Modelo de Gestão de Projeto de Aquisição

PROJECT PROCUREMENT MANAGEMENT TEMPLATE
Public Works and Government Services Canada
PREFACE
The Project Procurement Management (PPM) Template is intended as guidance for procurement managers and the teams involved in complex project procurements. It should be considered to be a work in process that will be refined as feedback becomes available from users. In order to make this document widely available, it is being posted on the PWGSC web site at http://www.ames-mpsl.com Some hardcopies also are being distributed for the convenience of many interested professionals. However, distribution is not controlled. Therefore, hardcopy updates cannot be provided to holders of the document. Rather, you are requested to check the web site to obtain the latest revision which will be indicated by the revision number and date on the cover page. Your comments are solicited. The collective knowledge and experience of the many people involved in complex procurement can be of great value in improving the content of the Template. Please forward your comments by E-mail to tritesr@sos.pwgsc.gc.ca. The author acknowledges the importance to this work of several documents cited herein: SOSB Business Process Renewal Blueprint, Final Report, October 2, 1998; Canadian Government Procurement Guide, Computer Sciences Corporation; 1997. Draft DND Acquisition Reform Guide, Directorate of Business Change Management, March 31, 1998; Systems Engineering Management, Computer Sciences Corporation, October, 1998.
TABLE OF CONTENTS
Section 1. 2. 3. 4. 5. Title Page
FOCUS OF THE PPM TEMPLATE............................................................................ 1 FORCES FOR CHANGE ............................................................................................. 2 THE PPM TEMPLATE AND DESKTOP TOOL ....................................................... 6 INTEGRATED PROCUREMENT TEAMS................................................................ 7 PROJECT PROCUREMENT MANAGEMENT FRAMEWORK .......................... 10 5.1 Phase 1 - Project and Procurement Planning (P&PP) ................................... 10 5.1.1 Validate Requirements ........................................................................... 12 5.1.1.1 Analyze (Review Clients) Requirement ..................................... 13 5.1.1.2 Define Procurement Concept ...................................................... 15 5.2 Phase 2 - Solicitation Planning ........................................................................ 19 5.2.1 Define Procurement Requirements ......................................................... 21 5.2.1.1 Define Business and Technical Requirements ............................. 23 5.2.1.2 Define Project Management Strategy .......................................... 25 5.2.1.3 Define Scope of Contract(s)........................................................ 34 5.2.1.4 Define Reporting Strategy........................................................... 35 5.2.1.5 Define Approval Strategy ........................................................... 36 5.2.1.6 Define the Change Management Strategy.................................... 36 5.2.2 Define Procurement Strategy.................................................................. 36 5.2.2.1 Validate Sources of Supply ......................................................... 38 5.2.2.2 Define Procurement Methodology (Tools & Techniques) ........... 39 5.2.2.3 Define Bid Evaluation Criteria and Basis of Source Selection ..... 39 5.2.2.4 Prepare Bid Solicitation Document ............................................. 40 5.2.2.5 Obtain Management Approval of the Procurement Strategy........ 44 5.3 Phase 3 - Solicitation and Source Selection (S&SS)........................................ 45 5.3.1 Execute Procurement Strategy................................................................ 47 5.3.1.1 Solicit Bids ................................................................................. 48 5.3.1.2 Receive Bids............................................................................... 48 5.3.1.3 Evaluate Bids.............................................................................. 49 5.3.1.4 Select Contractor ........................................................................ 50 5.3.1.5 Negotiate Contract...................................................................... 51 5.3.1.6 Prepare Contract ......................................................................... 52 5.3.1.7 Obtain Contract Approval ........................................................... 52 5.3.1.8 Award Contract .......................................................................... 53 5.4 Phase 4 - Contract Management ..................................................................... 54 5.4.1 Manage Contract .................................................................................... 56 5.4.1.1 Manage Technical, Systems and Quality Performance ................ 57 i
5.5
5.4.1.2 Manage Cost/Schedule and Delivery Performance ...................... 58 5.4.1.3 Manage Government Furnished Resources (GFR) Performance.. 59 5.4.1.4 Administer Contract ................................................................... 59 Phase 5 - Contract Closeout ............................................................................ 59 5.5.1 Contract Closeout................................................................................... 61 5.5.1.1 Physical Disengagement ............................................................. 62 5.5.1.2 Administrative Disengagement ................................................... 62
Figures
Figure Title Page
Figure 1 Procurement Types ...................................................................................................... 2 Figure 2 Social, Industrial and Economic Objectives.................................................................. 3 Figure 3 Desktop Tool Main View .......................................................................................... 7 Figure 4 Integrated Procurement Team....................................................................................... 8 Figure 5 Complex Procurement Effort Profile ............................................................................ 9 Figure 6 Project and Procurement Planning Process ................................................................. 13 Figure 7 Integrated Procurement Team Concept....................................................................... 15 Figure 8 Market Research Service............................................................................................ 16 Figure 9 Procurement Management Plan .................................................................................. 19 Figure 10 Solicitation Planning Process Part I ....................................................................... 21 Figure 11 Options Analysis ...................................................................................................... 22 Figure 12 Business Case Analysis ............................................................................................ 24 Figure 13 SEI Continuous Risk Management Model ................................................................ 26 Figure 14 Dealing with Risk..................................................................................................... 28 Figure 15 Risk Mitigation Through Contract Management....................................................... 29 Figure 16 Choosing From a Plethora of Standards.................................................................... 31 Figure 17 Determining Contract Scope .................................................................................... 35 Figure 18 Solicitation Planning Process Part II...................................................................... 37 Figure 19 Alternative Procurement Strategies........................................................................... 38 Figure 20 Requirements Management Leading to Product Acceptance..................................... 41 Figure 21 Communicating in the Contracting Process .............................................................. 42 Figure 22 Typical Structure of an RFP ..................................................................................... 43 Figure 23 Selection of the Winning Proposal............................................................................ 44 Figure 24 Solicitation and Source Selection Process................................................................. 47 Figure 25 Proposal Evaluation ................................................................................................. 50 Figure 26 Contract Management Process ................................................................................. 56 Figure 27 Contract Management .............................................................................................. 57 Figure 28 Delivery and Acceptance.......................................................................................... 58 Figure 29 Contract Closeout Process........................................................................................ 61 Figure 30 Contract Closeout..................................................................................................... 61
ii
Tables
Table Table 1 Table 2 Table 3 Table 4 Table 5 Title Page
PPM in the Project and Procurement Planning Phase................................................... 11 PPM in the Solicitation Planning Phase ....................................................................... 20 PPM in the Solicitation and Source Selection Phase .................................................... 46 PPM in the Contract Management Phase ..................................................................... 55 PPM in the Contract Closeout Phase............................................................................ 60
Annexes
Annex A B C D E F Title MPSL Services Project Procurement Management (PPM) Template PPM Work Breakdown Structure The Relationship Between The Complex Procurement Functions and Core Competency Areas Life Cycle Wall Charts Sample Activity Templates
iii
ACRONYMS
ABE ACRO AIT AMESS ASD BDP BPR BRU CBP CCC CFP C/SPMS CDRL CEIL CIS CITT CMF CMIS COTS CPAA CPP CSC DID DMS DND DoD EPA FAA FTE Automated Buying Environment Advisory Committee on Repair Agreement on Internal Trade Aerospace, Marine and Electronics Systems Sector Alternative Service Delivery Benefits Driven Procurement Business Process Renewal Bid Receiving Unit Core Best Practice Canadian Commercial Corporation Canadian Forces Publication Cost/Schedule Performance Management Standard Contract Data Requirements Lists Contract End Items List Customer Information Service Canadian International Trade Tribunal Contract Management Framework Configuration Management Information System Commercial-Off-The-Shelf Contract Planning and Advance Approval Common Purpose Procurement Computer Sciences Corporation Data Item Description Document Management System Department of National Defence Department of Defense (US) Effective Project Approval Financial Administration Act Full Time Equivalent
iv
GBO GCRs GETS GFR IM/IT IP IPPD IPS IPT IT LOI LSAR MA&S MCP MOU MPSL MRP NAFTA NDI NSN OBS P&A P&PP PFC PIP PMBOK PMI PMO PMP PNs
Government Business Opportunities Government Contract Regulations Government Electronic Tendering System Government Furnished Resources Information Management/Information Technology Internet Protocol Integrated Process and Product Development Informatics Professional Services Integrated Procurement Team Information Technology Letter Of Interest Logistics Support Analysis Record Material Acquisition and Support Major Crown Project Memorandum Of Understanding Major Project Service Line Manufacturing Resource Planning North American Free Trade Agreement Non-Developmental Item NATO Stock Number Organization Breakdown Structure Price and Availability Project and Procurement Planning Pre-Facilitated Contract Project Implementation Plan Project Management Body Of Knowledge Project Management Institute Project Management Office Procurement Management Plan Part Numbers
PO&M PPA PPM PPMS PPRA PRC PWGSC RCI RFP ROM SAR SEI SI SOA SOI SOO SOP SOR SOSB SOW SPAC SRB SS(ID) S&SS TB TPP TQM UGD WBS WTO-AGP
Personnel, Operations and Maintenance Preliminary Project Approval Project Procurement Management Project Performance Management Standard Project Profile and Risk Assessment Procurement Review Committee Public Works and Government Services Canada Request for Contractor Information Request For Proposal Rough Order of Magnitude Search and Rescue Software Engineering Institute System Integration Special Operating Agency Solicitation Of Interest Statement of Operational Objectives Solution Oriented Procurement Statement of Operational Requirements Supply Operations Service Branch Statement of Work Senior Project Advisory Committee Senior Review Board Synopsis Sheet (Identification) Solicitation and Source Selection Treasury Board Total Package Procurement Total Quality Management Unique Government Development Work Breakdown Structure World Trade Organization-Agreement on Government Procurement
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1. FOCUS OF THE PPM TEMPLATE
Among a broad range of common services, Public Works and Government Services Canada (PWGSC) provides procurement services to federal government departments and agencies. Of the $8 Billion annual expenditure on goods and services, roughly half of this expenditure is in the area of complex procurement that is characterized by significant technical and business risk. Project Procurement Management (PPM) is the effective integration of project management principles and practices in the procurement process. PPM is the PWGSC discipline applied to major acquisition and support projects. The PPM Template presented in this document is based on work processes and the business environment of the Aerospace, Marine and Electronics Systems Sector (AMESS), and specifically, the Major Project Service Line (MPSL) that manages the government's most complex and sensitive project undertakings, characterized by capital expenditures above $50 Million (CAN), with significant risk and project management implications. Within PWGSC there is a well-known distinction between standard and complex procurement. The former is transaction based, characterized by the purchase of commercial goods and services using automated techniques and customer direct-order supply arrangements, such as standing offers. Individual transactions are relatively low dollar value and thousands of contractual documents are issued1. The focus is on Part Numbers (PNs), NATO Stock Numbered (NSN) items and Commercial-Off-The-Shelf (COTS) procurement. In comparison, complex procurements are higher dollar value, more complex, often involving development, integration, business process change, or outsourcing. Complex procurement typically results in fewer contractual transactions, and far more effort in project and procurement planning, source selection, and contract management. Figure 1 illustrates both standard and complex procurement types. On the far left of the figure, Client Delegated procurement activity is performed locally by the client departments within their delegated authority. Catalogued item procurement refers to the simplest type of procurement performed by Supply Operations Services Branch (SOSB), where technical compliance, price and availability are the main selection criteria. Simplified procurement is one step up on the complexity scale because there may be a simple Statement of Work (SOW) or technical specification, or there may be additional selection criteria2.
1 2
Taken from the SOSB BPR Requirement, 14 September 1998 Taken from the SOSB BPR Requirement, 14 September 1998
STANDARD PROCUREMENT
COMPLEX PROCUREMENT
DELEGATED PROCUREMENT AUTHORITY
LOW
DEGREE OF COMPLEXITY
HIGH
Goods & Services Requests
Manufacturers Part Numbers, NATO Stock Numbers, Commercial-Off-The-Shelf
Low Risk and Complexity Simple Spec/SOW
Client Delegated Procurement Process Catalogued Item Procurement Process PWGSC Enablers Standing Offers, Catalogues Simplified Procurement Process
Higher Risk, Complex SOW, Pre-Facilitated Contracts, Capital Equipment, Major System Procurement
Integrated Procurement Team
Local Purchase Orders
Quick Competitions, Electronic Business Via Internet
Review Policies Reduce Open Bidding Times Pre-Qualify Vendors Use of E-Business
Integrated Procurement Team, Contract Management Framework based on Risk, Contract Administration and Resources on Contractors Site SOSB Contracted
SOSB Facilitated
SOSB Contracted
Figure 1 Procurement Types3 There is only one category of complex procurement shown in Figure 1; however in reality there are many gradations of complexity. What distinguishes complex procurement is the need for teamwork between SOSB, the client department and industry through an integrated procurement process to ensure a successful project. This teamwork involves more extensive and earlier teaming with the client, and consultation with industry in order to better define the procurement requirements and position the solicitation process.
2.
FORCES FOR CHANGE
In Canada complex procurement is an instrument of public policy. The social, industrial and economic objectives of federal government procurement projects are identified in Figure 2. The government Treasury Board has emphasized that all procurement must be guided by principles of value for money, fairness, openness, and transparency. In large, sensitive procurements the interests of regional and industrial policy and priorities come into play through a network of advocacy organizations.
Taken from SOSB BPR Report, dated 14 September 1998
SOCIAL, INDUSTRIAL AND ECONOMIC OBJECTIVES
Within the constraints of trade agreements, contribute to a favorable balance of payments, by ensuring that sufficient expenditures occur in Canada to offset project expenditures in other countries Develop the nations industrial base by taking advantage of opportunities presented by major projects to expand Canadian industrial capability in terms of technological opportunities, managerial capability, and production capacity Improve Canadian competitiveness in world markets by stimulating Canadian exports and promoting replacement of imports Provide employment, especially in economically disadvantaged regions of the country Consistent with government obligations under Comprehensive Land Claims Agreements, take into account the current capacity and increased ability over time of aboriginal firms, within settlement areas, to compete for and to successfully complete government contracts.
Figure 2 Social, Industrial and Economic Objectives Within the last several years, national legislation, international trade agreements and aboriginal land settlement agreements have been added to the procurement context. The North American Free Trade Agreement (NAFTA), the World Trade Organization Agreement on Government Procurement (WTO-AGP), and the Agreement on Internal Trade (AIT) govern much of federal government procurement. The Canadian International Trade Tribunal (CITT) is a quasi-judicial body that investigates complaints by potential suppliers. When the CITT investigates a complaint, it makes a determination and recommendations, for example, re-evaluation, retendering or providing compensation. The recommendations of the tribunal are generally implemented by the government organization in question. The federal government has been downsizing in recent years. In the Supply Operations Service Branch (SOSB), program reviews and employee departure programs have reduced the workforce by about 30%. During this period the procurement environment has become more complex. Both internal and external audits and challenge processes are signalling that some core competencies are suffering due to a lack of experienced personnel. As a result of these environmental changes, there is a need to provide guidance and tools for complex procurement. The purpose of the Template is to assist procurement managers and their teams in performing work more effectively. Also, it will assist MPSL in identifying competencies, and in related training and professional development initiatives. The template is also intended to provide an orientation and reference for new employees, customers and other stakeholders, and to support:
A more disciplined, repeatable, and measurable process; PPM competencies; Training requirements; The capability and approach to benchmark the process; and The capability to evaluate the process, products (i.e. RFP, Contract) and the people working in complex procurements.
It is not intended that the Template be used to generate policy for complex procurement. The PPM Template focuses on the procurement services of Major Project Service Line (MPSL) organization, although the processes are generic enough to be applicable branch-wide in complex procurement. Annex A describes the range of MPSL procurement, project and program services that are available to client departments. Some of the driving forces behind the template are: In conducting complex procurement, sophisticated strategies and models are used to incorporate a range of business, technical, and program/project management practices which require high skill levels; The effects of downsizing, outsourcing, and business renewal in PWGSC, client departments and industry means that it is no longer practical to rely exclusively on mentoring to maintain and pass on knowledge; and There is a growing trend toward "projectising" work, even in program service environments, supported by knowledge repositories, accessible through Internet Protocol (IP) based technologies.
The PPM Template approach reflects several major initiatives currently impacting PWGSC procurement operations. The first of these, La Releve is a public sector-wide initiative sponsored by the Clerk of the Privy Council that seeks to modernize service delivery and re-position the human resources to meet present and future needs. The overall PWGSC initiatives supporting La Releve are to: Review the procurement process, mechanisms, and technology; Improve the working environment, increase efficiency, reduce costs, and enhance human resource skills; Identify needed productivity improvements; and Define the impact on PWGSC of the reengineering of PWGSCs largest single customer, the Department of National Defence (DND) and recommend responses that are also suitable for other client departments.
Another high profile PWGSC initiative is Benefits Driven Procurement (BDP). BDP is a set of procurement principles and processes that recognizes the sources and consequences of risk in
complex project procurements, and promotes intervention at appropriate times. It has evolved from experience in Information Technology and System Integration procurements. Under BDP, the contractor is brought in early, before the requirements are fully defined. The contractor works closely with the customer in defining and implementing an appropriate solution. BDP seeks: A reduction in procurement process time and cost to government and industry; Long term business relationships between customers and contractors, Continuous risk management; Business-case management, and The use of best practices.
The PPM Template incorporates BDP processes that have been identified for information technology and systems integration projects. In September 1998 the SOSB business process renewal study phase was completed. The key message in the Report is the need to: Respond to the Shift in Business Foster a Results Oriented Culture from transaction to knowledge-based procurement. methods for meeting productivity demands and government procurement objectives will require employees to assume greater responsibility and accountability in meeting client needs and managing contractual risks. select Information Management/Information Technology (IM/IT) tools that ensure a lead role in the selection and management of EBusiness tools. provide the necessary resources to sustain the change effort, communicate best practices, lead communications, and support a learning organization culture.
Prepare for Electronic Business Create a Learning Organization
The Template also considers acquisition process change underway in DND, for example: Equipment Management Teams New relationships with industry organizational alignment by system being procured or supported; such as long term business relationships, for example in partnering, support and bundling of procurements using Pre-Facilitated Contracts (PFC);
Alternative Service Delivery (ASD)
provision of non-core services by the most appropriate means. After evaluation of alternatives, a government agency or industry will be chosen to provide the service whichever is the most cost effective. that integrates procurement and project management capability outside functional stovepipes.
Strong preference for teaming
The new procurement methods, such as BDP, PFC and ASD are addressed later in the Template. However, it should be noted here that such methods demand a very knowledgeable PWGSC Contract Authority able to devote considerable time to individual complex procurements, supported by project management and contract process expertise.
3.
THE PPM TEMPLATE AND DESKTOP TOOL
PWGSC and customer procurement personnel do not have a comprehensive, easy-to-use guidance document to assist them in doing their work. This need led to the development of the PPM Template and its presentation on a desktop computer tool. The idea of the desktop originated in the US Department of Defense (DoD). A Canadian version is being created by the Department of National Defence (DND) as part of its Acquisition Reform initiative. The MPSL desktop will be linked in the area of common processes to that of DND, in order to ensure compatibility, and to maximize the synergy of guidance tools being used by the two departments. The PPM Template has two immediate customers. First, the MPSL has a requirement for the Template (and the related training gap and needs assessment) as a deliverable for the Branch Business Plan. Second, the branch-wide business renewal process defined a requirement for a Contract Management Framework (CMF) in response to various audits, effectiveness studies and focus group feedback. Detailed activity level templates are being prepared to provide guidance in preparing project and procurement documents, and for different PPM processes, for example, contract management. The Template will be linked through the MPSL web page4 with information on policy, guidance, training and innovative procurement practices, including a library with search and query capability. The Template will also be made available as part of a desktop tool, and in Work Breakdown Structure (Annex C) and wall chart (Annex E) formats. In addition to the template or process view, the desktop tool will contain several other views that allow users to find related
4
MPSL web page: http://www.ames-mpsl.com
information or ask questions and provide input to the desktop repository. The main view of the desktop tool is shown in Figure 3.
PROJECT PROCUREMENT MANAGEMENT
SEARCH QUERY STRUCTURED BUSINESS PRACTICES TOOLS PROCESSES DESKTOP MAIN VIEW TRAINING LIBRARY EDUCATION AND TRAINING WHATS NEW People
Processes
Tools
Figure 3 Desktop Tool Main View The desktop tool enables direct support of all those performing procurement activities who need guidance, templates, computer tools, etc. Updates are immediately available to all users, without the previous cost and time delay associated with distribution of paper. Also, feedback can be readily obtained electronically, enabling lessons learned for example, to be provided when they occur rather than months or years later.
4.
INTEGRATED PROCUREMENT TEAMS
One of the acquisition reforms in the US, UK and Australia is the introduction of integrated product and process teams. Benchmarking studies have concluded that using such teams is a Core Best Practice (CBP) for organizations that manage project business.5 Multi-disciplinary project teams improve the effectiveness of project decisions and work delivery. Many customer and contractor organizations have replaced functional stovepipes with teams and integrated processes that support this concept. The U.S. Department of Defense (DoD) acquisition projects use teaming arrangements that involve government and industry in the development of equipment, software, and business systems. The IPT is a natural evolution of the industry concept of concurrent engineering that replaces the lengthy, sequential processes of design-production-logistics engineering with a much shorter and
5
Project Management Institute (PMI) Benchmarking Research Report, Page 22.
more effective and integrated process. The IPT is characterized by physical co-location of integrated teams, concurrent design, production and logistics engineering; parallel, incremental product and data releases; electronic data replacing paper, GroupWare and collaborative work tools; and overall, integrated product teams and management structure6. The IPT may also include joint contractor and customer decision making through alliances or long-term business relationships. In Canada, federal organizations take on very little system design and development. Most development effort involves modification of existing products to suit customer needs. In DND projects, the IPT has been adapted to the modest scope associated with "development effort", and the customer does not share design authority responsibility with the contractor. However, the IPT approach has a significant impact on the contractor. With the IPT approach, contractors need not write many of the documents now used to describe how it conducts project business. These business practices should be evident to the government team members who participate in the project along side the contractors personnel. Depending on the contract provisions, project business processes can be influenced by all team members. In the Template, the phrase Integrated Procurement Team (IPT) has been used to describe the team concept. (DND uses the term: Integrated Project Team.) One of the most important recommendations from PWGSC and DND business process renewal is the early formation of the IPT. Larger projects often have specialists in functional areas, such as systems engineering and integrated logistics support. Some teams will have a member from Industry Canada who will address Industrial, Regional and Aboriginal Benefits. A few projects will also have a small team co-located with the contractor. The concept of an IPT is illustrated in Figure 4. Significant effort needs to be devoted to training procurement personnel in the reform concepts that are being implemented, for example the roles of IPT members in relation to departmental mandates.
CLIENT DEPARTMENT
Finance Technical Operations Contracting
r r
Use of information technology Shared access to computer tools and databases
CONTRACTOR
Figure 4 Integrated Procurement Team

