ACQUISITION PLANNING
Planning to acquire goods or services is an evolutionary process that begins with the development of the statement of need and culminates with the solicitation. “This planning shall integrate the efforts of all personnel responsible for significant aspects of the acquisition. The purpose of this planning is to ensure that the Government meets its needs in the most effective, economical, and timely manner.”
It is during the planning process that the acquisition team identifies risks and opportunities associated with the procurement. The MR＆O process begins at this point in the acquisition process with the development of the “How to Handle Plan.” Procurement planning is a subset of the overall acquisition plan. The plan should contain all applicable technical, contracting, fiscal, and business management factors that govern the acquisition. The magnitude and detail contained in an acquisition plan should be tailored to fit the situation. For example, details included in a plan to purchase supplies in economic quantities are significantly less than what is needed in a plan to acquire a major system.
Figure 3-3 The Traditional ECP Process
Figure 3-4 Overlapping the ECP Process
Determining Requirements
The requirements determination phase includes such tasks as requirements forecasting, market research, defining risks and opportunities, developing initial acquisition strategy, and quantifying the initial budgetary estimate. This estimate is extremely important because it becomes the basis for initial planning and is often the initial amount cited in the fund request submitted up the chain of command. Numerous projects have suffered because they were saddled with an unrealistic initial budget estimate. The initial budget estimate must be realistic because subsequent management decisions must live with this fund projection.
It is a fundamental policy that all government requirements are based on a need that is tied to a mission. The mission must, by law, emanate from a Congressional authorization. Figure 3-5, Overview of the Requirements Determination Process, depicts the requirements determination process from perceived need to preparation of the solicitation/request for bid. This illustration will guide our discussion on how requirements are developed and solicitations/bids are requested.
Needs can be separated into four general sources, each with its own distinguishing characteristics: (1) the need to establish a new operational capability, (2) the need to improve an existing capability, (3) the need to exploit an opportunity to reduce cost, and (4) the need to preserve a current capability through maintaining replenishing inventory.
When maintaining existing equipment or replenishing inventories, the inventory manager originates individual procurement requests. Inventory replenishment is most frequently determined through the use of requirement determination models, which include such variables as past consumption and such mission factors as force size and flying hours, as well as planned distribution points, re-supply times, item value, and procurement and production lead times. With increasing frequency, stock replenishment orders can easily be handled by computer-to-computer exchange without human intervention. The sealed bid method of contracting, with its competitive bids and public opening of bids, is the method most frequently used to replenish inventories. In addition, indefinite quantity agreements and requirements contracts, which will be covered in Chapter 4, are very appropriate contracting methods in lieu of single-purchase contracts.
Figure 3-5 Overview of the Requirements Determination Process
The remaining three sources of needs, i.e., the need for a new operational capability, the need to improve an existing capability, and the need to exploit an opportunity to reduce cost, are based on an assessment of current and projected capability and validated mission needs. The process begins with a broad statement of a requirement that cannot be satisfied with current resources or by nonmaterial means. It is during the requirements determination process that mission needs are translated into an Operational Requirements Document (ORD), which includes the operational and logistics support requirements. There must be a linking of this to possible mission failure. Requirements should be stated in terms of functions to be performed, performance parameters, and essential physical characteristics. The supporting technical and program analysis and initial funding projections are important parts of the requirements determination process but are not discussed in any detail in this book.
For the purposes of our discussion of the requirements determination process, we will assume that the need has been approved and the acquisition team is on board and ready to begin the acquisition process. The mission needs statement has been translated into basic performance objectives.
Two common problems to keep in mind when developing requirements statements are:
1. The requiring activity fails to consider the cost implications of alternative approaches to describing requirements.
2. The CO and others members of the acquisition team fail to conduct systematic search and analysis of alternative solutions to providing the need.
