copyright 2009-- all rights reserved1 joe michels, phd, p.e., c.p.l. solomon bruce consulting llc...

Copyright 2009-- All Rights Reserved

1

Joe Michels, PhD, P.E., C.P.L.

Solomon Bruce Consulting LLCBillings, Montana 59103www.solomonbruce.com

Air Force Installation Acquisition Transformation–

How to compete in a new era!

2Copyright 2009-- All Rights Reserved

Who is Solomon Bruce Consulting LLC?

• Professional Management/Engineering Consulting firm located in Billings, Montana

• Our goal– to improve your organization and make you more “profit”, increase your effectiveness and efficiency– in other words, improve results and make you more money!

• Phone—406-672-6387

• www.solomonbruce.com


Who is your Presenter?

• United States Air Force– retired Colonel (O-6)• June 1971- Oct. 1974, June 1976- Aug. 2002

• College of Business Dean• September 2002- December 2005

• Professional Management Consultant• January 2007- Present


Disclaimer

Some of the slides in this presentation are United States Air Force slides, presented in the public domain for information dissemination purposes.

Solomon Bruce Consulting LLC makes no claim to the veracity or accuracy of such slides.

These slides are only used to explain concepts that Solomon Bruce Consulting LLC will address in greater detail and granularity.


Outline

• AF Priorities & Case For Change• IAT Background• Key Tenets• Old & New Structure• Future Organization • Schedule


What is the only Constant in today’s World?

CHANGE!


Your Air Force


Inefficiencies of Current Air Force Organizational Structure

71 contracting offices/squadrons are doing great work:

But, as organized, are only able to provide tactical support to their assigned installation customers

This alignment results in:

Redundant procurement of similar goods and services

Sometimes from the same vendors

Inability to effectively strategically source requirements

Inefficient use of contracting expertise spread across 71 locations

Air Force Produced Slide


The Case for Change:Current Installation Contracting Structure

• 71 buying organizations focused on providing tactical support to installation customers

• Additional contracting support provided to numerous Field Operating Agencies

• This current alignment results:• Inconsistent use of skilled contracting resources • Redundant procurement of similar commodities • Inability to leverage the scale of the Air Force to drive efficiencies • Failure to realize strategic sourcing objectives• Strain on buying activities with contingency contracting officers



Case for Change- Continued

• Challenges are compounded by:• Increase in contracting workload and

complexity• On-going mission support

commitments

The current structure strains the ability of the Installation

Contracting community to effectively perform its mission


Key Tenets for Change

Maintain Customer Relationships: Maintain and improve our ability to support our customers

Socio-Economic Focus: Maintain and strengthen focus on socio-economic program responsibilities

Retain Contracting Experts at Every Installation: Maintain a buying activity responsible for providing business advisory services and performing installation-specific contracting actions

Maintain Robust Contingency Contracting Capability: Ensure continued ability to meet contingency contracting commitments

Ensure Force Development: Preserve leadership and professional development opportunities for military and civilian contracting professionals

Transparency: Provide visibility to Congressional and key stakeholders



SECAF Direction - 20 Aug 07

“…apply innovative best business practices to improve Air Force processes”; “…along with the strategic sourcing work”

“…we identified the need for a fundamental shift in how we accomplish Air Force contracting and acquisition in support of our installations”

“…introduction of five geographic-based Regional Centers” (Now known as Installation Acquisition Groups)

“The implementation of the transformed installation acquisition organization will follow an aggressive timeline.”



Old: CONUS Installation Contracting

Current as of October 2007

AF Inspection AgencyAF Safety CenterAF Nuclear Weapons and Counterproliferation Agency

AF Security Forces CtrAF News Agency

AF Manpower AgencyAF Personnel CenterAF Services Agency

AF Center for Environmental Excellence

AF Technical Applications Ctr

AF Agency for Modeling and Simulation

Orlando

AF CE Support Agency

AF Historical Research AgencyAF Logistics Management Agency

AFC2ISRCAF Global C4ISR Integration Ctr*

AF Communications Agency

BollingAF Legal Services AgencyAF Medical Support AgencyAF Medical Operations AgencyAF Pentagon Communications Agency

AF Weather Agency

AndrewsAF Flight Standards AgencyAF Review Boards AgencyANG Readiness CenterOffice of Special Investigations

PentagonAF Personnel Ops AgencyAF Ops Group71 Buying Activities

3,322 Personnel

71,000 Contract Actions

$13B Installation Spend

$2B GPC Spend



Future Organization

Current as of May 2008

IAGs

786th IAG

787th IAG

789th IAG

790th IAG 788th IAG

5 Geographic Based Groups

Contracting Presence at Each Installation

Enables Realization of Strategic Sourcing

IAC HQ



Lead-MAJCOM:• Management/oversight of entire AF

contracting organization, training, policy

Installation Acquisition Group:• Conducting strategic sourcing activities • Providing contracting support