6
Taken from the Canadian Government Procurement Guide, B.F. Hough, CSC.
OTHER DEPARTMENTS
PWGSC
"During interviews conducted as part of the PWGSC and DND business process a common theme was the importance of adequate staffing to manage the procurement. Obtaining qualified people, ensuring adequate training, avoiding excessive staff turnover, and benefiting from prior project management experience were all concerns. Human resources deficiencies can adversely affect the ability of a project office to progress in a timely and efficient manner.7" This research suggested that SOSB and client departments no longer have the necessary experienced personnel to manage complex procurements. To partially offset this problem, many project offices have obtained expertise and assistance by contracting for support. Examples are: Establishing a cadre of contractor support staff called a Project Management Support Office - to provide specialized engineering, logistics and project management support; Hiring experts in specialized topics where such highly skilled resources are not available within the Branch; and Hiring consultants to perform or assist with time consuming tasks, such as drafting the Statement of Work and specifications8.
These concerns are being addressed by MPSL in the competency/gap/training and recruitment process, and in DND through implementation of the Project Management Occupational Analysis and related improvements in training. Figure 5 illustrates the project procurement life cycle, and the five (5) the PPM phases. IPT members work together throughout the project to achieve the procurement objectives.
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Objectives & Constraints Defined Requirements Defined Solution Defined
ACQUISITION MILESTONES
Product Accepted Delivery & Installation Complete Logistics Product Support Qualified Fielded Support Planned INDUSTRY GOVT
EFFORT
KEY DOCUMENTS
Statement of Requirements Performance Specification Detailed Specifications
Maintenance Plan Test & Evaluation Reports Product Baseline
TIME
Figure 5 Complex Procurement Effort Profile

7 8
DND and PWGSC interviews conducted in 1998. Taken from DND Acquisition Reform Guide, Team Leader G. Reinhardus, Author B.F. Hough.
5.
PROJECT PROCUREMENT MANAGEMENT FRAMEWORK
The approach taken in defining the Project Procurement Management (PPM) business process was a topdown, hierarchical method comprising the following elements: Governance and Accountability Framework PPM Concepts PPM Process Template PPM Activity Templates a review of government, central agency and departmental mission and business planning documents to verify that PPM is an initiative consistent with the current vision for the Branch. were developed to link PPM activities with goals, competencies and responsibilities. were defined to relate the objective of each activity to the process and its output/outcome. are being prepared in order to provide detailed guidance for each PPM process. These templates will contain how to information that will be contributed and maintained by subject matter experts.
The PPM processes identified in the Template are shown in a Work Breakdown Structure (WBS) in Annex C. Sample Activity Templates are contained in Annex F. 5.1 Phase 1 - Project and Procurement Planning (P&PP)
The Guide to the Project Management Body Of Knowledge (PMBOK) defines the procurement planning process as "determining what to buy and when"9. The process includes identifying project needs that can be best met by procuring products or services outside the project organization. The concepts presented in Table 1 are aimed at giving a high-level view of PPM in relation to the project phase goals, responsibilities, and needed competencies. PPM is also linked to inputs, tools and techniques, and outputs of the project phase.
PMBOK, Procurement Page 132.
10
Table 1 PPM in the Project and Procurement Planning Phase

COMPETENCY AREA Financial Management Project/Technical Management Capability Assessment Risk Management Procurement Management Procurement Management GOALS10 Confirm project priority and affordability Determine or confirm project feasibility Assess project organization capability Assess the project risks Determine allocation and IPT membership Determine the overall procurement approach TOOLS & TECHNIQUES Concept/Development phase outputs Project and Procurement business capital plans and resource forecasts RESPONSIBILITY IPT = Input D = Decision D = Strategic, financial and user organizations IPT D = Project Leader/Manager/Director D = Project Leader/Manager IPT D = Project Manager IPT D = Project Manager IPT D = Project Manager OUTPUTS Planning for P&PP phase and definition of project performance objectives File allocated within Branch, and IPT defined Business Case Template SOR Template and preliminary SOW/SPEC Life Cycle Costing Model Project Scope Statement and Work Breakdown Structure (WBS) COTS, SOP, UGD11 content Results of Capability & Risk Assessment Project constraints and assumptions Options analysis, trade-off studies National objectives in procurement Other planning outputs Capability and risk impacts Expert judgement Surveys, Market/Product Research, Letter of Interest Industry Canada review Preliminary WBS, cost, schedule, quality, cash flow, risk management planning, phasing, gates, ramps Mitigation plans and action Refine/integrate with risk planning Potential Sources of Supply and Capability Assessment Procurement Review Committee12 Record of Decision Procurement Management Plan (PMP) - draft
INPUTS Program approval to proceed with planning System or commodity designation Business Requirements and Case Statement of Operational Requirements (SOR)
10
The idea of linking PPM processes to goals and inputs-outputs is taken from the BDP Guide (Godcharles, Goulet and Fournier) and the PMBOK. 11 Commercial-Off-The Shelf, Solution Oriented Procurement, Unique Government Development these are Treasury Board Secretariat defined procurement strategies 12 For major Crown projects, the Senior Project Advisory Committee; for R&O, the Advisory Committee on Repair and Overhaul
11
5.1.1
Validate Requirements
Validate Requirements starts with review and analysis, from a procurement perspective, of the outputs of the client departments project identification phase. Based on the review of the draft requirement documents, the procurement responsibilities, including planning and control are determined, and the Integrated Procurement Team (IPT) membership is determined. The process is defined in the Supply Manual Memorandum Of Understanding (MOU) of Procurement Activities as: the definition of operational needs13. It starts with problem identification and is completed with the start of the Development Phase when a number of options to satisfy the requirement are examined. Validate Requirements is the first point of contact between an SOSB account manager and customer requirements and/or project office staff. This contact may occur prior to or during the identification/concept phase when the project objectives and requirements are being defined. The typical program management activities in the identification phase are: Description of the operational deficiency; Identification of potential solutions in broad terms; Rough Order of Magnitude (ROM) cost estimate; Creation of Project Charter; First Statement of Operational Requirements (SOR) or Business Requirements; and Identification of cash phasing in the capital planning process.
In DND, the Identification Phase culminates in a Program Decision Document, the Synopsis Sheet (Identification) or SS(ID). The purpose of the SS(ID) is to obtain: Agreement on the deficiency or need; Agreement on the proposed options to be examined; Funding for the Development Phase; and Planning approval for the anticipated capital cost.14
The PPM Process in the Project and Procurement Planning Phase is shown in Figure 6. Each process is then described below.
13 14
DND/PWGSC Responsibility Matrix, Page 3. CFP 125, Chapter 7, Page 46. Note: This is not capital project cost approval.
12
PHASE 1 PROJECT AND PROCUREMENT PLANNING15