Initially the CO obtains a description of the basic attributes of the product and how it will fulfill the requirement. Using this information, market research is then used to locate alternative sources to satisfy a need. One of the reasons why it is difficult to initially define the desired characteristics of the product is that there is an assortment of technical knowledge that must be translated into an accurate description of the needed product characteristics. Acquisition doctrine calls for participation by the ultimate user in writing the requirements specifications. In the case of development programs, the user and engineer have a tendency to write product descriptions for different purposes. Traditionally, the user describes the performance characteristics. An engineer often tries to specify in minute detail how the product works. This difference can cause a problem because a poor initial description can lengthen the acquisition process. Everything downstream in the process depends on the initial description. However, the ultimate user is not the only stakeholder to determine what product will best satisfy the requirement. Other functions such as logistics (product support), manufacturing, quality assurance, and testing may also be written into the specifications, depending on the product and how it will be employed. Therefore, an acquisition team representing the user, engineering, manufacturing, and logistics must be involved from the outset because each of these areas has its own expertise to contribute. Another advantage to using the team approach to defining the requirement is that the team gains a sense of ownership of the project from the outset.
In 1994 DoD turned away from its traditional practice of using detailed specifications when it canceled many of its detailed MILSPECs and process-oriented MILSTDs. The purpose of this monumental change in policy was three-fold:
1. To reduce the cost of weapon systems and other material DoD sought by eliminating unique military requirements and procedures that drove up acquisition cost
2. To remove impediments to getting state-of-the-art technology into defense weapon systems, especially information systems, telecommunications, and microtechnology, where private R＆D exceeded defense R＆D by a ratio of 2 to 1
3. To facilitate the diversification into the commercial markets of firms that had produced goods for defense purposes.
This change in policy enabled defense agencies to utilize commercial products and services to a greater extent than in the past. Acquisition doctrine now emphasizes the use of non-government standards, program-specific requirements, or tailored portions of MILSPECs and MILSTDs to the maximum extent possible. Rather than stating how the requirements are to be satisfied by using design specifications and citing MILSPECs and MILSTDs, requirements must now describe functions to be performed, performance parameters, and physical characteristics. The buying office is charged to look for different approaches to meeting the user’s needs.
The order of precedence for documenting requirements is: (1) documents mandated for use by law; (2) performance-oriented documents; (3) detailed, design-oriented documents; and (4) standards, specifications, and related publications issued by the government outside the Defense or federal series for the non-repetitive acquisition of items. Performance-oriented specifications emphasize that objectives, measurable performance requirements, and quality standards are to be used in the ORD and statements of work (SOW).
Another policy change introduced with federal acquisition streamlining is that the federal government has tried to make it easier to purchase commercial items. Therefore, the CO is authorized to tailor government contractual provisions and clauses to permit the acquisition of commercial items so they are consistent with standard commercial practices found in the commercial marketplace.
Contracts for acquiring commercial items are subject to the FAR. However, when a policy in the FAR conflicts with one applying to commercial items in FAR Part 12, Acquisition of Commercial Items, the policy in Part 12 takes precedence. The CO may also use streamlined procedures for soliciting commercial items outlined in FAR 12.203. If the price of the items exceeds the simplified threshold but does not exceed $5,000,000, including options, the CO is instructed to follow the simplified procedures authorized by Subpart 13.5 to the maximum extent possible. Contract types that are to be used to acquire commercial items are firm-fixed-price or fixed-price contracts with an economic price adjustment. (The various types of contract pricing arrangements are discussed in detail in Chapter 4.) Indefinite-delivery contracts are contracts in which prices are based on a firm fixed-price or a fixed price with an economic price adjustment. Contracts for the acquisition of commercial items are also subject to a special contract clause, FAR 52.212-4, Contract Terms and Conditions—Commercial Items. Tailoring of contract clauses is permitted for all paragraphs of FAR 52.212-4, with the exception of assignments, disputes, payments, invoices, other terms and conditions, act of yielding, and compliance with the laws unique to government contracts.
Product performance goals are always constrained. Figure 3-6, The Tradeoff Process, illustrates the e-tradeoffs the acquisition team is most likely to encounter during the process. Team members should participate in making these e-tradeoffs at the macro, or total product level, by making their interests known. This will also give team members a better understanding of the basic decisions that were part of the requirements determination process.