customer’s Need to Buy ( ( Analysis Analysis CAMs) CAMs) Competitive Differentiation Competitive Differentiation Competitive Differentiation Competitive Differentiation Customer’s Funding Customer’s Funding Potential Teaming Strategies Potential Teaming Strategies Assessment Assessment Assessment Assessment Refined Win Strategy Statement Refined Win Strategy Statement Competitor’s Competitor’s Competitor’s Competitor’s Teaming Teaming Teaming Teaming Plans Plans Plans Plans Customer Customer Potential Past Potential Past Potential Potential Teammate Teammate Customer Customer Potential Past Potential Past Potential Potential Teammate Teammate Potential Risk Potential Risk Potential Risk Capture Capture Performance Performance Management Management Capture Capture Capture Capture Performance Performance Management Management Capture Capture Identification Identification Identification Themes Themes Approach Approach Approach Approach Themes Themes Themes Themes Approach Approach Approach Approach Themes Themes Competitor’s Competitor’s Competitor’s Competitor’s Potential Potential Potential Potential Potential Potential Overall Overall Price to Win Price to Win Teaming Teaming Potential Potential Overall Overall Price to Win Price to Win Teaming Teaming Customer Call Customer Call Customer Call Customer Call Capture Plans Capture Plans Capture Plans Capture Plans Technical Technical Political Political and EBIT and EBIT Execution Execution Technical Technical Political Political and EBIT and EBIT Execution Execution Plans Plans Plans Plans Approach Approach Assessment Assessment Identification Identification Plan Plan Approach Approach Assessment Assessment Identification Identification Plan Plan Document Document Potential Potential IR&D IR&D Factors and Factors and Potential Potential IR&D IR&D Factors and Factors and Capture Capture Competitor Competitor Competitor Competitor Team Feedback Team Feedback Requirements Requirements Objectives Objectives Team Feedback Team Feedback Requirements Requirements Objectives Objectives Ghosts/Mitigation Ghosts/Mitigation Ghosts/Mitigation Ghosts/Mitigation Plan Plan Specific Hot Specific Hot CR&D CR&D DMP DMP Specific Hot Specific Hot CR&D CR&D Plans Plans DMP DMP Plans Plans Button Issues Button Issues Potential Potential Chart Chart Button Issues Button Issues Potential Potential Chart Chart Acquisition Problems Acquisition Problems COTS/GOTS COTS/GOTS KDM Personal KDM Personal Acquisition Problems Acquisition Problems COTS/GOTS COTS/GOTS KDM Personal KDM Personal And OCI Issues And OCI Issues Requirements Requirements Profiles Profiles And OCI Issues And OCI Issues Requirements Requirements Profiles Profiles Initial Capture Plan Activities That Support Teaming & Bid Decisions • - Industry’s business development processes provide a disciplined methodology for qualifying the opportunity • - Prior to building a team, Industry must understand the customer needs • - Must haves and hot buttons provide Industry the insight they need to develop technical, management, cost and support baselines • Industry conducts a gap analysis from “understanding the problem” and their potential baseline solutions to identify pursue / no-pursue, bid / no-bid make / buy, IRAD, and teaming strategies

11. Teaming Considerations • What is teaming? • Why you want to team • Fill void or eliminate inadequacy • Domain knowledge • Experience (at least good!) with customer • Cost-effective • Enhance your capability • Niche/unique expertise • Fill holes or offset weaknesses • Successful past performance • Future relationships • Why you don’t want to team • Makes things more complicated • Restricts flexibility and eliminates options • Discloses company propriety data and processes • Organizational conflicts of interest • Cost driver

12. Teaming Window of Opportunity • Prime • Fill Gaps based on Requirements • Supplement Resources • Capture/Share/Manage Risks • Teammates/Subs • Support in accordance to work share • Furthering team’s capabilities • TYPICAL PROPOSAL TEAM on $200-$250M RFP • 25-30 People (Prime + Partners) – Proposal Manager, PM, Engineers, SMEs, Finance, Contracts, etc – FULL TIME! • 2-3 Partners Industry Stands up Full Proposal Team Advertised RFP release Teaming Window Proposal Team Government releases Draft RFP Government releases RFP • Teaming Issues of Requirement Flux • Proposal cost increases • Teammates/Subs may be reluctant to commit to Prime • Prime reluctant to commit work share • Work share changes impacting teaming arrangements • May require changes to team structure • Teaming Issues of Schedule Flux • Proposal cost increases • Proposal team key personnel availability affected (Challenge to hold Personnel, both for Prime and Subs) • Team disappointment