VALIDATE REQUIREMENTS Analyze (Review Clients) Requirement Define Performance Objectives Determine Allocation and Teaming Identify and Form Integrated Procurement Team (IPT) Define Procurement Concept Identify Sources of Supply Identify and Define Procurement Concept Refine Performance Objectives Prepare Procurement Management Plan (PMP)
Figure 6 Project and Procurement Planning Process 5.1.1.1 Analyze (Review Clients) Requirement Objective: To understand the problem, deficiency, or opportunity; to understand the views of the sponsor and stakeholders; to ascertain the state of requirement documents; and to determine the project management required for the procurement. Process: Contact the project sponsor and stakeholders. Review the preliminary requirement documents and background project documentation such as the deficiency description, ROM estimates, Project Charter, Work Breakdown Structure (WBS), and Risk Assessment to determine procurement implications and obtain inputs for the Procurement Management Plan (PMP). Output: Customer contact is made, project and requirement documents are reviewed and analyzed, and procurement implications are determined The PMP is started for the project, with inputs from key documents and contact points.
Define Performance Objectives Objective: To assist the client department in defining the top-level acquisition objectives of the project.
15
The PPM process is shown without numbering. Annex C contains a numbered of WBS view of PPM.
13
Process: Review requirements documents, such as draft Statement of Operational Requirements (SOR) and the options analysis that identify alternative ways to satisfy the required capability of the project. Since the identified options are the basis for Development Phase trade-off decisions, the earlier that all credible solution alternatives are considered, the more quickly the procurement can proceed. Since project performance objectives typically relate directly to procurement objectives (expressed later as contract performance requirements), it is essential that there is procurement input to the customer at this point in the project. Output: Project objectives expressed in the requirement documents and in the Project Charter are clarified.
Determine Allocation and Teaming Objective: To determine which SOSB organization and personnel should team with the client department organizations to conduct the project procurement. Process: The procurement file is allocated based on considerations such as system or commodity designation, product and project management complexity, and the need for planning, control and risk management expertise in support of the procurement. Teaming within and between sectors also is identified where procurements cross organization boundaries. Output: File allocation, SOSB and sector teaming is identified and recorded in the PMP. The Contracting Authority office and individual file holder is identified as the single point of contact with customer requirements staff and the Project Manager. Teaming within and between sectors is established. The source of particular expertise, for example planning and control, is identified.
Identify and Form Integrated Procurement Team (IPT) Objective: To identify and assign the IPT members that will be responsible to execute the end-to-end procurement process, including the transition from capital acquisition to operations and support procurement. Process: The IPT is formed at the call of the Project Manager, and in conjunction with other product or process teams supporting the project objectives. The IPT is composed of core members (technical specialist, logistics/financial specialist, operations specialist (user representative), contracting specialist and many supporting specialists that provide, for example, legal, cost, risk, policy, trade agreements, and security advice. Figure 7 illustrates operation of the IPT. The IPT operates under the direction of the Project Leader from the client department. Under the Project Manager, the core team accomplishes the
14
many tasks in the procurement process. The specialists provide inputs as needed. Interaction with industry is via procurement instruments, such as the Request For Proposals and resulting contract. The selected contractor is responsible for satisfying the specified requirement by developing/providing the needed new or enhanced operational capability. Output: IPT membership and responsibilities are established and recorded in the PMP.
SPECIALIST SUPPORT
Policy Advise Risk Assessment Cost Accounting Legal Advice Security Advice
CORE TEAM PROJECT LEADERS DIRECTION Project Management Operations Technical Contracting Finance
Supply System Expertise
INTERACTION WITH INDUSTRY
Quality Standards Expertise Test and Evaluation Capability
Documentation Support
Configuration Management Support
REQUIREMENT
PROCUREMENT PROCESS
OPERATION CAPABILITY
Figure 7 Integrated Procurement Team Concept 5.1.1.2 Define Procurement Concept
Using the output of Validate Requirements, this process identifies potential sources of supply, links project and procurement objectives, and starts the formal procurement planning process. Identify Sources of Supply Objective: Using requirement documents, suppliers are assessed to verify the availability of products that meet the requirements; their ability to modify products to meet user requirements; and their willingness to propose solutions that maximize Commercial Off-The-Shelf (COTS) product and service content.
15
Process: Researching sources of supply can involve interaction with users, contacting companies for information, and getting source and product information from other users (e.g. allies) or mining the wealth of information on the internet.16 In addition to these methods, technical journals, unsolicited proposals, Price and Availability (P&A), catalogues and conferences, surveys, and plant visits are techniques to identify potential sources. Information on the historical performance of these sources can also be useful, even at this stage of planning. This Process should stimulate industry interest in the project, and focus on their capability to adapt existing (COTS) solutions to the project requirements. PWGSC provides a valuable service to client departments in assisting with Market Research as suggested by Figure 8. Output: The potential sources of supply, and the procurement assessment of the COTS alternatives identified for the project are recorded in the PMP.
MARKET RESEARCH SERVICE
USERS ALLIES INTERNET JOURNALS COMPANIES
...
SOURCES OF SUPPLY
Before buying goods and services, get to know the market.

Availability of products to meet the requirement as is; Ability of suppliers to modify their products to meet the users requirement; and Flexibility of users to modify their requirements to allow the purchase of commercial-off-the-shelf goods and services.
Figure 8 Market Research Service Identify and Define Procurement Concept Objective: To identify and conduct preliminary analysis of considerations that will impact the procurement strategy. Process: The procurement concept includes an examination of topics such as: Identifying opportunities for using Benefits Driven Procurement (BDP). In this phase the Project Team is: Preparing a Business Case
16
DND Acquisition Reform Guide, Team Leader G. Reinhardus; Author B.F. Hough.
16
Determining if information technology solutions for the need exist Performing an evaluation of the departments project management and software process management capability Preparing project scope and risk assessment Assess applicability of the BDP approach and seeking project approval
In addition to BDP considerations, the procurement concept involves consideration of: Canadian vs. off-shore industrial capability, that may require assessment of major policy and trade legislation issues Need for Government Furnished Resources (GFR) Technology transfer, patents, licensing and royalty issues The overall procurement timeline and process; major project and contract milestones Preliminary identification of procurement effort/resource level Target cost and cash flow Identification of appropriate authorities (technical, design, system, inspection, quality assurance) Need for and coordination of interdepartmental or international agreements Identification of relevant standards and templates for technical and project management disciplines Project Management needs and capability Risks and mitigation strategies17 With the introduction of trade agreements like NAFTA, WTO-AGP and AIT, the non-competitive approach to the procurement process is called limited tendering. It is a deviation from the competitive process including the ability to contact a sole or single supplier or a number of suppliers individually. The conditions under which limited tendering may be used are very specific, and the Supply Manual, paragraph 5.030 should be consulted for the details. In all cases the client must provide the rationale for exceptions to competitive procurement before a procurement strategy that uses limited tendering can be followed.
The appropriate procurement approach for the project depends upon many factors, such as the nature of the project, the time and resources that you have and the market place availability of a solution. The points of involvement and resulting effort profiles vary, depending upon the procurement concept selected. For example, under BDP, industry is
17
Canadian Government Procurement Guide, B.F. Hough, CSC.
17
brought in when the project objectives are clear, but requirements have not yet been specified. The requirements definition work is largely transferred to industry. Under Commercial-Off-The-Shelf procurement, product development effort and risk is avoided. However, the specific (logistics) support requirements must still be planned. With Total Package Procurement, life cycle product support is provided by industry, and maintenance planning is simplified18. Feedback on the Procurement Concept should be sought within the IPT(s) and from potential sources of supply. Output: A preliminary review and analysis of factors contributing to the procurement concept is recorded in the PMP. In many cases, this analysis will raise questions that may not be answered until later in the procurement process, or conditions may change, requiring further review of how these factors will influence the procurement.
Refine Performance Objectives Objective: To review and refine the procurement objectives using feedback from within the IPT and from potential sources of supply. Process: Using the outputs of early dialogue with industry, requirements and business planning documents, the procurement concept, and the project life cycle methodology, review and refine the procurement performance objectives. Output: Using project, requirements, and procurement planning and industry feedback (e.g. homepage, industry days, plant visits, company presentations), update the performance objectives and requirement documents. This results in revisions to requirements definition documents, such as Statement of Operational Requirements, Statement of Objectives, Business Requirements and any preliminary specifications.
Prepare Procurement Management Plan (PMP) Objective: To integrate the planning effort of the IPT in a single procurement plan that will be used for overall management, coordination and communication of procurement activity, and as the basis for the contract approval strategy. Process: Using information gathered in the activities to date, prepare a draft of the PMP and review it within the IPT. The PMP evolves over the life of the procurement as it adds content on project, contract management and contract administration activities. An outline of the PMP is presented in
18
DND Acquisition Reform Guide, Team Leader- G. Reinhardus; Aughor B.F. Hough.
18
Figure 9. The PMP is both a plan and a record of the key activities and decisions during the life of the project procurement.
1.
Output: The draft PMP is prepared.

Description Requirement

5.
Procurement Milestones

Budget and Financial Code
RFP Issued Bids Closed Contract Award Deliveries Commence Contract Complete
2.
Need Date Policy Issues

Authorization Reference Risks (Time, Cost, Performance) Protection of the Crown
6.
3.
Contract Administration Sourcing

Additional Comments Any additional information that the Approval Authority should be aware of. Revisions To The Plan
Procurement Method Trade Agreements Competitive vs Sole Source Multi-Sourcing
7.
Approved By:
4.
Evaluation Criteria Best Price, Best Value, Best Technical Socioeconomic Considerations
Figure 9 Procurement Management Plan 5.2 Phase 2 - Solicitation Planning
The PMBOK defines solicitation planning as "documenting the project requirements and identifying potential sources of supply"19. The process includes preparing all the documents that will be necessary in the solicitation and source selection phase. These concepts are presented in Table 2.
19
PMBOK, Procurement, Page 137.
19
Table 2 PPM in the Solicitation Planning Phase

COMPETENCY AREA Multidisciplinary Project/Procurement/Technical Management GOALS Define Procurement Requirements in Bid Solicitation Documents Determine contract scope (WBS), for example bundling, PFC, BDP, ASD opportunities Determine applicability of trade agreements Multidisciplinary Technical/Procurement/Cost & Pricing Management Procurement Management Define Contract Management and Administration strategies Define evaluation methodology and basis of selecting the winning bid Obtain advance approval for procurement strategy TOOLS & TECHNIQUES Document templates RESPONSIBILITY IPT = Input D = Decision IPT D = Project Manager IPT D = Project Manager D Procurement Manager20 IPT D = Procurement Manager IPT D = Project Manager IPT D = Procurement Manager OUTPUTS Requirements documents consistent with procurement strategy and best practices Contract documents: T&Cs, SOW, SPEC, Plans, DIDs/CDRL, Master Schedule, WBS Document templates Evaluation Plan- Methodologies, criteria (attributes, weighting, thresholds) and basis of selection. Evaluation team resources. Suppliers aware of pending procurement, knowledgeable about requirements in relation to capabilities Update mitigation plans Independent estimates
INPUTS Scope Documents: WBS, SOW, SPEC, Plans, cash flow Draft Contract documents: T&Cs, SOW, SPEC, Plans, DIDs/CDRL, Master Schedule, WBS Evaluation Methodology and Basis of Selection
Potential Sources of Supply
Guidance documents: Communication with industry- Industry Days, feedback on draft solicitation documents, site visits and presentations Procurement risk assessment, risk tools Expert judgement, estimating techniques
Risk Mitigation Plans and Results Life Cycle Costing and preliminary Estimates
20
In this context Procurement Manger is the PWGSC lead IPT position. Finance and logistics represents the DND procurement position.
20
Solicitation planning processes are grouped under: Define Procurement Requirements; and Define Procurement Strategy.
Part I, the PPM Process in the Solicitation Planning Process, is shown in Figure 10. Each process is then described below. PHASE 2 SOLICITATION PLANNING (PART I)
DEFINE PROCUREMENT REQUIREMENTS Define Business and Technical Requirements Define Project Management Strategy Define Risk Management Strategy Define Contract Management Strategy Define Delivery and Acceptance Strategy Define Quality Assurance Strategy Define Financial Management Strategy Define Government Furnished Resources (GFR) Strategy Define Bid Solicitation Strategy Define Contract Administration Strategy Define Scope of Contract(s) Define Reporting Strategy Define Approval Strategy Define Change Management Strategy
Figure 10 Solicitation Planning Process Part I 5.2.1 Define Procurement Requirements
This group of processes involves developing procurement strategies and preparing the solicitation documents and resulting contract(s). The emphasis is on defining strategies, within the IPT, for project and risk management, contract management and administration. These strategies are defined during the project Development Phase when the selected options are being studied in detail. The process provides the Rough Order of Magnitude (ROM) costs (capital and personnel, operating and maintenance costs). It also identifies the benefits, risks and opportunities of each option with a view to finding the best option to further define in detail, if necessary, during a Definition Phase. Options analysis is conducted in an iterative fashion, starting with an assessment of the various ways of meeting the need. For example, an operational capability (e.g. sovereignty patrol) could be carried out in many different ways. Figure 11 illustrates options analysis and provides basic advice. In the development phase, one would examine the options selected during the identification phase, before selecting long range
21
patrol aircraft, and then define the particular aircraft that will best meet the operational requirement.
Example:
6 Conventional Jet Aircraft 5 Total System Cost Per Pound of Payload on Station Small Long-Endurance Aircraft 4
Define operational need Identify options Analyse each option Select preferred option
2 Large Long-Endurance Aircraft 1
0 0 50 100 150 200 250
Aircraft Payload Weight (Thousands lbs.) Antisubmarine Warfare Patrol Aircraft Operations
Source: Cost Considerations in Systems Analysis, G.H. Fisher, Rand, 1971
Note: Stay at high level. Leave implementation details to industry.
Figure 11 Options Analysis Key program management activities in the Development Phase are: Options analysis/feasibility studies to examine the capability levels that would be provided by the options; Cost estimates of both acquisition and life cycle support; Assessment of industry capability in terms of technology, personnel and priorities; Socio-economic21 and market studies; Price and availability studies; Refinement of the SOR; Project Profile and Risk Assessment (PPRA)22 for large projects; Shift of project leadership from sponsoring organization to the implementing organization; and Substantive estimate of the Definition Phase cost.23
21 22
Typically these are Industry Canada assessments of the project potential to generate Industrial Regional Benefits This is an assessment used by the Treasury Board Secretariat to determine how the project should be managed 23 CFP 125, Chapter 7, Project Approval, a substantive estimate is one that is sufficiently accurate to support entering into contract
22
5.2.1.1
Define Business and Technical Requirements Objective: To define, in terms suitable for contracting, the operational requirement or business case, and the technical description of the operational need, including applicable portions of specifications and standards. Process: The definition of technical requirements is an iterative process that starts with operations/user personnel describing their needs in a Statement of Operational Requirements (SOR) or in a Business Requirements document. A Statement of Operational Objectives (SOO) may also be used to define the primary performance, operational and support system objectives of the project. This permits earlier contractor participation in defining performance specifications. In general, requirement documents should state performance or functional objectives rather than require design solutions.24 In this phase, the SOR or Business Requirements should be refined with user, stakeholder, and potential supplier input. Potential suppliers will need key operations, system and support information to assist in providing input on the SOR or Business Requirements, and or to help in preparing or validating specifications. 25 Many departments now require business case methodology to obtain approval for any capital major expenditure. Preparation of the Business Case, in conjunction with the business requirements document is commonplace in Information Technology projects. Figure 12 describes a business case analysis approach that can be used to establish and maintain a business requirements baseline for the project.
24 25
Canadian Government Procurement Guide, B.F. Hough, CSC. Canadian Government Procurement Guide, B.F. Hough, CSC.
23
1.
DEFINE OBJECTIVES
2. BASELINE CURRENT PARAMETERS 3. IDENTIFY ALTERNATIVES FORMULATE ASSUMPTIONS
4.
5.
DETERMINE COSTS OF EACH ALTERNATIVE
6.
DETERMINE BENEFITS OF EACH ALTERNATIVE
7.
COMPARE ALTERNATIVES PERFORM RISK ANALYSIS MAKE DECISION MAINTAIN BUSINESS CASE
8.
IDENTIFY RISKS
9.
10.
11.
Figure 12 Business Case Analysis The process of preparing a business case involves: Define Objectives Baseline Current Parameters Identify Alternatives Define the required capability. Record the life cycle costs and benefits/ shortcomings of the existing situation to provide a baseline against which to measure future costs and benefits. Identify viable alternatives. (This step is iterative main alternatives are addressed first, then subalternatives.) Collect, organize, evaluate and summarize necessary data. Identify important assumptions up front. (These become evident as the business case is developed.) Identify and estimate life cycle costs for each alternative. Perform crosscheck analysis to validate important data.
Formulate Assumptions Determine Costs
24
Determine Benefits Compare Alternatives
Identify life cycle benefits for each alternative. Compare alternatives. Focus on cost drivers and their impact on the decision. Conduct payback analysis to determine when the investment will be recovered. Establish a tentative ranking of the alternatives. Determine the significant risks associated with each alternative. For each significant risk, assess its likelihood and potential impact, and identify a risk mitigation method. Determine if the risks alter the ranking of alternatives. Weigh the evidence, determine the preferred solution and list the main reasons this alternative is selected. During implementation, maintain and update cost, benefit and risk analysis data to verify the decision and demonstrate goal achievement. Use this data to guide refinements26.
Identify Risks Perform Risk Analysis
Make Decision
Maintain Business Case
Output: Statement of Operational Requirements (SOR), Statement of Objectives (SOO), business requirements or Business Case, as appropriate, is prepared or refined. Combining the SOR, and other requirement documents (e.g. Concept of Operations and systems studies) is also good practice in streamlining project documentation.
5.2.1.2
Define Project Management Strategy Objective: To develop strategies for each of Risk and Contract Management, and Contract Administration. Process: Developing the project management strategy, in conjunction with the procurement strategy well in advance of the solicitation, emphasizes the importance of project management as applied to contract management. These strategies become elements of the PMP, and they form the basis for the various roles of the project team after the contract has been awarded. It is
26
CSC.
25
important to ensure adequate resources are available to the IPT to support contract management, for example, in the area of earned value management. Output: The IPT defines and records in the PMP the project, risk and contract management strategies that will be used in the contracting process.
Define Risk Management Strategy

