ACQUISITION EXCELLENCE Acquisition Innovation in Action March 12

ACQUISITION EXCELLENCE Acquisition Innovation in Action March 12, 2019 March 12, Grand Hyatt DC 2019 Grand Hyatt DC

Category Management Changes Everything Moderator: Greg Giddens, Partner, Potomac Ridge Consulting Panelist: Major General Cameron G. Holt, Deputy Assistant Secretary for Contracting, Office of the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics

Headquarters U. S. Air Force Integrity - Service - Excellence Category Management Changes Everything! Lessons from the Air Force’s Award Winning Program Maj Gen Cameron Holt Deputy Assistant Secretary (Contracting) Assistant Secretary of the Air Force (Acquisition, Technology, & Logistics) Air Force Contracting: Mission-Focused Business Leadership! 3

Overview n Concept n 4 & Principles Key Tenants n Category Management Results (The Real Deal!) n Mission-Focused Business Leadership “We will continue to leverage the scope of our operations to drive greater efficiency in procurement of materiel and services while pursuing opportunities to consolidate and streamline contracts in areas such as logistics, information technology, and support services” - 2018 National Defense Strategy of the United States of America 4

3 Levers of Category Management 1. Rate 2. Demand Capability 3. Process 5

Principles Category Management Industry Best Practices 4. Drive Results Strategic Acquisition Solutions Issue Policy Manage Demand & Consumption Strategic Cost Management 3. Develop Business Intelligence 2. Assign Cost Ownership via Category Managers 1. Categorization of Spend Key: Acquisition Solution Non-Acquisition Solution 1. Air Force category structure aligns to OMB’s government-wide program 2. Assigns cost management authority & responsibility to functional domain owner 3. Comprehensive analysis robust business intelligence data driven solutions 4. Reduce TCO through shaping, managing, and strategically acquiring requirements 6

The “ 4 Pillars” (Examples) Elevator Maintenance Action: Issued policy memo Action: Converted airfield for mandatory use of Elevator lighting from incandescent to Mnx Performance Work LED Statement Impact: Process & Demand Result: Greater than 60% Result: 22% savings over FYDP reduction in energy or ~$3. 7 M consumption Strategic Cost Management Issue Policy Manage Demand & Consumption Taxiway Lighting Rate – Process - Demand Strategic Acquisition Solutions Action: Implemented strategic sourcing program Impact: Rate & Process Result: 41% savings over FYDP or ~$163. 9 M 7 Action: Benchmark dumpster management practice at Ohio State University Impact: Demand Result: Eliminate unscheduled dumpster pickups; reduce fuel consumption cost driver Industry Best Practices Integrated Solid Waste Management Client Computing

Tenant 1. Categorizing Spend Air Force Mountain of Spend Aircraft, Ships/Subs & Land Vehicles $ 60 We need to accelerated our efforts to characterize the “does cost/should cost” GAP Billions $ 50 Air Force Contract Spend $289 B (FY 13 - FY 17) Professional Services $51. 40 Facilities & Construction R&D $44. 96 IT $ 40 Sustainment S&E Weapons & Ammo Trans & Log Svcs 32. 25 Elec & Comm Svcs $ 30 Elec & Comm Equip $25. 87 Industrial Products & Svcs Medical $20. 50 $ 20 $16. 68 Office Management $9. 29 $0. 26 $1. 20 $2. 74 Security & Protection Clothing, Textiles S&E $12. 21 $ 10 $ - $18. 98 Human Capital Misc S&E How do you find the “gold veins” in the mountain? Equip Related Svcs $9. 29 Travel & Lodging $4. 44 $2. 20 8 $0. 52 $0. 35 $0. 24

Tenant 2. Assign Cost Ownership 94 % of Spend OWNED! 9

Tenant 3. Develop Business Intelligence AFBIT Lite 10

Tenant 3. Develop Business Intelligence Key Points • Initial planning establishes goals and identifies prioritized targets of opportunity • Comprehensive analysis of AF requirements provides actionable business intelligence • AF and Industry benchmarks are used to identify gaps in cost and performance • Category Managers make data driven decisions to select optimal courses of action to close gaps 11

Tenant 4. Results CST Dashboard View 12

Category Management Summary n n Air Force achievements to date: n Validated saving/avoidance of $1. 5 B n Enabled improved lethality through local, regional, and enterprise level cost reduction n Partnering across the USAF & Do. D – we are positively influencing the Federal Government Opportunities to capitalize on: n Improve requirements development and control n Shape future buying behavior through data analytics n Instill more disciplined cost management n Improve alignment between budgeting and execution Think like a business, where the “bottom line” is Lethality & Readiness! 13