Installation Contracting Squadron:• Emergency buying and selected buying as delegated by the IAG• Government Purchase Card and Quality Assurance Administration

Future Organization

Installation Acquisition Center: • Responsible for CONUS installation

acquisition/contracting execution

Enterprise Sourcing Squadron:• Lifecycle acquisition of defined

commodities/services• AF-wide focus

ESSsESSsESSsESSsESSs

St Louis, MO San Antonio, TX Peterson AFB, CORobins AFB, GAHampton Roads, VA



Future OrganizationInstallation Acquisition Center (IAC)

IAC/CCSA

790th IAGPeterson AFB, CO

SupportedMAJCOMs

Support Staff

SACClearance & Program

Support Division

SALLabor Advisor Division

SARResource Management

Division

SATSourcing Division

786th IAG Hampton Roads, VA

787th IAGRobins AFB, GA

789th AIGSan Antonio, TX

788th IAGSt. Louis, MO



• Lifecycle Acquisition of Defined Commodities

Enterprise SourcingSquadron (ESS)

Future OrganizationInstallation Acquisition Group (IAG)

Program Support Squadron (PSS)

Resource Mgt Support Flight

(SABR)

Business SupportSquadron (BSS)

Acquisition Flight A (SAAA)

Acquisition Flight B (SAAB)

Requirement Evaluation &

Sourcing Flight (SAAR)

Technology Support Flight (SABT)

Acquisition Flight C (SAAC)

Sourcing Acquisition Squadron (SAS)

• General Contracting Support Functions

• Demand Planning • Spend Analysis• Opportunity Assessment• Receipt, Review of Installation Requirement• Assignment of Valid Requirements• Multifunctional• Customer-focused Procurement• Source Selections• Performance Management (Post Award)

• Contract Review• Policy Compliance

& Interpretation• Program

Management• Pricing Functions

IAG

Command Section

Co-Located Allied Support

LegalLabor

AdvisorsSmall

BusinessACE

Sourcing Support Flight (SAPS)

GPCFlight(SAPC)

Policy & Review Flight (SAPR)

Price Analysis

Flight (SAPP)



18

Plans & Programs

GPC/QAMgmt Support/ITAdmin/Training

Contingency

Acq Spt Flt A*

Business AdvisoryLimited BuyingContract Admin

Acq Spt Flt B*

Business AdvisoryLimited BuyingContract Admin

Command Section

Future OrganizationInstallation Contracting Squadrons

Limited Buying remains at the ICS• Emergency Buying w/limited warrants for short term natural

disasters and local emergency response• Selected buying delegated by the IAG

• Limited Delivery Orders/Task Orders

• GPC Buying will continue* Flight A&B segmentation depends on unit size



19

Future OrganizationInstallation Contracting Squadrons

Business Advisory Services Provide support during requirement development process

and throughout contracting life cycle Interface with installation customers and leadership, small

business/local industry, and IAG Perform Contract Administration

Acceptance of Services Performance Measurement Corrective Action

Other Functions at the ICS Implement AF/AFMC policy GPC monitoring and surveillance Quality Assurance Systems Admin/Management Support Conduct Training (QA, GPC, Contingency, and Other) Contingency Support



Future OrganizationEnterprise Sourcing Squadrons (ESS)

• Conduct Lifecycle Acquisition of Defined Commodities including Services

• Provide Multi-functional Skills to Develop Acquisition Strategy

• Coordinate with FOAs and existing Air Force and DoD Commodity Councils

• Execute Strategic Sourcing Activities• Maintain Air Force-wide Focus on Defined

Commodity Groups



Future OrganizationSmall Business Involvement

A Small Business expert will remain at each base to:

Understand local businesses’ capabilities and advise them of opportunities Communicate those capabilities to contracting officers at IAGs Help articulate performance-based installation requirements Help local small businesses with teaming approaches (joint ventures, etc.)

A full-time SB expert will be a member of every strategic sourcing analysis and strategic contracting strategy at the IAG

The AF Small Business office has established the “Air Force Small Business Solutions Center” to assist with strategic sourcing

To assist with Strategic Sourcing, people and processes will remain at the base level to ensure local small businesses continue to get timely market intelligence

of incoming requirements and make their capabilities known.