Risk management is recognized by client departments as an important aspect of the acquisition process. A risk assessment is required as part of the project approval process. Bidders are often required to identify significant risks and risk mitigation methods in their proposals. Project implementation often involves preparation and implementation of a risk management plan.27
Objective: To apply continuous risk management in the project procurement. Process: Figure 13 illustrates the principles behind the Software Engineering Institute (SEI) Continuous Risk Management model which has been specifically developed to apply to complex procurement projects, particularly projects involving significant design, development, and integration effort. These projects often involve risk to cost/schedule/performance objectives. Process, methods and tools that encourage communication and teamwork are part of the full SEI model.
N CO
TR
OL
ID EN TI FY
CON P L A N TIN GEN CI
ES
Source: SEI Continuous Risk Management Guidebook
Figure 13 SEI Continuous Risk Management Model28

27 28
DND Acquisition Reform Guide, Team Leader G. Reinhardus; Author B.F. Hough. Continuous Risk Management Guide. Carnegie Melon University, Software Engineering Institute. Page 267.
AN
AL
YZ
TRACK
COMMUNICATE
26
The steps in the SEI Continuous Risk Management Model are: Identify Risks Analyze Risk Data Search for and capture risks before they become problems. Capture statement of risk and context. Transform risk data into decision-making information. Determine what is important and set priorities. Evaluate impact, probability, and timeframe; and, classify and prioritize risks. Translate risk information into decisions and mitigation plans and implementation. Monitor risk indicators and mitigation plans/actions. Acquire, compile and report data on risk mitigation. Correct for deviations from the mitigation plans. Corrective actions impact process and product. Change plans as needed. Analyze tracking data and make decisions. Provide information and feedback on current and emerging risks. This is the key function that links and drives the others. Steps are iterative, and each step is a vehicle for the communication of risk.
Plan Contingencies Track Risks and Responses Control Mitigation
Communicate
Given that much of the project risk occurs within the procurement process, it is important that risk management is a continuous process. Figure 14 indicates the some methods that can be used to identify and manage risks, and a short discussion of techniques follows the figure.
27
EXPERIENCE-BASED RISK MANAGEMENT

RISK IDENTIFICATION Brainstorming RISK ANALYSIS Estimated Impact On: Technical Schedule Cost Socio-Economic Benefits Other
Structured Walk-Throughs
Problem Reporting COMMUNICATION RISK TRACKING AND CONTROL Risk Matrix in Bid Risk Management Plan Risk Tracking Process CONTINGENCY PLANNING Technical Margins and Fallbacks Slack in Schedule Contingency in Budget Flexibility in Economic Benefits Risk Mitigation Planning
Figure 14 Dealing with Risk29 Brainstorming is effective during early project planning. What problems were experienced with similar projects? Are all stakeholders on side? Is the schedule overly optimistic? Is the state of the art being exceeded? Once a project plan has been developed, a structured walk-through of project information the work breakdown structure, critical path method schedule, product breakdown structure, etc. can be used to identify potential problem areas. During project implementation, a problem reporting process should be established. Typically the government project manager and industry counterpart can designate issues as risks to be entered into a problem tracking database. Each identified risk is assigned to someone, get well plans are formulated and the risk is tracked to resolution.30
The project plan should include contingencies to allow for technical problems, work slippage, cost over-runs, and difficulties in accomplishing economic benefits goals.
29 30
Systems Engineering Management, B.F. Hough, CSC. DND Acquisition Reform Guide
28
Output: Strategy is prepared by IPT and recorded in PMP to identify and analyze risks; plan contingencies; and track, control and communicate project risk status.
Define Contract Management Strategy Objective: To develop, within the IPT, an overall framework and individual strategies for contract management in the areas of Delivery and Acceptance, Quality Assurance, Financial Management, and Government Furnished Resources. Process: In developing the contract management strategy, the IPT focuses on the work areas of contractor performance that will be monitored after contract award, and the associated contractor processes that will be evaluated during source selection. Contractors should be aware of the nature and degree of contract management envisaged by the IPT, and its consistency with the procurement strategy. Figure 15 illustrates the risk mitigation function of contract management. Output: Strategy is prepared by the IPT and recorded in PMP for Delivery and Acceptance, Quality Assurance, Financial, and Government Furnished Resources.
Strategies to Mitigate Risk (Examples) Critical Indicators (Examples)
Financial Mgt
Value for Money
Risk Identification and Evaluation Delivery Objective To Manage Risk GFR Tech Perf
Technical Performance
Fit with Performance Specification
RISK
Fin Mgt
QA Test and Acceptance
QA Inspection and Acceptance
Delivery
Time and Location of Delivery
GFR
Fitness for Use
Figure 15 Risk Mitigation Through Contract Management
29
Define Delivery and Acceptance Strategy Objective: To develop and record the strategy for continuous monitoring, including feedback and corrective action, of activities associated with delivery and acceptance. Process: The strategy should address all mechanisms that will be used to monitor delivery and perform acceptance, for example: Establishing credible product/service delivery and in-service dates Preparing acceptance criteria for deliverables Monitoring of contractor progress reports; master, support, and special schedules; earned value data; and the effectiveness of related project management processes including change control; Packaging, Handling, Support, Transportation (PHST) (e.g. hazardous materials) planning; and Expediting and follow-up on delivery status and delays, and unsatisfactory performance until final delivery.31 Output: Strategy prepared by the IPT and recorded in the PMP of all mechanisms that will be used to monitor delivery performance and perform acceptance.
Define Quality Assurance Strategy Objective: To develop and record the Quality Assurance Strategy that will be used to monitor contractor performance. Process: Quality Assurance processes include the ISO 9,000, 10,000 and 14,000 series standards and guidelines, proprietary approaches (e.g. Deming, Juran, Crosby) and non-proprietary approaches such as Total Quality Management (TQM) and Continuous Improvement. Quality Assurance is typically a technical specialist function, and a subject matter expert should form part of the IPT and should lead the effort to define this strategy. The strategy should address the following elements: Quality Planning (identification of standards and tailoring); Quality Assurance (ensuring project/contract activity meets standards); and Quality Control (monitoring project/contract results for compliance, and resolving unsatisfactory performance).32
31 32
BPR Team #1 Report. PMBOK. Quality Assurance.
30
With the cancellation by the US DoD of its military standards and the growing use of international and commercial standards, it is becoming more difficult to define quality and process related requirements. There are many competing standards to choose from. Just staying informed about what standards exist, which are widely accepted, and what is the latest version, is a real challenge. Also, selection of any given set of standards may have unintended effects on companies ability to bid. This new challenge, highlighted in Figure 16, applies to quality assurance, engineering and logistics, and project management disciplines. Output. Strategy prepared by the IPT and recorded in the PMP for Quality Planning, Assurance and Control.
CHOOSING FROM A PLETHORA OF STANDARDS

- A NEW CHALLENGE IN PROCUREMENT
INTERNATIONAL STANDARDS
ISO 9,000 Series ISO 10,000 Series ISO 14,000 Series
INTERNATIONAL ASSOCIATION AND INSTITUTIONS STANDARDS
PROPRIETARY GUIDANCE
- Capability Maturity Model - Continuous Risk Management - Configuration Management - Failure Modes, Effects and Criticality Analysis Total Quality IEEE - Systems Engineering Management SOLE - Supportability Continuous Improvement
SEI SEI EIA SAE
Deming Juran Crosby etc.
NON-PROPRIETARY GUIDANCE
Figure 16 Choosing From a Plethora of Standards Define Financial Management Strategy Objective: To develop and record the Financial Management Strategy that will be used to monitor contractor performance. Process: The strategy should address all mechanisms that will be used to monitor delivery performance, for example:
31
Verify the time, cost elements and other factors charged to the contract; Ensure that contract billings are in accordance with contract provisions; Ensure that the work is performed; that products and services have been delivered, or (in the case of progress payments) that work in progress is reasonable and payment is in accordance with contract provisions; Correlate progress and earned value status and projections with actual and planned billings; Monitor time recording system and cost accounting system; Monitor contractor financial and cost/schedule performance; and Verify financial input to contract closeout.
Output: Strategy prepared by the IPT and recorded in the PMP for management of cash flow, funds, budget, payment, cost, price and rate determination, and performance management.
Define Government Furnished Resources (GFR) Strategy Objective: To develop and document the GFR Strategy that will be used to monitor contractor performance. Process: GFR should be provided on an exception basis only when contractors cannot provide the appropriate resources. Coordination of the provision of GFR may impose significant administrative effort on the IPT. The timeliness and quality of GFR delivery brings with it contract risk and the need to track the availability of incoming/outgoing resources in order to avoid consequential delays and cost growth. The strategy should address all mechanisms that will be used to manage the GFR, for example: GFR requirements in the form of information, materials, test equipment, system assets and personnel; Agreements in the form of loans or other formal agreements; and Tracking mechanisms to coordinate resource movements, repairs, upgrades, and corrective action at operational units/supply locations and contractor facilities. Terms and Conditions that specify rights and obligations with regard to GFR. Output: Strategy prepared by the IPT and recorded in the PMP for GFR management.
32
Define Bid Solicitation Strategy Objective: To develop and record the Bid Solicitation Strategy that will be used to solicit bids, evaluate proposals, select the winning contractor, and negotiate an acceptable contract package. Process: The strategy should address all mechanisms that will be used to manage the bid solicitation, for example: The main elements of the Solicitation Document (Certifications, Terms and Conditions, Statement of Work, Evaluation Criteria, Basis of Selection, Attached Documents); The evaluation elements (e.g. Technical Proposal, Presentation and Interviews, Historical Performance and Risk Assessment, Cost Evaluation); The basis of selection (e.g. best price, best value, best technical) The evaluation methodology (e.g. criteria, attributes, weighting, thresholds); The evaluation plan (detailed process and scoring formats that the valuation team uses); Evaluation team (core members, subject matter experts, challenge committee); Debriefing unsuccessful bidders; and Negotiation strategy and process. Output: Strategy prepared by the IPT and recorded in the PMP for bid solicitation.
Define Contract Administration Strategy Objective: To develop and document the Contract Administration Strategy that will be used to administer the contract. Process: The strategy should address all mechanisms that will be used to administer the contract. Whereas contract management is concerned with performance monitoring, contract administration deals with the day-to-day administration of the contract: verification and payment of claims/invoices; filing and data management; loan administration; and contract reporting. Preparing for administration includes: Review of the procurement file to identify anticipated contract provisions and preparation of a list of administrative functions; Allocating contract administrative functions to various team members; Providing notice and instructions to those involved in administration;
33
After contract award, ensuring the contractor is notified of personnel, roles and delegated authority, and having contractor counterparts named with their authorities; and Considering past performance and issues that have occurred with the contractor in performing contract administration.33 It is important that all team members know their administrative roles. Some redundancy may be desirable in key areas. However, duplication between IPT members should be avoided. Output: Identification of contract management and administration functions to be performed, and the resources necessary to perform them, prepared by the IPT and recorded in the PMP.
5.2.1.3
Define Scope of Contract(s) Objective: To develop and record the strategy for Pre-Facilitated Contracting (PFC), designation as a Benefits Driven Procurement, Alternative Service Delivery, Total Package Procurement, or other scope alternatives. Process: Dramatically different contract scopes are now available to choose from. Opportunities to bundle and establish pre-facilitated contracts are now being examined across systems and commodity classes on an ongoing basis. However, new opportunities will occur as acquisitions move into a support mode, and personnel are encouraged to exploit these opportunities in order to move from repetitive transactions into higher value contracting activity. Figure 17 presents four different contract scopes. Each of these approaches involves establishing a long term relationship with the contractor. Early PWGSC participation in planning is essential. Output: Strategy prepared by IPT for Pre-Facilitated Contracts (PFC), Benefits Driven Procurement (BDP) application of Total Package Procurement (TPP), Alternative Service Delivery, or some other approach, recorded in the PMP.
33
BPR Team #1 Report.
34
CONTRACT SCOPE - CONSIDERATIONS

ALTERNATIVE SERVICE DELIVERY

Non-core services are competed between industry and in-house provider Costs are reduced for both retained and contracted-out services Logistics support is greatly simplified
BENEFITS DRIVEN PROCUREMENT

PRE-FACILITATED CONTRACTS

Contractor selection is based on capability and track record Contractor is brought in early before requirements are fully defined Government prepares statement of objectives in lieu of SOW/Specification
Related goods and services are bundled Number of contracting transactions are greatly reduced Based on long term relationships with competent supplier
TOTAL PACKAGE PROCUREMENT

Contract is for system and life cycle support Basis of source selection is life cycle cost Contractor guarantees reliability and bears cost of excessive repairs/overhauls
Figure 17 Determining Contract Scope 5.2.1.4 Define Reporting Strategy Objective: To develop and document the Reporting Strategy that will be used to administer the contract. Process: To define the format and content of contract management and administration reports that will be required of the contractor. Care should be taken to minimize the reporting burden by tailoring required reports to the scope and complexity of the anticipated contract. Government and industry resources for oversight are limited, and it is important that reporting (indeed all contract data requirements), are reviewed before being specified in the contract. Templates of Data Item Descriptions (DIDs) and Contract Data Requirements Lists (CDRLs) are often available from previous contracts, however each data item should be challenged as to its need and cost effectiveness. Output: Strategy prepared by IPT and recorded in the PMP for contract and project reporting.
35
5.2.1.5
Define Approval Strategy Objective: To define and document the Approval Strategy. Process: To define and document the approval strategy applicable to the procurement. Unless appropriate approval lead time is planned for, the process can impose delays on the overall procurement time-line pushing out contract award and contractor delivery dates. BPR has recommended increased delegation, and a simplified approval and reporting system, however, these recommendations apply to complex procurements within departmental approval limits. Many complex procurements will require Treasury Board Approval because of the size and sensitivity of public expenditure involved. Output: Strategy prepared by IPT and recorded in the PMP for procurement strategy approval, and contract approval and signing authorities.
5.2.1.6
Define the Change Management Strategy Objective: To define and document the change management strategy that will be used in the contract administration phase. Process: The technical configuration management, contractual contract change and amendment processes should be integrated in an overall change process for the contract. Configuration management is focused on changes to the contract specification. Contract change management incorporates approved changes to all contract elements, including the terms and conditions, statement of work, specification, delivery dates and quantities, etc. Close coordination of project team and contractor processes and systems is necessary for an effective change management process. Special attention should be given to the cycle time for administrative processes such as change impact assessment, and the implementation and verification of approved changes. Output: Strategy prepared by IPT and recorded in the PMP for contract change management, including necessary configuration and data management processes.
5.2.2
Define Procurement Strategy
Figure 18 shows Part II of the solicitation planing process and each process is described below.
36
PHASE 2 SOLICITATION PLANNING (PART II)