13. Develops: Win Strategy Capture Plan Price to Win As process progresses, personnel assigned to the Program Manager might also work for the Proposal Manager On smaller efforts, one person might fill several roles within the Organizational Chart Prepares Proposal Defines Solution Typical Proposal Team Organization Operations Decision Manager Business Development Manager Capture Manager Capture Management Support and Proposal Leadership Group Review Team Lead Cost Strategist Contracts Lead Subcontract Manager Subcontract Administrator Proposal Manager Program Manager Proposal Coordinator Admin Assistant Technical Manager Admin Assistant Pricing Lead Program Scheduler Production Team Manufacturing Lead Management BOE Lead Management Volume Lead Technical Volume Lead Past Performance Volume Lead Engineering BOE Lead Cost Volume Lead Manufacturing BOE Lead Integrated Product Team Leads (IPT) • Critical to provide Industry with stable and predictable milestone dates to avoid false starts, wastes resources, and provide ability to assemble and sustain quality team Predictable Draft to Final RFP Content and Timelines are Paramount!

14. Industry Opportunity Process Potential Programs in the Pipeline Target Identification Award Decision Strategic Tactical Operational Preparing for Future New Business CapturingIdentifiable New Business ExtendingCurrent Business Target Identification Interest Pursue Prelim-B/L Review Bid Submit Award Preparing Process Extending Process Target Qualification Strategy Development Opportunity Positioning Proposal Production Post Submittal Opportunity Assessment Follow-On Growth New Derivatives Black hat red storyboard pink Industry day gold Draft RFP RFP

15. Decision Tracking Interest Pursue Mid-Course Bid Submit Pre-Award Types of Reviews/Review Discipline Capture Planning and Strategy Development Post-Submittal Substantiation & Transition Target Qualification Opportunity Positioning Proposal Production Pink Team Red Team EN Response Red Team Storyboard Black Hat Gold Team Blue Team Black Hat - External review of competitors that helps us predict and understand competitor strategy, our vulnerabilities, and appropriate actions Blue Team - External review of Win Strategy implementation including Key Messages (Themes), Discriminators, and Our Solution. Blue Team and Storyboard review are often identical Red Team - External review of the initial draft of our proposal (or response to questions) to ensure effective communication of win strategies and compliance with customer requirements Gold Team - Internal or external validation of our Win Strategy including Key Messages (Themes), Discriminators, and Our Conceptual Solution. Recently decomposed into Value Prop Workshop and Technology Workshop, leading to Gold Milestone Storyboard Review - Internal review of section requirements, objectives, themes, and key graphics – Predecessor to full proposal development Pink Team - Internal review of the initial draft of our proposal to ensure effective communication of win strategies and compliance with customer requirements Color Reviews

16. Timeline T-30/45 Days to RFP release Pre RFP Release Preparation 2-6 Months First 10 Days after Draft RFP Release Draft RFP Release Pursue / No-Pursue Bid / No-Bid Proposal Strategy Initial Assessments - Sources Sought Analyze RFP,Strip RqmtsPrep for Kickoff- Outlines- Assignments - Proposal Sch - Program Sch Initial Cost Estimates Business Case Analysis - ROI Core Proposal Team On Site Draft Exec Sum Proposal Team Identified -On Notice- Business Case Analysis - ROI Day 11 Day 12 Day 13 Day 14 Day 15 Day 16 Day 17 Day 18 Day 19 Day 20 Black Hat Review Draft Layout Proposal Development Schedule Technical Approach Draft Proposal Solidify Team Mates Print Draft Win Themes - Proposal Outlines Day 28 Day 21 Day 22 Day 23 Day 24 Day 25 Day 26 Day 27 Day 29 Day 30/45 Final RFP Release Gold Team Review Bus Area Final Incorporate Any Changes Book Check, Pack Mat Review/ Corrections Line-By-Line Word-by-Word Review of Changes Final Print Author Cutoff Print Core Team Review