Future Organization Strategic Sourcing

Strategic Sourcing recognized as industry best practice:

Leading companies typically achieve more than 15% savings and cost avoidance

Honda achieved 17%

American Airlines achieved 20%

IBM achieved 24%

Kettering Hospital: saved $1.3M on $8M spend

AF Examples:

Installation Domain Commodity Council generated $80M savings on $484M spend



Strategic Sourcing IS NOT Just…Strategic Sourcing IS NOT Just… Strategic Sourcing IS…Strategic Sourcing IS…

• A PROCESS for systematically analyzing and developing optimal strategies for buying goods and services

• DATA DRIVEN – fact-based analysis to drive decision making rather than just “hunches”

• A HOLISTIC process that addresses customer needs, market conditions, socio-economic considerations, organizational goals/objectives & other environmental factors

• Based on MARKET INTELLIGENCE and takes into account small business capabilities

• A COLLABORATIVE, CROSS-FUNCTIONAL approach

• About SUPPORTING AN ORGANIZATION’S MISSION through procured goods and services

• A PROCESS for systematically analyzing and developing optimal strategies for buying goods and services

• DATA DRIVEN – fact-based analysis to drive decision making rather than just “hunches”

• A HOLISTIC process that addresses customer needs, market conditions, socio-economic considerations, organizational goals/objectives & other environmental factors

• Based on MARKET INTELLIGENCE and takes into account small business capabilities

• A COLLABORATIVE, CROSS-FUNCTIONAL approach

• About SUPPORTING AN ORGANIZATION’S MISSION through procured goods and services

• Leveraged buying

• Contract consolidation/bundling

• About saving money

• The resulting contract

• Contracting and procurement

• Leveraged buying

• Contract consolidation/bundling

• About saving money

• The resulting contract

• Contracting and procurement

What is Strategic Sourcing?The “IS” & “IS NOTS”



• The transformation only applies to a base-level contracting within the continental United States• Approximately $15 Billion per year

• The transformation does not apply to:• Major Weapon systems• Logistics Support to Weapon Systems• Laboratory Support• Research, Development, Test and

Evaluation

What the Transformation Applies To



Your Air Force:Past/Current AF Resource Environment

AF Balancing Investments Across Limited Resources. .AF Balancing Investments Across Limited Resources. . .Transformation a Must.Transformation a Must



What Will Change*

* most changes likely will not start until around January, 2010



Air Force Installation Contracting:(post-transformation)

Current as of October 2007



A Key Commitmentof the Transformation

Increase Socio-Economic Focus and Results:

Increase opportunities for small business (increase total dollars)

Design strategically sourced contracts to maximize opportunities for small businesses to participate (may be different opportunities than exist today)



A Key Commitmentof the Transformation

Increase Socio-Economic Focus and Results:

Increase opportunities for small business (increase total dollars)

Design strategically sourced contracts to maximize opportunities for small businesses to participate (may be different opportunities than exist today)

Retain Contracting Experts and Small Business Experts at Each Installation:

To understand local business capabilities/advise them of opportunities

To articulate performance-based installation requirements

To serve on source selections (as needed)

To administer base contracts (on-site liaison to local contractors)

To perform some installation-specific contracting actions



Why Strategic Sourcing Brings Greater Opportunities for Small Business

We know small business capabilities are often not fully understood

We know that strategic sourcing analyses will help us “grow the pie” of opportunities currently available for small businesses:

Via better capture of our “spend” for various goods and services

Via ability of SBs to do work currently done by large business

Via “de-bundling” of certain parts of consolidated contracts

Strategic Sourcing requires us to vigorously research the market and supplier capabilities before contracting strategies are developed

We aim to do even better via this transformation!



Strategic Sourcing:A Proven Track Record

The Air Force Medical Services Commodity Council awarded 100% of their $40.7 Million FY06 baseline spend to small businesses.

In FY06 the Information Technology Commodity Council exceeded their goal of 6% by achieving a 12% small business spend on a baseline spend of $181.3 Million.

The Air Force Security Commodity Council awarded three small business contracts in the amount of $440 Million for security gate guards at various Air Force Installations.

The Air Force has Proven Track Record…

of Increasing Small Business Opportunities Via Strategic Sourcing.



What Will Not Change



High Integrity Procurements Will Continue

How we buy will not change:

Preference for competition and set-asides when appropriate

Selection criteria will still be in solicitations

Best value awards/industry days (via telecon or VTC)/debriefings

Awards will still not be based on geographic location of supplier

Awards will still be posted to FedBizOps



More Robust, Multi-Layered, AF Small Business Involvement

1. A Small Business expert will remain at each base

To understand their local businesses’ capabilities/advise them of opportunities To communicate those capabilities to contracting officers at Regional Center To help articulate performance-based installation requirements To help local small businesses with teaming approaches (joint ventures, etc.)