Define Procurement Strategy Validate Sources of Supply Define Procurement Methodology (Tools and Techniques) Define Bid Evaluation Criteria and Basis of Source Selection Prepare Bid Solicitation Document Obtain Management Approval of the Procurement Strategy
Figure 18 Solicitation Planning Process Part II Objective: To develop, within the IPT, an overall procurement strategy in the areas of sources of supply, procurement methodology, bid solicitation and evaluation, and contract approval. Process: The Treasury Board Secretariat identifies three principle procurement strategies: Commercial-Off-The-Shelf (COTS) or buying an existing solution; Solution-Oriented Procurement (SOP) or adapting an existing solution; and Unique Government Development (UGD) or developing a new solution. These three alternatives are illustrated in Figure 19. It is essential that an appropriate strategy be agreed upon within the IPT before the solicitation documents are prepared. The challenge in identifying the strategy being pursued is that these categories are not mutually exclusive. Often complex procurements include all three elements. Also, many COTS products and services can be customized and thus de-linked from standard product update cycles when in-service. Therefore, the extent of change anticipated to a COTS product, and the approach taken for life cycle support has a major influence on the complexity of the procurement strategy. Output: Strategy prepared by IPT and recorded in the PMP for the overall management/timeline of the procurement and its major milestones. The strategy should consider COTS, SOP, and UGD alternatives.
37
PROCUREMENT STRATEGIES
COMMERCIALOFF-THE-SHELF SOLUTION ORIENTED PROCUREMENT UNIQUE GOVERNMENT DEVELOPMENT
High
RISK
Medium
isk gR n i s rea Inc
Low Low Medium High
EXTENT OF DESIGN, DEVELOPMENT AND INTEGRATION
Figure 19 Alternative Procurement Strategies 5.2.2.1 Validate Sources of Supply Objective: To review, validate and record the interest and capability of potential sources of supply. Process: Using market research, source and supplier information, potential sources should be kept informed of the pending solicitation and be offered the opportunity to comment on draft iterations of the requirements. During this early communication, information on the evaluation approach or criteria should not be disclosed to individual companies as this could disadvantage other suppliers that may choose to bid. Continuing market research activity and contacts are aimed at keeping the pending procurement visible in the supplier community in order to stimulate competitive, high quality responses to the solicitation. Source capability information can obtained through a number of formal and informal channels, including historical contract performance, other customer references, and plant visits and capability presentations. Price and Availability (P&A), Letter of Interest (LOI), also known as a Solicitation of Interest (SOI), or Request for Contractor Information (RCI) documents can also be used to more formally communicate the timing and 38
significance of the project procurement. These approaches can also be used to stimulate industry partnering/teaming in the project, and to obtain feedback on requirement documents such as the SOO, SOR, SOW or Specifications. Output: Strategy prepared by IPT and recorded in the PMP for informal (non-solicitation) interaction with industry using various instruments in order to obtain feedback on requirement documents, and assess industry interest and capability.
5.2.2.2
Define Procurement Methodology (Tools & Techniques) Objective: To define and record the methodology that will be used to manage the procurement. Process: The procurement methodology is the detailed "how to" of the remaining activities in the PPM process. It consists of refining the strategies ("the what") previously identified, including the definition/selection of specific tools and techniques, operating procedures, and recruitment and/or training of core and matrix team members. Examples of methodology include: Financial Management System (system composed of people, defined process, and software tools); Contract Change Management System; Performance Management System (e.g. C/SPMS34 and PPMS); Data Management System; Risk Management System; Reviews and Reporting; and Project Office Management. Output: Procurement tools and techniques, selected and reflected in the PMP.
5.2.2.3
Define Bid Evaluation Criteria and Basis of Source Selection Objective: To define and record the evaluation and selection methods that will be used in the bid solicitation document. Process: Refine the bid solicitation strategy in order to identify the detailed evaluation criteria and basis of source selection. The evaluation approach and criteria details must be traceable to the SOW and specification and other provisions of the solicitation document. The selection of mandatory and rated requirements should be reviewed carefully to ensure potential bidders are able to understand the evaluation/selection approach, and know where to
34
Cost/Schedule Performance Management Standard. Project Performance Management Standard
39
concentrate their effort and resources in creating the most effective response possible. Mandatory requirements must be scrutinized to make sure that they are truly essential and do not exclude good potential sources of supply. A partial dry run of the evaluation process and training for team members, at the appropriate time, is a good practice. Output: Strategy prepared by IPT and recorded in the PMP for the bid evaluation and basis of source selection, including criteria, attributes, scoring, thresholds, and technical/price selection considerations.
5.2.2.4
Prepare Bid Solicitation Document Objective: To define and prepare the bid solicitation document. Process: Using the previously defined bid solicitation strategy and evaluation/ selection methodology, the solicitation document is prepared. The document can be prepared using Policies, the Automated Buying Environment (ABE), by cut and paste from the SACC Manual, and/or using templates from previous project procurements. In a complex procurement, the sheer size of the solicitation document represents an integration challenge. It is important that the Procurement Officer ensures the overall integrity of the document by doing at least three full review cycles of the entire document. Peer and independent review are also good practices to further validate the integration and consistency of the entire document, and challenge the necessity of all of the information requirements it places on potential bidders. A draft Request For Proposal (RFP) is prepared first. After sufficient consultation and revision, this document is revised and becomes the final RFP. The final RFP reflects the considered views of the IPT and other stakeholders, including potential bidders.35 The RFP and the associated bid evaluation process should be as brief and simple as possible. Although a large number of requirements often are identified, only a few factors are usually critical to selection of the winning bid. For example, in the Search and Rescue (SAR) helicopter project, the most critical factors were helicopter size, range, adverse weather capability and reliability. Bid packages that are large, complex and lengthy may involve far more evaluation effort than is essential to make a sound decision. Dealing with evaluation minutiae increases the chance of error and the potential for challenge from a disgruntled bidder. 36 The Terms and Conditions, found in the main body of the RFP and subsequently, in the contract, are known as the Articles of Agreement and they are prepared by the procurement officer. The approach should be kept
35 36
DND Acquisition Reform Guide, Project Leader G. Reinhardus, Author B.F. Hough Canadian Government Procurement Guide, B.F. Hough, CSC.
40
simple using terms and conditions that are suitable for the nature of the work, easy to understand, and no more onerous than necessary37. The General Conditions, used in virtually all government contracts, provide powerful protection to the government. For example, they require the contractor to be competent to perform the work, to supply everything necessary for its performance, to use properly qualified personnel and proper procedures and to warrant that the products and services provided are free from defects. Clauses specific to the project cover many topics, such as basis of acceptance, method of payment, warranty provisions, management of government property, etc. The draft terms and conditions should be subject to a requirements scrub, just like the other parts of the RFP. Examples of questions that should be asked are: Are the terms and conditions consistent with the procurement strategy? Do any clauses impose requirements that would unnecessarily increase the cost of the work? Are the clauses consistent with the procurement reforms being applied?38 The contract should include a basis of acceptance of the goods and services. For services, one may use the performance thresholds established in a Service Level Agreement or interim and final reports. For goods, a test and evaluation program may be needed. A contract specification states what is required (section 3 of the specification) and how it will be shown that the requirements have been met (section 4). One must be able to trace from requirements, to test and evaluation results, as illustrated in Figure 20.
VALIDATION AND VERIFICATION - PRODUCT ACCEPTANCE
--------------- Customer --------------
------------------------ Contractor Validation ------------------------------
-- Customer Verification --
REQUIREMENTS
TEST AND EVALUATION
RESULTS
ACCEPTANCE 4 4 4 4
Figure 20 Requirements Management Leading to Product Acceptance
37 38
Canadian Government Procurement Guide, B.F. Hough, CSC. Canadian Government Procurement Guide, B.F. Hough, CSC.
41
Although the role of industry in complex procurement is increasing under procurement reform, it remains the responsibility of the IPT to define requirements and, having been shown that these requirements have been met, to accept the product. In other words: The contractor must know: The customer must know: What is the basis of acceptance and payment? Have the performance, interface support requirements been met? and
There are several computer tools on the market that may be used to facilitate requirement management, from requirement definition to product acceptance. Figure 21 shows the importance of a logical process from needs analysis through contract signing.
Needs Analysis Requisition Solicitation Responses Evaluation & Selection Negotiation Agreement
Needs change over time. Tasks Contracting Authority. Properly structured, clear Request for Proposals. Compliant, clear, credible. Using stipulated criteria. Includes risk assessment. Resolves major concerns. Defines work, product, schedule, price, industrial/ regional benefits. Includes agreed specification.
Figure 21 Communicating in the Contracting Process39
39
42
The typical structure of an RFP is shown in Figure 22.

Section A: Section B: Section C: Section D: Instructions to Bidders Inquiries and Request for Clarifications Evaluation Criteria Resulting Contract Clauses Part A: Part B: Part C: Requirements Clauses Financial Clauses General Conditions
GUIDANCE TO BIDDERS
MODEL CONTRACT
Annexes to Part A: Annex A Statement of Work Appendix 1
REQUIREM ENTS
- Contract Data Requirements List - Data Item Descriptions
Appendix 2 Annex B Annex C ...
- Contract End Items List
Performance Specification (goods) Qualifications, Knowledge and Experience Requirements (services) Other annexes as required
Figure 22 Typical Structure of an RFP40 An overview of the proposal evaluation process is shown in Figure 23. The Proposal Evaluation Plan should be prepared at the same time as the RFP. In this way it is more likely that all of the information for the evaluation will be solicited. The RFP should state the evaluation criteria and their relative importance. To ensure a fair bid evaluation, there must be an objective way of confirming the bidders contention that each requirement has been met. The instructions to bidders in the RFP must be consistent with the Proposal Evaluation Plan. It is good practice to evaluate and score the proposed approach to meeting all requirements both mandatory and desirable in order to verify the integrity of the intended process.
40
43
Prepare a Proposal Evaluation Plan at the same time as statement of work (and specification) is written. State in the RFP the Source Selection Rule to be used: Best Price Best Value Best Technical State the proposed Evaluation Criteria and allocated Point Scores in the Instructions to Bidders in the RFP. Organize the Proposal Evaluation Team, ensuring that all stakeholders are represented. Record the detailed evaluations so that the source selection decision can be justified. Have an independent group perform a challenge function of the evaluation results.
Figure 23 Selection of the Winning Proposal41 Output: The Bid Solicitation Document is prepared by the IPT, and updated as necessary to incorporate potential source42, peer and independent reviews that assure the completeness and integrity of the bid package.
5.2.2.5
Obtain Management Approval of the Procurement Strategy Objective: To conduct a thorough review of the procurement planning in order to ensure that it is properly defined and organized prior to soliciting bids. Process: The PMP is reviewed by the IPT to ensure that it is complete, accurate, and reflects the needs of the client department as well as realistic assumptions about the potential industry response to the requirement. The size and content of the PMP should reflect the complexity of the procurement. The Plan should be similar in size and scope to the relevant parts of the Project Management Plan that is normally required from contractors. The Plan is the basis for allocating IPT roles, work definition, performance measurement, and guidance regarding interaction with contractors. It should be concise, readable, and flexible enough to accommodate changes. The Contract Planning and Advance Approval (CPAA) process allows contracting officers to award contracts without further reference to the approval authority when there are no significant changes from an approved CPAA form. A Procurement Plan is used for procurements exceeding the
41 42
Canadian Government Procurement Guide, B.F. Hough, CSC. Potential sources should not see evaluation, selection and pricing elements. Their role is limited to feedback on the clarity/necessity of requirements.
44
approval levels of directors general; and those procurements with significant socio-economic impact; or those that may require the Ministers involvement at some stage of the procurement. Output: PMP document updated and reviewed by the IPT to ensure completeness and accuracy. Management approval of the Procurement Strategy is received. Project funding is available.
5.3
Phase 3 - Solicitation and Source Selection (S&SS)
The PMBOK defines solicitation as "obtaining quotations, bids, offers, or proposals as appropriate" and source selection as "choosing from among potential sellers"43. The source selection process involves the receipt of bids and the application of evaluation criteria and source selection rules to identify the winning contractor. The phase culminates in the awarding of a contract to the successful bidder. These concepts are shown in Table 3.
43
45
Table 3 PPM in the Solicitation and Source Selection Phase