Mission-Focused Business Leadership • Mission-Focused Business Leadership a shift: – from Linear to Systemic Thinking – from Bureaucratic to Entrepreneurial – from Defense to Offense – from “Business Advisors” to “Business Leaders” – from Compliance Focus to Mission Focus 14

Mission-Focused Business Leadership n Four Lines of Effort (LOE) with associated Objectives and Key Results for Calendar Year 2019 n LOE 1: Build Mission Focused Business Leaders n Attract, Assess and Retain Key Talent n Reimagine training and culture from initial skills through executive level n Leverage and formalize key strategic external partnerships n LOE 2: Tools Not Rules! n Reimagine AF Contracting online presence n Eliminate all MPs below Air Force level (2 a) and flatten and align contractual authority (2 b) n Enhance Instructional Guidance n Build Dashboards to enable Data-Driven decision making 15

Mission-Focused Business Leadership n LOE 3: Own the High Ground: Optimizing the Acquisition Enterprise Efficiency – Optimize aggregate cycle time savings n Effectiveness – Build credibility and achieve cost savings/avoidance n Experimentation – Exploit lessons learned from closed loop innovation efforts n n LOE 4: Expeditionary Contracting as a Joint Force Capability n Present a ready Total Contingency Contracting Force n Sharpen expeditionary training, exercises, and lessons learned n Enhance integration of contracting as a warfighting capability n Amplify OCS planning and integration proficiency 16

Questions 17

BACKUP Slides 18

4. Results Strategic Acquisition Solutions Executive Office & Conference Furniture (100% SB) USAF-wide 5 -yr BPA Savings/Efficiencies: - $4. 44 M (12%) over 3 years Transient Alert Services (100% SB) USAF-wide 5 -yr MAC IDIQ Savings/Efficiencies: - $205 K (5%) in 1 st year Client Computing Solutions (50% SB) USAF-wide 5 -yr BPA Savings/Efficiencies: - $163. 9 M (39%) in 1 st year System & Modular Furniture (100% SB) USAF-wide 5 -yr Contract Savings/Efficiencies: - $15. 29 M (29%) over 4 years Seating I (43% SB) USAF-wide 6 -yr GSA BPA Savings/Efficiencies: - $6. 49 M (11%) over 6 years Digital Printing & Imaging (67% SB) USAF-wide 5 -yr BPA Savings/Efficiencies: - $40. 7 M (32%) over 4 years Maintenance, Repair & Operations (89% SB) USAF-wide 5 -yr BPA Savings/Efficiencies: - $6. 23 M (29%) over 4 years Office Supplies V 3 (96% SB) USAF-wide 5 -yr IDIQ Savings/Efficiencies: - $9. 92 M (16%) over 3 years Land Mobile Radios USAFE EOY Buy Savings/Efficiencies: - $11. 4 M rate and trade-in savings – 2 years Folding Wardrobes Joint AF/Army 5 -yr BPAs Savings/Efficiencies: - $1. 2 M (15%) in 6 years DF-LCS 2 Non-FR Combat Shirt Gen 2 (100% SB) USAF-wide 5 -yr IDIQ Savings/Efficiencies: - $830 K (38%) over 2 years Roofing Replacement Repair (96% SB) USAF-wide 5 -yr IDIQ Savings/Efficiencies: - $14. 86 M (63%) over 3 years Transforming operational acquisition from money spenders to deal makers! 19

Tenant 4. Results Enterprise Sourcing & SB Examples Executive Office & Conference USAF-wide 5 -yr BPA Awardees: 100% SB Digital Printing and Imaging USAF-wide 5 -yr BPA Awardees: 67% SB Roofing Replacement Repair USAF-wide 5 -yr IDIQ Awardees: 96% SB Savings/Efficiencies: $2. 05 M (12%) saved for 1 st 2 yrs Savings/Efficiencies: $25. 4 M (40%) saved 1 st 2. 5 yrs Savings/Efficiencies: $12. 064 M (27%) saved 1 st 1. 5 yrs Increased SB utilization by 38% Increased SB utilization by 14% Transient Alert Services USAF-wide 5 -yr IDIQ Awardees: 100% SB System & Modular Furniture USAF-wide 5 -yr 2 -Tier/C-Type Awardees: 100% SB Savings/Efficiencies: $6. 3 M projected over next 5 yrs Savings/Efficiencies: $11. 6 M (30%) saved 1 st 3 yrs Increased SB utilization by 24% AFMC Small Business Special Achievement Award Market Research Increased SB utilization by 23% 20 Strategic Sourcing increasing SB utilization!! Increased SB utilization by 49%