2. A full-time SB expert will be a member of every strategic sourcing analysis and strategic contracting strategy at the Regional Center

3. The AF Small Business office has established the “Air Force Small Business Solutions Center” to assist with strategic sourcing.

To assist with Strategic Sourcing, processes and people will remain at the base level to ensure local small businesses continue to get timely market

intelligence of incoming requirements and make their capabilities known.


Small business expertise

• OK, let’s think about what was said—

• Expertise is retiring, good people are hard to attract and retain--


And You are HERE!


AND you are here!


How this Impact’s YOU!

• YOU MUST be able to clearly articulate and identify the niche market that you have—• WHY are you the best?• WHAT makes you the best?• HOW do you know that you are the

best?• (Hint– Measurement, continuous process

improvement is the answer here!)


How does this Impact YOU?

• Continuous Process Improvement (CPI)• Measure everything– sales, product turn,

waste, scrap, time, everything!

• Measurement is the way to identify EXACTLY how your business is doing-

• It applies to YOU! If you are not doing it, begin NOW!


Organizational Structure



Contracting Contingent remains at Installations to provide agile customer support

Hampton Roads Warner Robins St Louis San Antonio Colorado Springs

AFMC – Lead-MAJCOM

Organizational Structure



Transformation Schedule



Majority of next 18-24 months is on internal transition planning/execution of activities Few strategically sourced contracts will likely be issued during this

period Little noticeable change to installation contracting, workload, or

processes

For continual transformation status updates please go to: http://www.selltoairforce.org

IATSchedule (con’t)



Actions You Can Take



Change your thinking!

• You must change your thinking or you will be left behind!

• THIS IS IMPORTANT– Don’t be fooled!


BE AGGRESSIVE!

• Nobody is going to come knocking on your door– make sure that the buyers at the base (s) know you and your products—• Samples• Flyers/ Brochures• Internet Presence


Communication Plan

• How are you going to get the word about your business to base officials?• Mailings?• Phone Calls?• Emails• Promotions?• Sales Calls?• Referrals, Testimonials?

• A plan on how this is going to work is the key here!


Media Types– What Works?

Product Feature and Benefits

Marketing Plan

• Do you have a marketing plan? IF not, now is the time to develop one!

Marketing Plan

Branding Strategy


Samples

• Touch, feel, smell, handle, see

• No samples? TESTIMONIALS from satisfied clients! Pictures!• Service• Construction• Commodities


Flyers/Brochures

• Do your flyers ACCURATELY describe what you do? How you do it?

• Are they easy to read and understand?

• Do you leave behind a business promotion item, pen, cup, etc?


Business Promotion Items

• Look at www.mgrmarketing.com for many unique ideas! This is a Geiger distributor/representative who can fulfill your business promotion needs!


Business Cards

• Give ‘em out all the time• Get one back in return

• Put contact in your database• Use an electronic card scanner

• WORK those cards– see how you can help the individual who gave you the card!


Business Cards

• Make them easy to read• Do Not use “garish” colors– PINK,

GREEN, or something else weird!

• Do NOT use Script– This is hard to read on a business card– make this easy to read


Internet Presence

• Are you on the internet? If not, GET ON TODAY– NOW, NOT TOMORROW!

• Is the web site easy to navigate?• Colors• Font Size• Amount of Material on each page?

• Do you have a shopping cart?


Internet Presence

• Unless you are REAL GOOD at computers and graphics– pay to have a professional develop your website

• Search Engine Optimization (SEO)

• You only get ONE TIME to make a lasting first Impression– Don’t blow it!


Internet Presence

• Good web sites cost money– be prepared to pay $3000-$5000 for a first class site

• Nice sites can be completed for less, however………………………………

• Don’t go cheap here on YOUR IMAGE– especially today!


More Proactive Actions to take during this change

1. Keep AF Small Business specialist apprised of your:

1. Capabilities2. Interests3. Areas of possible competitive advantage4. YOUR NICHE IN THE MARKET

a) Exactly what DO YOU DO– EXACTLY? This has to be made real clear today.

b) Said another way, what do you bring to the table that is unique and special? How do you do that? This is a discriminator– think hard!


Proactive Change

Interest

CapabilitiesNiche

CompetitiveAdvantage

Specialized Expertise

Your Businesss


Accept Credit Cards

GSA Smart Pay CardsMastercardVisaDiscover

Government Procurement Cards

Establish credit card account at your bank! This is nothard, however, you would want to do a cost/benefitanalysis to ascertain if this is viable for your business!


Market, Market, Market!!