COMPETENCY AREA Multidisciplinary GOALS Prepare fully integrated bid solicitation document Verify availability of funds under Financial Administration Act (FAA) and project approval status Multidisciplinary Receive Bids and conduct evaluations in accordance with the solicitation document and evaluation plan Select recommended contractor(s) Negotiate contract provisions and financial incentive package Update and implement project and risk management strategies Prepare contract document and obtain approval and signing authorities. Award contract(s) TOOLS & TECHNIQUES Expert Advice Repository knowledge and templates Government Electronic Tendering Service, Government Business Opportunities, Bidders Conference, Clarifications, Questions and Answers Evaluation team and procedures Continuous risk management Proposals IPT D- Procurement Manager RESPONSIBILITY IPT = Input D = Decision IPT D- Procurement Manager
Procurement Multidisciplinary Project Management Procurement Management
IPT D- Procurement Manager IPT D- Procurement Manager IPT D- Project Manager IPT D- Procurement Manager
INPUTS Procurement Management Plan (PMP) Risk and Capability Assessment and Project Management Strategies Bid Solicitation Document (Request for Proposal (RFP)
OUTPUTS
Evaluation Plan and Resources
Proposal ranking and source selection Evaluation Report Debriefings
Draft Contract Documents
Clarification and negotiations Risk Assessment, Independent review
Gates, Ramps, Financials, Delivery/ incentives, update to Business Case, Requirements and Contract Final changes and contract award
46
5.3.1
Execute Procurement Strategy
Execute Procurement Strategy includes the solicitation, receipt and evaluation of proposals, source selection, negotiation, contract preparation, and contract approval and award. These processes are listed in Figure 24.
EXECUTE PROCUREMENT STRATEGY Solicit Bids Receive Bids Evaluate Bids Select Contractor Negotiate Contract Prepare Contract Obtain Contract Award Award Contract
Figure 24 Solicitation and Source Selection Process This process may be conducted at the beginning of both the project definition and implementation phases. During project definition there is significant expenditure to define the project in detail, and to select contractor(s) to provide the solutions in the implementation phase. Key program management activities are: Conduct of studies that produce a "final" Statement of Operational Requirements, and a substantive estimate of the system acquisition, transition and recurring Personnel Operations and Maintenance (PO&M) costs for the implementation of the project; Update of the Project Profile and Risk Assessment (PPRA); Preparation of the Project Implementation Plan (PIP); Senior Management review of project documentation; Synopsis Sheet, Effective Project Approval44 is obtained for: The preferred solution Commitment to the Personnel, Operations and Maintenance cost estimate Agreement and funding to proceed with the implementation phase; The Senior Project Advisory Committee (SPAC), or Procurement Review Committee (PRC), or Advisory Committee or Repair and Overhaul (ACRO) review of the planned procurement and resolve any interdepartmental issues;45 and
Synopsis Sheet, Effective Project Approval is the expenditure authority for the project given by the Treasury Board Ministers These committees provide advice and direction through the project sponsor/leader and senior departmental managers.
44 45
47
The project moves to priority status on phase completion and to implementation status when Minister and Treasury Board (TB) expenditure authority is obtained.46 Output: The processes of bid solicitation, receipt and evaluation of proposals, source selection, negotiation and contract preparation, contract approval and award come under this heading and generate solicitation and source selection outputs. Solicit Bids Objective: To obtain responsive proposals from suppliers. Process: Bid solicitation involves posting the solicitation document on the Government Electronic Tendering System (GETS) provided through MERX47, placing the requirement in the Government Business Opportunities (GBO) publication, holding a Bidders Conference, answering questions from bidders or providing clarifications and, if necessary, amending the solicitation document. The bid solicitation period ends with the close of the bid period, sometimes a minimum period stipulated by the relevant international trade agreement. It is good practice to limit the number of pages allowed in the proposals48. This focuses the bidders attention on the need to be concise and to concentrate on the essential points of the RFP. Page limits control the size of the proposals, assisting the bid evaluation team in understanding the proposal in its entirety. Output: Advertised and electronically posted bid solicitation document, Bidders Conference, and clarifications or amendments to the solicitation.
5.3.1.1
5.3.1.2
Receive Bids Objective: To obtain proposals from suppliers on/before the bid period closing date/time and at the bid receiving site specified in the solicitation document. Process: Proposals can be received at the Bid Receiving Unit (BRU) of the SOSB or at any other location specified in the bid document. Proper receipt and custody of the bids during the open bid period is important, especially if there are clarifications or questions/answers and amendments that are distributed to prospective bidders. A record of all document transactions is kept to determine which bids are responsive and which must be rejected, and returned to the bidder. A bid that is late or sent to the wrong location is returned to the bidder with a regret letter
46 47
CFP 125, Chapter 7, Project Approval. Unless the solicitation is exempt from trade legislation or uses limited tendering. 48 US Army Acquisition Reform Summary, Contract Management, June 1998.
48
explaining why the bid will not be evaluated. At the close of the bid period, the procurement officer receives the original and the specified number of copies of the proposals for evaluation. The procurement officer maintains a transaction record of all communications during the bid period. It is essential that all communication about the solicitation document is channelled through the procurement officer in order that correct and timely response information is available to all prospective bidders. 5.3.1.3 Output: Bids received in accordance with the instructions in the solicitation document, and a record of all communications during the bid period.
Evaluate Bids Objective: To evaluate bids in a fair and transparent manner, following the evaluation methodology specified in the solicitation document, in order to select the winning proposal. Process: Using the previously defined bid evaluation criteria, evaluate the proposals. The solicitation document, in effect, establishes an obligation between the procurement officer and the bidders that the proposals will be evaluated in accordance with the methodology specified in the solicitation document. Proposals are first screened for compliance. Non-compliant bids are eliminated from further consideration. The evaluation team will then score each responsive proposal by subject area. The final selection is based on technical merit, price and risk. Figure 25 presents an overview of this process using example criteria and weightings. The sequence of steps in the evaluation follows the RFP and may include: Overall review of proposal for completeness and checking required certifications; Check to make sure that Mandatory Requirements have been met; Evaluation of the Technical Proposal (e.g. systems engineering, production, test and evaluation); Evaluation of the Management Proposal (e.g. company and personnel qualifications, project management capability); Evaluation of presentations and interviews of key personnel; Evaluation of historical performance and assessment of proposal risks; Determination of any areas of the proposal that require clarification, obtaining the clarification, and making any resulting change to the scoring; Evaluation of the Financial Proposal; Identification of potential negotiation issues; Identification of the proposal with the highest (winning) score; and
49
Third party challenge independent review of the evaluation findings.
Output: An Evaluation Report with proposals ranked in accordance with the evaluation methodology.
Evaluation criteria are logically broken out and weighted. Some criteria may be mandatory. Each proposal is scored against all criteria. Scores are totaled. Risks are identified and assessed. e.g. Technically achievable solution, consistent with price.
.6
Technical Merit .2 Management Capability .1 Schedule Compliance .1 Industrial, Regional Benefits (IRB)
Price The price is compared with the score and risk level to determine the winning bid.
Weight = Importance
(example)
Risk
Figure 25 Proposal Evaluation49 5.3.1.4 Select Contractor Objective: To select the recommended contractor based on the results of the proposal evaluation by applying the selection basis to the evaluation results. Process: The basis of selection is first determined as a strategy and then defined in the solicitation document. This approach is determined by the source selection rule (best price, best value, best technical). The scoring emphasis placed on various elements of the proposal should reflect the customer and market preferences and knowledge about the trade-off between capability and price. The proposal evaluation process results in the identification of a ranked list of bids/proposals. However, it is possible that no bid/proposal is selected, particularly if stringent thresholds/ratios are use for source selection. In the event there is no proposal that qualifies under the selection criteria, the bid solicitation process may have to be repeated (with adjustments) because a non-compliant bid cannot be accepted. Bidders that were not selected are debriefed.
49
Output: Notification of winning bidder and debriefing of losing bidders.
50
5.3.1.5
Negotiate Contract Objective: To clarify contract wording and negotiate acceptable contract provisions with the winning bidder. Process: Negotiation issues are identified during the proposal evaluation. Preparation for negotiations should include determining: Objectives; Team and roles; Agenda: issues and positions; Behaviour and tactics; Use of questions; Negotiating techniques; and Closing method.50 Once the winning proposal has been selected, a contract can be established. Often this involves negotiations with the contractor to achieve a meeting of minds and to ensure clarity. A good contract benefits both parties and establishes a climate of good will. Negotiation involves knowledge of human behaviour and basic tactics and techniques of negotiation. In a successful negotiation it is also important that the negotiator satisfy the opposing party's needs in order that a successful business relationship is established at the outset of the contract. Win-win positions are necessary in complex, long-term contracts where managing the relationship is an essential ingredient for contract and project success. A contract involves rights and responsibilities of both buyer and seller. The buyer obligations must be treated as seriously as those of the seller. For example, the buyer may be obligated to provide information, to review and approve documents, and to accept and pay for goods and services. Contracts must include a process for making changes. Without such a process, the work may be frustrated by altered circumstances. Also, if changes are not strictly controlled and a constructive change results, the contractor may submit a claim for the cost of extra work51. The contract should include procedures that enable the government to monitor contract performance, cost and schedule. Examples include clearly defined deliverables, monthly progress reports and technical reviews at milestones. Conduct IPT and independent review of the contract package.
50 51
Taken from Nierenberg on Negotiation Strategy. Canadian Government Procurement Guide, B.F. Hough, CSC.
51
Output: A draft contract package that is acceptable to the client department and contractor, and meets the approval criteria (e.g. protection of the Crown and mitigating potential risks) set out in the advance approval received.
5.3.1.6
Prepare Contract Objective: To incorporate the results of clarifications and negotiations in the contract. Process: Virtually all of the contract provisions are brought forward from the solicitation document along with any changes that result from clarification and negotiations. Delivery, price, method of payment and contract type, in conjunction with any contentious requirements, tend to be the closing negotiation issues. Performance incentives in the form of a target incentive for performance that exceeds the target or an award fee incentive for exceptional performance, are two examples of performance contracting. All provisions of the contract should be given a thorough, final review for consistency with best practices. Peer and independent reviews of the full contract package should be held using the results of the terms and conditions, requirements and data scrubs previously held. Output: Contract package initialled by both parties ready for contract approval and signing. The contract package incorporates clarifications and negotiation results, and reflects intended best practice and reform concepts. The contractor must know: The customer must know: What is the basis of acceptance and payment? Have the performance, interface support requirements been met? and
5.3.1.7
Obtain Contract Approval Objective: To obtain authority to enter into contract or to amend a contract and authority to sign a contract or the amendment to a contract. Process: Procurement Officers are required to have a Delegation of Authority (Letter) from management that specifies the authorities delegated to them. There are two kinds of authority: approval authority and signing authority. The delegated authorities vary between goods and services, real property, construction and maintenance, and architectural and engineering services contracting. Authority levels also vary with the procurement method. Approval authority must also consider set aside provisions, for example in aboriginal treaty areas. Signing authorities should ensure their contractor
52
counterparts are formally authorized to enter into contracts or contract amendments. Approval Authority - The Minister has delegated authority to the incumbents of positions up to specified dollar limits to enter into contracts or to amend contracts. Subject to applicable legislation and PWGSC General Conditions, this constitutes approval to accept the Terms and Conditions in the (approval) submission on behalf of the Crown. Signing Authority - The Minister has delegated authority to incumbents of positions up to specified dollar amounts to sign on his behalf, after ascertaining that approval authority has been received, and also that the terms and conditions written in the documents reflect those approved by the contract approval authority. Expenditure Authority - Treasury Board Ministers delegate to departments and agencies expenditure authority levels based on the nature of their procurement requirements. Due to size of public expenditure, and the complexity, sensitivity and public interest in complex project procurements, expenditure authority is usually required from the sponsoring department Minister or the Treasury Board. Expenditure authority may be Preliminary Project Approval (PPA), to cover project definition costs or Effective Project Approval (EPA), to cover project implementation costs. Output: Authority to approve and to sign the contract, in accordance with delegated authority, and in conjunction with sponsoring department project expenditure approval. This leads to the contract being executed (signed/sealed).
5.3.1.8
Award Contract Objective: To award the contract and authorize the contractor to commence work on the contract. Process: A contract is a set of promises that the law will enforce. It forms the original baseline for change management. A fax award notice, letter of intent or go-ahead letter may be used to authorize the commencement of work, however formal approval, signature and seal on the documents is required by the authorized representatives of the contracting parties. Output: A signed and sealed contract, and authority for the contractor to commence work.
53
5.4
Phase 4 - Contract Management
The PMBOK defines contract management as "managing the relationship with the seller"52. The process involves ensuring that both the vendor and the government meet their contractual obligations. It also involves the monitoring of contractor performance and the timely completion of both parties' administrative responsibilities. As noted earlier, contract management also involves the application of project management processes to the contractual relationship, and the integration of the outputs of these processes into the overall management of the project. Table 4 shows these concepts.
52
54
Table 4 PPM in the Contract Management Phase

COMPETENCY AREA Multidisciplinary GOALS Meet contract performance objectives: Cost/schedule Delivery Performance Validation and Verification Delivery and Acceptance Quality Risks Government Furnished Resources (GFR) Multidisciplinary Multidisciplinary, Procurement INPUTS Contract provisions Contract provisions, progress reports, claim for payment, invoices, cost/schedule performance, delivery, technical, quality production and support data Requirements tracking, progress, problem, quality, schedule/cost reports Contract provisions Contract provisions Maintain win-win relationship between the contracting parties Resolve significant performance problems and disputes TOOLS & TECHNIQUES Change management system Performance monitoring and analysis, and payment system IPT D = Procurement Manager IPT D = Project Manager IPT D = Project Manager RESPONSIBILITY IPT = Input D = Decision
IPT D = Project Manager IPT D = Project Manager IPT D = Project Manager IPT D = Procurement Manager IPT D = Procurement Manager OUTPUTS Authorized changes, amendments Performance tracking and payments
Requirements and business review and changes Contract administration procedures Project and risk management tools
Changes to business case and requirements leading to contract changes and amendments Correspondence, loan agreements, financial agreements and guarantees Status and projections to support decisions Evaluation of gates, off-ramps
55
5.4.1
Manage Contract
Figure 26 identifies the contract management process. CONTRACT MANAGEMENT