17. Typical 30-Day Proposal Due timeline Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 Write Proposal in 7 days story board Exec Sum Bid Decision Kick Off RFP DTC Commit Set PTW Dist. DTCs Initial Cost Rollup Core Proposal Team On Site Analyze RFPStrip RqmtsPrep for Kickoff- Outlines- Assignments - Proposal Sch - Program Sch Full Proposal Team On Site Blue Team Review Proposal Win Themes, Technical Approach, and Content Flow Complete Day 11 Day 12 Day 13 Day 14 Day 15 Day 16 Day 17 Day 18 Day 19 Day 20 Pink Team Review Author Cutoff Layout Incorporate Any Changes Print ITA Final Cost Rollup Print Author Cutoff Q-Print Q-Print Core Team Review Core Team Review Day 28 Day 21 Day 22 Day 23 Day 24 Day 25 Day 26 Day 27 Day 29 Day 30 Prop Due Bus Area Red Team Review Final Incorporate Any Changes Final Print Book Check & Pack Mat Review/ Corrections Deliver Proposal Author Cutoff Print Core Team Review

18. Independent Research & Development (IRAD) • IRAD • What I thought about IRAD • What is IRAD? Research and development efforts are initiated, funded and conducted by defense contractors, neither sponsored by a government grant nor required in performing a contract, and must abide by certain Federal Acquisition Regulation and Defense Contracting Audit Agency regulations • Innovation Dilemma • How to insert innovation when there are limited Army RDTE $’s available in TRADE programs • DoD increasingly searches out COTS based solutions using mature, proven technology to meet the needs of the end-users, thus driving decreases in research & development for training and simulation • IRAD funding is often hard to secure for training simulation • IRAD resources are limited within companies • Discussions and forums on solution gaps are limited Defense contractors spend in excess of $3 billion annually conducting independent research and development. How can you leverage and influence this innovation?

19. Generic IRAD Selection Process 7. Strategic IRAD Decisions – IRAD Selection Team 4. Project Assumptions 6. Target IRAD Budget and Budget Percentages 9. Product Line IRAD Decisions 3. Define Strategic IRAD Thrusts 5. Strategic IRAD Requests 8. Product Line IRAD Requests 2. Business Growth Driver Tech Roadmaps with Tech Gaps 10. IRAD Kickoff Gate with Leadership Team 1. Growth Driver roadmaps from Tech Innovation Workshop 11. IRAD Charge numbers available 13 5 23 16 2 10 24 4 15 { 16 19-21 { { { { Jan Oct Nov Jan July Sept Dec Feb May June Aug Mar Apr Warfighter Needs Technology Analysis ongoing IRAD Project Decision Packages for approval Business Growth Driver & Tech Innovation Workshop Prepare Strategic IRAD Project Decision Packages Selected IRAD Project Kickoff Gate 19

20. Generic IRAD Integrated Master Schedule 12 month planning & approval process 6-24 month delivery timeline IRAD can deliver game changers and next generation evolution which government can leverage… …but it takes time and needs collaboration 20

21. Independent Research & Development (IRAD) Why should I care? What are the Benefits? Enable superior performance of future training systems and components Reduce acquisition costs, life-cycle costs, development risk of training systems and components Strengthen the training industrial and technological base Enhance the industrial competitiveness of the United States Increase the development and promotion of dual-use technologies for training, testing, operational environments Increased capabilities to the Warfighter Find the leverage points Improved early communications to forecast needs and gaps Consistent information exchange activities (Industry Days, TSIS, I/ITSEC…) Technical Interchange Meetings initiated by either DoD activities or contractors Other voluntary technical discussions or exchanges of information between the scientific, engineering, and operational personnel of the DoD and the contractors Go see what industry has to offer Improved communications between industry and government is the heart of successful leveraging of IRAD