Identify Customer Research the needUnderstand Govt Rules(PTAC can help here!)

PRESENT YOURCAPABILITIES TOBUYING OFFICE

Submit Bid

• Cost Effective• Quality Problem Solution• Innovative, Creative

•Don’t Waste time– YoursOr theirs

CELEBRATE– YOU WON THE BID!!!


• Maintain currency in Central Contractor Register database• Used as marketing research for

contracting officers• Provides information on size and socio

economic status of your business



• Subscribe to FEDBIZOPS– stay current on posted opportunities• Respond to Sources Sought Synopses

• Requests for Information• Participate in Industry Days and other

small business outreach events

• Remember your business promotion item– pen, cup, clip, etc.



Resources to help you!

• There are many resources available to help you!• -- Local Air Force Small Business Specialist• -- www.selltoairforce.org• -- Small Business Administration (SBA)

-- Small Business Development Centers (SBDC)• -- Minority Business Development Agency (MBDA)

• -- Procurement Technical Assistance Centers

(PTACs)

• SOLOMON BRUCE CONSULTING LLC www.solomonbruce.com


Teaming with a bigger contractor

• Developing a strategic alliance with other firms• More important today—• More opportunities to go after• Increases your “capture” area

• Some things to consider---


Purpose of Strategic Alliance• Combined leveraging of talent and

resources of both firms– big and small


How do you do it?

Big companies have small business liaison officers– find them! Tell them about what YOU can do.

Meet and get to know these folks!


Bid Matching Opportunities

1. Know the program, i.e, govt contracting

2. Perfect your pitch– practice is the key!3. Learn how government contracting

works before you go4. Pass out LOTS of business cards!


Change Process

“It won’t have any effect on us”

“We should have called

SOLOMON BRUCE

EARLIER!”

“At least we making

something happen”

“We should have done this last

month, not now”“Let’s make the change today”

"The Chasm"

Change Realization Process


What is a Strategic Alliance?

•Temporary Partnership with a larger firm

- Provides greater SYNERGY of firm’s capabilities-- Leverages strengths of each company-- Able to achieve better product pricing

1 + 1 = 3

The whole is greater than the sum of the parts


Strategic Alliances

• - Partnerships achieve mutual benefits for each

• -- Ownership remains with each respective firm • -- Alliance is maintained only as long as mutually beneficial to both parties


Paradigm Shift

• Small business has to think like a large business!

• Small Business must embrace international best practices• -- Not hard, however, may require

change in operations


• Image Enhancement– increased ability to work on international scale

• Mitigates risk and expenses– especially in new market areas

• Maintains breadth and depth in core competencies

Purpose of Strategic Alliance


• Able to adapt with fast changing marketplace

• Increased profitability potential– allows identification of new revenue streams and new market entry points



Considerations working with large business partner

• Politics• Big companies are more political• Hidden agendas• Upper management employees may

not be as open as you are used to--- said another way– they may not tell you everything!

• May be frustrating to you?


• Serious– big firms are all business– profitability and “bottom line numbers” are the key focus

• May reduce the “family” atmosphere sense and feel of a small business

• Primarily focus on task at hand– less on pleasantries and relationship building

Considerations working with large business partner


Strategic Alliances

• - Partnerships achieve mutual benefits for each

• -- Ownership remains with each respective firm

• -- Alliance is maintained only

as long as mutually beneficial to both parties


Paradigm Shift

• Small business has to think like a large business!

• Small Business must embrace international best practices• -- Not hard, however, may require

change in operations


• Image Enhancement– increased ability to work on international scale

• Mitigates risk and expenses– especially in new market areas

• Maintains breadth and depth in core competencies



Conclusion

A. Air Force Base Level Contracting Changing

-- Focus changing from base to regional level

-- Purported improvement in operations of people and organizations

-- “Strategic Sourcing” focus


Conclusion--continued

B. Reasons for change-- Efficiency-- Manpower-- Improved warfighter support

C. Timeframe for change-- Started July 2008-- Full transition scheduled for 2010


D. What YOU must do to stay competitive—-- Develop/identify “Niche” market-- Market, Market, Market-- Operational Website-- Business cards– lots of them-- Marketing Plan



E. Strategic Alliance with Major Contractor-- Complimentary-- Synergistic-- Learn how the “big boys” do it!



Overwhelmed?

Let Solomon Bruce Consulting LLC help you make your organization more effective, efficient and profitable!

Call today to schedule a consulting engagement– 406-672-6387

www.solomonbruce.com

copyright 2009-- all rights reserved1 joe michels, phd, p.e., c.p.l. solomon bruce consulting llc...

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