MANAGE CONTRACT Manage Technical, Systems and Quality Performance Manage Cost/Schedule and Delivery Performance Manage Government Furnished Resources (GFR) Performance Administer Contract
Figure 26 Contract Management Process Manage Contract includes managing contract performance and administering the contract provisions. Contract management may be conducted in any project phase where goods or services contracts are awarded. Its takes on increasing importance from the development to the definition and implementation phases as the project size and complexity and the expenditure level of contracts increases. Using the results of the definition phase, implementation contractor(s) are selected to design, develop, build, test, integrate, deliver and support the selected solution. The key program management activities in the Implementation Phase are: Execution of the Project Implementation Plan (PIP), including the project scope that is contracted to industry and the transition from acquisition to life cycle management; Transfer of project leadership from the sponsoring to the implementing organization, (this transition is at the start of the definition phase for MCPs); Monitoring implementation;53 and Preparation of a Project Closeout Report and Lessons Learned.
Contract management involves close interaction among the government authorities contract, technical, inspection, industrial regional benefits and the contractor, as suggested by Figure 27. In successful projects the working relationship is positive, with each participant fulfilling his/her obligations in a professional and timely manner. The government team members provide essential information when needed, review and approve deliverable documents quickly and competently, provide government furnished resources as promised, etc. The contractor performs its work professionally, delivering quality goods and services on schedule. When either the government or contractor fails to meet its obligations, or has unreasonable expectations, then the
53
CFP 125, Chapter 7, Project Approval.
56
relationship becomes adversarial. The lack of a working together atmosphere characterizes a project drifting into failure.
CONTRACT MANAGEMENT
- WORKING TOGETHER TO ACHIEVE PROJECT SUCCESS
GOVT FURNISHED RESOURCES TEST AND EVALUATION
Functional Test
DELIVERY SCHEDULE
Concept of Operations Computer Models Electronic Units Plant Machinery
Qualification Tests -- Shock -- Temperature -- Humidity -- Sand Trials
Actual
CONTRACTOR
COST
CONTRACT AUTHORITY
TECHNICAL AUTHORITY
DOCUMENTATION
Figure 27 Contract Management 5.4.1.1 Manage Technical, Systems and Quality Performance Objective: To monitor contract performance in the work areas of technical, systems, and quality performance; to verify corrective action taken; and to assess if the contract requirements are being achieved. Process: Using the contract statement of work and specification (or in the case of BDP, the SOR), and the project and risk management strategies and contractor work plans, the IPT assesses work progress, problems, variances, deviations and corrective actions. Methods such as requirements tracking, configuration and data management, technical and production reviews, and project management data such as schedule status and earned value measurement are used to keep a running list of problem areas, nonconforming items, and variances. If the monitoring is a dedicated function at the contractor site, the strategy established in the PMP should be developed into an ongoing product/process surveillance plan.
57
Output: Information on contractor performance, feedback on problems, and status of corrective action. Inputs to administration of contract remedies, as required.
5.4.1.2
Manage Cost/Schedule and Delivery Performance Objective: To monitor contract performance of cost/schedule and delivery contract performance; to verify and monitor corrective action taken; and to assess if the contract requirements are being achieved. Process: Using the defined project and risk management strategies and contractor work plans (WBS, Master Schedule, CDRL/DID, work packages, progress and earned value data), the IPT assesses work progress, problems, variances, deviations and corrective actions. By tracking schedule performance on interim activities leading to deliveries and analyzing cost trend indices, the IPT will have early warning of significant cost growth, schedule/delivery delay and technical or quality problems. Delivery and acceptance activities are depicted in Figure 28. The contractor is required to deliver the contracted goods and services on schedule and for the cost stipulated in the contract. The customer accepts the product if it meets the requirements in the contract specification, as demonstrated through test and evaluation. Successive units coming off production are accepted if they pass the factory acceptance test, indicating a sustained high quality of manufacture. Output: Cost/schedule and delivery status. contract remedies, as required.
DELIVERY AND ACCEPTANCE
- PERFORMANCE, SCHEDULE AND COST OBLIGATIONS
DELIVERY
Inputs to administration of
Delivery is on schedule Costs are as per contract
ACCEPTANCE
Product meets specification Production quality is sustained
Figure 28 Delivery and Acceptance 58
5.4.1.3
Manage Government Furnished Resources (GFR) Performance Objective: To monitor contract performance in the area of Government Furnished Resources (GFR) work; to verify corrective action taken; and to assess if the contract requirements are being achieved. Process: The contractor states when GFR are required. The Contract Authority ensures that GFR are delivered on time and consistent with technical requirements. The Contract Authority ensures that the contractor properly manages and accounts for GFR. Output: GFR provided by the government as stipulated in the contract.
5.4.1.4
Administer Contract Objective: To administer and monitor contract provisions in the area of the Crown's contract obligations to the contractor; to verify corrective action taken; and to assess if the contract requirements are being achieved. Process: Using the strategy defined in the PMP, develop a sub-plan for contract administration by going through the contract provisions and identifying administrative tasks and who within the IPT will perform them. A sample list of areas of contract administration includes: Roles of Technical, Inspection, Quality, Industrial Regional Benefits and Contracting Authorities in communicating and interacting with the contractor; Formal notice under the contract; Interim and final data item feedback and acceptance/rejection. This is done in accordance with the Terms and Conditions, Technical Plans and CDRL/DIDs; Method of Payment administration; Changes and amendment administration; Design-development-production-support milestones and gates; Test and acceptance process and feedback; and Contract provisions related to contract finalization and close-out.54 Output: Formal communications with the contractor regarding contract administration matters.
5.5
Phase 5 - Contract Closeout
The PMBOK defines contract closeout as completion and settlement of the contract, including resolution of any open items."55 The closeout process involves product validation by the
54
BPR Team #1 Report.
59
contractor and verification by the customer (Was all the work completed correctly and satisfactorily?), and administrative closeout (Updating of records to reflect final results and archiving of such information for future use.). The contract may include specific provisions for closeout, including early closeout in the form of termination. The concepts are shown in Table 5. Table 5 PPM in the Contract Closeout Phase
COMPETENCY AREA Procurement/ Multidisciplinary Procurement/ Multidisciplinary GOALS Close-out of successful contract where contract performance objectives and administrative obligations have been met Early close-out contract using gates or ramps if performance of the contract can no longer meet the performance objectives Complete physical and administrative close-out, resolve any outstanding issues, make final payment/amendment TOOLS & TECHNIQUES Procurement audit Review and acceptance/rejection Product Acceptance RESPONSIBILITY IPT = Input D = Decision IPT D = Procurement Manager IPT D = Procurement Manager
Multidisciplinary/ Procurement
IPT D = Procurement Manager
INPUTS Contact Provisions Contract Deliverables Business Case, SOW/SPEC, Acceptance criteria Issues, disputes, claims Unresolved issues and claims All issues resolved
OUTPUTS Feedback and corrective action Final Acceptance or stop work Product in-service
Negotiation/litigation/ arbitration Negotiation Final contract amendment/releases
Resolution/amendment Termination (off-ramp or gate) Close contract file, process/ product evaluation, feedback to PPM repository
55
60
5.5.1
Contract Closeout
Contract closeout process is identified in Figure 29. CONTRACT CLOSEOUT

DISENGAGE CONTRACT Physical Disengagement Administrative Disengagement
Figure 29 Contract Closeout Process Contract closeout processes may be conducted in any project phase where goods or services contracts have been fully performed. Contract closeout also is required in the event the contract will not be performed, and an early closeout is pursued using the termination provisions. Figure 30 highlights contract closeout actions. Contract deliverables are verified and accepted, disputes or claims are settled, contract work and charges are ceased. Contract administration is completed, including audit adjustments, return of inventory or other Crown assets, warranty management, and any releases or undertakings that support the final contract amendment/payment. A PPM performance evaluation is conducted, providing lessons learned and feedback to the PPM repository. This information should be used to update training and professional development programs. The key program management activities are completion of the project closeout report and documenting the lessons learned.
CONTRACT CLOSEOUT
- NO LOOSE ENDS!
Confirmation of Completion Loans of Equipment Government Inventory Closeout Claim Settlement Warranty Action Final Payment Project Evaluation Record Retention
Figure 30 Contract Closeout
61
5.5.1.1
Physical Disengagement Objective: To finish the contract work and, based on substantial or final completion, accept delivery of all products and return of government assets, and stop work at the contractor facilities. Process: Based on work inspection, quality assurance and product acceptance and warranty provisions, determine the point at which all the contract work has been completed or, in the event not all the work is to be completed, negotiate adjustments to the contract provisions as part of the contract closeout. This includes the return of government loaned assets, inventories and other GFR. Physical disengagement is aimed at bringing the contract work to an end in an orderly fashion, including any adjustment to the contract value to recognize contract work that will not be completed. Output: Receipt and acceptance of the contract deliverables, settlement of the disposition of outstanding work, and cessation of further work and charges to the contract.
5.5.1.2
Administrative Disengagement Objective: To complete the contract administration, issue the final contract amendment and closeout the contract file. Process: To finish the administrative activity associated with contract obligations. An example list includes: Determine if the contract will be completed by performance or if contract performance is frustrated and termination for convenience or default is required; Examine results of quality assurance, inspection, test and acceptance processes and accept final deliverables under substantial or final completion terms; Closeout inventories including credits or back charges for any product assets that will not be returned to the Crown; Complete audits and claims adjustments for over/underpayments; Prepare release that holds both parties harmless from future claims by either party; Prepare and execute final amendment and release final payments including the holdback in recognition of contract completion; Perform a performance evaluation of the procurement process (i.e. PPM), product (RFP and contract), people and relationships/teaming (IPT).
62
Produce final lessons learned56 and provide update to the PPM knowledge repository; and Inventory and put away contract files.57
Output: Completed contract administrative obligations; orderly closeout of the contract file, including the final contract amendment; PPM product, process and people performance evaluation, and feedback to new project procurements.
56 57
Lessons learned should be gathered throughout the project, at least at key milestones. BPR Team #1 Report
63
ANNEX A MPSL SERVICES
MPSL SERVICES
MPSL AT A GLANCE MPSL is recognised for its track record in managing the Governments most complex and sensitive project procurements. Our focus is on working with clients to achieve successful procurement and project outcomes. We work with you to meet the challenges of improving acquisition quality, efficiency and effectiveness, in an environment of increasing expectations, fewer resources and greater complexity. MPSL is based in Hull, Quebec, with a network of project offices throughout the National Capital Region. Our team of 140 professionals, with over 30 project procurements and an annual cash flow of over $ 2 Billion, brings a wealth of experience to meet your procurement, project and program management challenges. Why MPSL We work collaboratively with each client. We identify the key issues, and develop and implement solutions suitable to your environment. Our matrix structure means that we are flexible and responsive. We are able to apply expertise quickly, assisting you in solving the problems that influence project success. Our team can provide you with the experience and tools you need to meet your objectives and obtain results.
A-1
How we work with you Before the project Consult with you to assess needs identify problem areas outline proposed services agree on client roles, involvement develop approach complete service proposal Work with you to provide the agreed upon services provide knowledge and skill transfer assess our performance throughout Follow up with you to ensure your satisfaction with MPSL services provide you with feedback on how to improve performance on future projects apply our learning to follow on or related projects in your organisation
Output/Outcome Service Agreement
During the project
Project Report(s)
During/After the project
Improved Performance
A-2
Where we can help Our core competency is project-procurement management (PPM), the effective integration of project management principles and practices in the procurement process. Procurement Services Project + Procurement Planning Solicitation Planning Solicitation & Source Selection Contract Management & Closeout
Our PPM experience has led to the following experience and products Project Services Planning & Control Risk Assessment Data Management Change Management Program Services Strategic Planning Business Improvement Business Process Re-engineering Project Management Systems Performance Evaluation Standard Project Reporting Professional Development E- Business Initiatives Training & Effectiveness Workshops Project and Contract Standards
If we can help please contact Rick Trites at (819) 956-0846 or tritesr@sos.pwgsc.gc.ca
A-3
Selected Assignments DISCIPLINE Strategic Planning SITUATION An organisation needed to restructure in the face of a changing business environment, and demands for increased efficiency, improved flexibility and responsiveness, and business growth. A major equipment project procurement experienced significant cost; schedule and performance problems that would have impacted project completion. SOLUTION Strategic planning assisted the organisation in forming a cohesive management team, and positioning the organisation with strategies and business objectives for the medium and long term. Through fact-finding and analysis, the contract was restructured to better allocate the remaining business and technical risks. The Crown accepted system responsibility and completed the project within the performance constraints. After addressing the key issues of stakeholder relationships and technical requirements, the contract was restructured, providing a more realistic baseline for the remaining project work. The framework and evaluation methodology was developed using best practices. It is being implemented with full consultation with users and other stakeholders.
Project Procurement Management
Project Procurement Management
A major IT project procurement was in trouble and facing the prospect of cancellation.
Performance Evaluation
An organisation wished to improve its management control framework, and to implement performance measures.
A-4
ANNEX B PROJECT PROCUREMENT MANAGEMENT (PPM) TEMPLATE
PROJECT PROCUREMENT MANAGEMENT (PPM) TEMPLATE

This annex is a work in progress. Figure B-1 identifies PPM processes, outputs, competencies, project phase and other references. Figure B-2 provides the competency grid for the Template. The Knowledge and Skills competencies are taken from the BPR Report58, with the exception of tools, where for the nine PMBOK process-tools lists as indicative of the tool competencies required59. The competencies have not been defined below summary PPM processes. Competencies are just one of several inputs to recruitment and selection. This task will require analysis of the MPSL human resource profile, position descriptions, and work assignments. The competency gird in this annex is descriptive, and is not yet derived from the human resources profile. A more complete list of competencies is given in Annex D. Template Format and Content The PPM Template is organized by Project and Procurement phase. The Template column headers are: 1. PPM and Project Phase - PPM phases are based on the Project Procurement Module of the Guide to the PMBOK. The project phases follow DND practice, but are close to PMBOK terminology. PPM Process - The forty-nine steps of the PPM process. The terminology is based on the BPR initiatives common to both PWGSC and DND. Output/Outcome - of the PPM process. Competencies - The knowledge, Skills, and Tools that have been identified for complex procurement. PPM Activities (Guidance/Tools and Techniques) - These are how to process and document guides that are being prepared. Four example templates are provided in Annex C for the Define Procurement Strategy Process (WBS 2.7). Point of Contact - The MPSL contact for information on the specific activities or functional specialty. Sub-elements of the process will be assigned to directors, managers and officers based on organizational responsibility. In addition to operational responsibilities, it is planned that subject matter experts would take responsibility for processes, and update the Template from time-to-time, to reflect changes in the business environment.
2. 3. 4. 5.
6.
58 59
BPR Team Report on Professional Development and Human Resources, Page 17. PMBOK tools and techniques are primarily judgement, expertise and document templates, although some software is noted.
B-1
PPM TEMPLATE PPM /Project Phase (49 Steps)

1. All
PPM Process Title (WBS Numbering)
Output/Outcome
Disciplined, repeatable, and measurable business process. PPM competencies Training requirements Benchmarking Performance Evaluation
Competency Knowledge Skills Tools

All
PPM Activities (Guidance/Tools and Techniques)

Branch/SectorStrategic Plan Operational Plan/Budget Performance Measurement Framework
Point of Contact60
Senior Director J.G. Roy (819) 956-0846
2. Phase 1-Project and Procurement Planning / Identification Phase
1. Validate Requirements
3.
1.1 Analyze (Review Clients) Requirements
4.
5.
1.1.1 Define Performance Objectives 1.1.2 Determine Allocation and Teaming
6.
7.
1.1.3 Identify & Form Integrated Procurement Team (IPT) 1.2 Define Procurement Concept
It starts with problem identification and is completed with the start of the Development Phase when a number of options to satisfy the requirement are examined. Validate Requirements is the first point of contact between an SOSB account manager and customer requirements and/or project office staff. This contact may occur prior to or during the identification/ concept phase when the project objectives and requirements are being defined. Customer contact is made, project and requirement documents are reviewed and analyzed, and procurement implications are determined The PMP is started for the project, with inputs from key documents and contact points. Project objectives expressed in the requirement documents and in the Project Charter are clarified. File allocation, SOSB and sector teaming is identified and recorded in the PMP. The Contracting Authority office and individual file holder is identified as the single point of contact with customer requirements staff and the Project Manager. Teaming within and between sectors is established. The source of particular expertise, for example planning and control, also is identified. IPT membership and responsibilities are established and recorded in the PMP. Using the output of Validate Requirements, this process identifies potential sources of supply, links project and procurement objectives, and starts the formal procurement planning process. The potential sources of supply, and the procurement assessment of the COTS alternatives identified for the project are recorded in the PMP.
K- 1-14, 19 S- 1-11 T- 1-9
R. Trites (819) 956-0846
8.
1.2.1 Identify Sources of Supply
60
Operationally, the Point of Contact (POC) is the senior Procurement Officer that holds the Contracting Authority responsibility. The POC for the PPM process is indicated in this column.
B-2

9.

1.2.2 Identify and Define Procurement Concept
Output/Outcome
A preliminary review and analysis of factors contributing to the procurement concept is recorded in the PMP. In many cases, this analysis will raise questions that may not be answered until later in the procurement process, or conditions may change, requiring further review of how these factors will influence the procurement. Using project, requirements, and procurement planning and industry feedback (e.g. homepage, industry days, plant visits, company presentations), update the performance objectives and requirement documents. This results in revisions to requirements definition documents, such as Statement of Operational Requirements, Statement of Objectives, Business Requirements and any preliminary specifications The draft PMP is prepared.
Point of Contact60
10.
1.2.3 Refine Performance Objectives
11.
12. Phase 2Solicitation Planning/Develo pment Phase
1.2.4 Prepare Procurement Management Plan (PMP) 2. Define Procurement Requirements
13.
2.1 Define Business and Technical Requirements
14.
2.2 Define Project Management Strategy 2.2.1 Define Risk Management Strategy 2.2.2 Define Contract Management Strategy 2.2.2.1 Define Delivery and Acceptance Strategy
15.
This group of processes involves developing procurement strategies and preparing the solicitation documents and resulting contract(s). The emphasis is on defining strategies, within the IPT, for project and risk management, contract management and administration. Statement of Operational Requirements (SOR), Statement of Objectives (SOO), business requirements or Business Case, as appropriate, is prepared or refined. Combining the SOR, and other requirement documents (e.g. Concept of Operations and systems studies) is also good practice in streamlining project documentation. The IPT defines and records in the PMP the project, risk and contract management strategies that will be used in contracting. Strategy prepared by IPT and recorded in PMP to identify Strategy prepared by the IPT and recorded in PMP for Delivery and Acceptance, Quality Assurance, Financial, and Government Furnished Resources. Strategy prepared by the IPT and recorded in the PMP of all mechanisms that will be used to monitor delivery performance and perform acceptance.
K- 1-19 S- 1-11 T- 1-9
R. Trites (819) 956-0846
Mike Cody (819) 956-0312
Keith Adams (819) 956-0334
16.
17.
B-3

18.

2.2.2.2 Define Quality Assurance Strategy 2.2.2.3 Define Financial Management Strategy 2.2.2.4 Define Government Furnished Resources (GFR) Strategy 2.2.3 Define Bid Solicitation Strategy 2.2.4 Define Contract Administration Strategy 2.3 Define Scope of Contract(s) (e.g. Bundling, PFC, BDP)
Output/Outcome
Strategy prepared by the IPT and recorded in the PMP for Quality Planning, Assurance and Control. Strategy prepared by the IPT and recorded in the PMP for management of cash flow, funds, budget, payment, cost, price and rate determination, and performance management. Strategy prepared by the IPT and recorded in the PMP for GFR management.
Point of Contact60
19.
20.
21.
22.
23.
24.
2.4 Define Reporting Strategy 2.5 Define Approval Strategy
25.
26.
2.6 Define Change Management Strategy
27.
2.7 Define Procurement Strategy
Strategy prepared by the IPT and recorded in the PMP for bid solicitation. Identification of contract management and administration functions to be performed, and the resources necessary to perform them, prepared by the IPT and recorded in the PMP. Strategy prepared by IPT for PreFacilitated Contracts (PFC), Benefits Driven Procurement (BDP) application of Total Package Procurement (TPP), Alternative Service Delivery, or some other approach, recorded in the PMP. Strategy prepared by IPT and recorded in the PMP for contract and project reporting. Strategy prepared by IPT and recorded in the PMP for procurement strategy approval, and contract approval and signing authorities. Strategy prepared by IPT and recorded in the PMP for contract change management, including necessary configuration and data management processes. Strategy prepared by IPT and recorded in the PMP for the overall management/timeline of the procurement and its major milestones. The strategy should consider COTS, SOP, and UGD alternatives. Strategy prepared by IPT and recorded in the PMP for informal (nonsolicitation) interaction with industry using various instruments in order to obtain feedback on requirement documents, and assess industry interest and capability. Procurement tools and techniques, selected and reflected in the PMP.
Anna Best (819) 956-0320
Implement COTS Procurement Implement SOP Implement UGD Implement BDP
28.
2.7.1 Validate Sources of Supply
29.
2.7.2 Define Procurement Methodology (Tools and Techniques)
B-4

30.

2.7.3 Define Bid Evaluation Criteria and Basis of Source Selection
Output/Outcome
Strategy prepared by IPT and recorded in the PMP for the bid evaluation and basis of source selection, including criteria, attributes, scoring, thresholds, and technical/price selection considerations. The Bid Solicitation Document is prepared by the IPT, and updated as necessary to incorporate potential source, peer and independent reviews that assure the completeness and integrity of the bid package. PMP document updated and reviewed by the IPT to ensure completeness and accuracy. Management approval of the Procurement Strategy is received. Project funding is available. The processes of bid solicitation, receipt and evaluation of proposals, source selection, negotiation and contract preparation, contract approval and award come under this heading and generate solicitation and source selection outputs. Advertised and electronically posted bid solicitation document, Bidders Conference, and clarifications or amendments to the solicitation. Bids received in accordance with the instructions in the solicitation document, and a record of all communications during the bid period. An Evaluation Report with proposals ranked in accordance with the evaluation methodology. Notification of winning bidder and debriefing of losing bidders. A draft contract package that is acceptable to the client department and contractor, and meets the approval criteria (e.g. protection of the Crown and mitigating potential risks) set out in the advance approval received. Contract package initialled by both parties ready for contract approval and signing. The contract package incorporates clarifications and negotiation results, and reflects intended best practice and reform concepts. Authority to approve and to sign the contract, in accordance with delegated authority, and in conjunction with sponsoring department project expenditure approval. This leads to the contract being executed (signed/sealed).
Point of Contact60
31.
2.7.4 Prepare Bid Solicitation Document
32.
33. Phase 3Solicitation and Source Selection / Project Definition (or Implementation) Phase 34.
2.7.5 Obtain Management Approval of the Procurement Strategy 3. Execute Procurement Strategy
K- 1-19 S- 1-11 T- 1-9
R. Trites (819) 956-0846
3.1 Solicit Bids
35.
3.2 Receive Bids
36.
3.3 Evaluate Bids
37. 38.
3.4 Select Contractor 3.5 Negotiate Contract
39.
3.6 Prepare Contract
40.
3.7 Obtain Contract Approval
B-5

41.

3.8 Award Contract 4. Manage Contract
Output/Outcome
A signed and sealed contract, and authority for the contractor to commence work. Manage Contract includes managing contract performance and administering the contract provisions.
Point of Contact60
42. Phase 4Contract Management / Project Definition and Implementation 43.
K- 1-19 S- 1-11 Far more emphasis and specialization in/on T- 1-9
R. Trites (819) 956-0846
44.
45.
46.
4.1 Manage Technical, Systems and Quality Performance 4.2 Manage Cost/Schedule and Delivery Performance 4.3 Manage Government Furnished Resources (GFR) Performance 4.4 Administer Contract 5. Disengage Contract
Information on contractor performance, feedback on problems, and status of corrective action. Inputs to administration of contract remedies, as required. Cost/schedule and delivery status. Inputs to administration of contract remedies, as required. GFR provided by the government as stipulated in the contract.
Mike Cody (819) 956-0312
47. Phase 5Contract Closeout / Project Implementation and Closure 48.
Formal communications with the contractor regarding contract administration matters. The physical and administrative processes of completing or ending contract work, and finalizing the contract obligations of the parries.
K- 1-19 S- 1-11 Far more emphasis and specialization in/on T- 1-9
R. Trites (819) 956-0846
5.1 Physical Disengagement
49.
5.2 Administrative Disengagement
Receipt and acceptance of the contract deliverables, settlement of the disposition of outstanding work, and cessation of further work and charges to the contract. Completed contract administrative obligations; orderly closeout of the contract file, including the final contract amendment; PPM product, process and people performance evaluation, and feedback to new project procurements.
Figure B-1 Project Procurement Management (PPM) Process Template
B-6
The following table contains the competencies for complex procurement that has been used in the template.
CATEGORIES Knowledge COMPETENCIES 1. Teaming roles and responsibilities 2. Commodity- systems, products, services 3. Marketplace 4. Industry 5. Business 6. Client 7. Competition 8. Economic development factors 9. Risk management 10. Project management 11. Contract management 12. Innovative contracting 13. Budgeting and financial planning 14. Managing IT required to support PPM 15. Quality management 16. Performance management 17. Data management 18. Configuration management 19. Marketing Skills 1. Strong in planning and organizing 2. Strong in analysis 3. Advanced project management 4. Teamwork 5. Strong in interpersonal 6. Influencing 7. Creative problem solving 8. Risk management 9. Decision-making 10. Self-assurance, confidence
B-7
CATEGORIES
COMPETENCIES 11. Strong in negotiation
Tools- PMBOK
1. Integration project and procurement processes in PPM 2. Scope management 3. Time management 4. Cost management 5. Quality management 6. Human resource management 7. Communications management 8. Procurement management 9. Risk management
Figure B-2 Competencies for Complex Procurement
B-8
ANNEX C PPM WORK BREAKDOWN STRUCTURE
PPM WORK BREAKDOWN STRUCTURE

1. VALIDATE REQUIREMENTS 1.1 Analyze (Review Clients) Requirements 1.1.1 1.1.2 1.1.3 1.2 Define Performance Objectives Determine Allocation and Teaming Identify and Form Integrated Procurement Team (IPT)
Define Procurement Concept 1.2.1 1.2.2 1.2.3 1.2.4 Identify Sources of Supply Identify and Define Procurement Concept Refine Performance Objectives Prepare Procurement Management Plan (PMP)
2.
DEFINE PROCUREMENT REQUIREMENTS 2.1 2.2 Define Business and Technical Requirements Define Project Management Strategy 2.2.1 2.2.2 Define Risk Management Strategy Define Contract Management Strategy 2.2.2.1 Define Delivery and Acceptance Strategy 2.2.2.2 Define Quality Assurance Strategy 2.2.2.3 Define Financial Management Strategy 2.2.2.4 Define Government Furnished Resources (GFR) Strategy 2.2.3 2.2.4 2.3 2.4 2.5 2.6 2.7. Define Bid Solicitation Strategy Define Contract Administration Strategy
Define Scope of Contract(s) (e.g. Bundling, PFC, BDP) Define Reporting Strategy Define Approval Strategy Define Change Management Strategy Define Procurement Strategy 2.7.1 2.7.2 2.7.3 2.7.4 2.7.5 Validate Sources of Supply Define Procurement Methodology (Tools and Techniques) Define Bid Evaluation Criteria and Basis of Source Selection Prepare Bid Solicitation Document Obtain Management Approval of the Procurement Strategy
C-1
3.
EXECUTE PROCUREMENT STRATEGY 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Solicit Bids Receive Bids Evaluate Bids Select Contractor Negotiate Contract Prepare Contract Obtain Contract Approval Award Contract
4.
MANAGE CONTRACT 4.1 4.2 4.3 4.4 Manage Technical, System and Quality Performance Manage Cost/Schedule and Delivery Performance Manage Government Furnished Resources (GFR) Performance Administer Contract
5.
DISENGAGE CONTRACT 5.1 5.2 Physical Disengagement Administrative Disengagement
C-2
ANNEX D THE RELATIONSHIP BETWEEN THE COMPLEX PROCUREMENT FUNCTIONS AND CORE COMPETENCY AREAS
THE RELATIONSHIP BETWEEN THE COMPLEX PROCUREMENT FUNCTIONS AND CORE COMPETENCY AREAS61
COMPETENCY AREAS KNOWLEDGE 1. VALIDATE REQUIREMENTS 1.1 Analyze (Review Clients) Requirements 1.1.1 Define Performance Objectives 1.1.2 Determine Allocation and Teaming 1.1.3 Identify and Form Integrated Procurement Team (IPT) 1.2 Define Procurement Concept 1.2.1 Identify Sources of Supply 1.2.2 Identify and Define Procurement Concept 1.2.3
61 62
PPM PROCESSES62 .
SKILLS Business Skills Goal setting/ Planning Priority setting Organizing Chairing meetings Managing stress Managing change Managing risks Consulting Marketing Negotiating - contractual - non-contractual Presentations Writing - memos, letters, reports (management) - specifications/ standards (technical) Leading teams Managing people
TOOLS PC/Network Workstation - Word processing applications - Graphics applications - Spreadsheet applications - Presentation applications - Project and Time Management - Foundation software (i.e. MS DOS, Windows) - E-Mail - Internet/Intranet Browsers Operational - MERX - Automated Buyer Environment (ABE) - Vendor Information Management (VIM)
Refine Performance
Procurement Contract Management Principles Materiel Management Principles Procurement process, procedures and framework Policies World Trade Organization - Agreement on Government Procurement (WTO - AGP) North American Free Trade Agreement (NAFTA) Agreement on International Trade (AIT) Financial Administration + Government Contracting Regulations PWGSC Act/Policies Canadian Government Procurement Policy, and Government Contract Regulations (GCRs) Interpretation Act Statutory Instruments Act Financial Administration Act Defence Production Act Access to Information Act Bankruptcy Act Bills of Exchange Act
Taken from Annex 2 to Appendix 4 of the SOSB BPR Final Report, dated 14 September 1998. The table does not read across. Competencies have not been identified with PPM sub-processes.
D-1
PPM PROCESSES62 Objectives 1.2.4 Prepare Procurement Management Plan (PMP)
COMPETENCY AREAS KNOWLEDGE Canadian Charter of Rights and Freedoms Competition Act Criminal Code Department of Justice Act Fair Wages and Hours of a Labour Act Federal Real Property Act Official Languages Act Privacy Act - Public Service Employment Act - Government Contract Regulations - TB Contracts Directive - Federal Contractor's Program for Employment Equity - Conflict of Interest and Post-Employment Code for Public Office Holders - Security Policy - Treasury Board Delegation of Powers Order - James Bay and Northern Quebec Agreement - Procurement Strategy for Aboriginal Business - Comprehensive Land Claims Agreements Canadian Commercial Corporation (CCC) Canadian International Trade Tribunal (CITT) Methods of supply Contracts Standing Offers and Catalogues Supplier Arrangements Contribution Agreements Pre-facilitated contracts Principles of Transportation Legal requirements of contracting SKILLS Teamwork Facilitation Innovation and risk taking Intellectual Skills Creative Problem Solving Analytical Thinking Strategically Identifying Links Information Search Model Building Observing Visioning Interpersonal/Interaction Skills Listening/ paraphrasing Coaching/mentoring Relating to others Conflict resolution Verbal/non-verbal communication Networking/building relationships Influencing Telephone skills Self-Management Skills Assertiveness TOOLS - Customer Information Service (CIS) - ACCORD/SPEC - Item Information Systems - Automated Buying Environment (ABE) - Informatics Professional Services (IPS) Marketplace - Client Systems
2.
DEFINE PROCUREMENT REQUIREMENTS 2.1 Define Business and Technical Requirements 2.2 Define Project Management Strategy 2.2.1 Define Risk Management Strategy 2.2.2 Define Contract Management Strategy 2.2.2.1 Define Delivery and Acceptance Strategy 2.2.2.2 Define Quality Assurance Strategy 2.2.2.3 Define Financial Management Strategy 2.2.2.4 Define Government Furnished Resources (GFR) Strategy
D-2
PPM PROCESSES62 2.2.3 Define Bid Solicitation Strategy 2.2.4 Define Contract Administration Strategy 2.3 Define Scope of Contract(s) (e.g. Bundling, PFC, BDP) 2.4 Define Reporting Strategy 2.5 Define Approval Strategy 2.6 Define Change Management Strategy 2.7. Define Procurement Strategy 2.7.1 Validate Sources of Supply 2.7.2 Define Procurement Methodology (Tools and Techniques) 2.7.3 Define Bid Evaluation Criteria and Basis of Source Selection 2.7.4 Prepare Bid Solicitation Document
COMPETENCY AREAS KNOWLEDGE Pricing Models Accounting Principles Indemnification Selection/Evaluation Criteria Value Analysis Budgeting and Financial Planning Theories Financial Contracting Contract Costing Principles Limitation of costs Methods of payment Unallowable costs Variable Rates Price and fee adjustments Progress Payments Firm Rates Pricing Methods Process Settlement/Arbitration Innovative pricing mechanisms/models Risk Management Theories and Principles Project Management Theories and Principles Integration Management Scope Management Time Management Cost Management Quality Management Human Resources Management Reporting Management Risk Management Project Procurement Management IT Management SKILLS Flexibility Self-assurance/ confidence Good judgement/ common sense Endurance/ Persistence Determination Initiative/Drive TOOLS
D-3
PPM PROCESSES62 2.7.5 Obtain Management Approval of the Procurement Strategy
COMPETENCY AREAS KNOWLEDGE Lifecycle Management Tools and Techniques Management Architecture Management Quality Management Theories Data Management Theories Performance Management Theories Configuration Management Theories Commodity Area (Products, Services, Systems) Commodity specifications and standards Products, services, systems Procurement history Commodity features and benefits Value and frequency of purchased commodity Value and volume of commodity at large Average unit price, quantity Methods of supply options Sources of supply (sourcing) End users and originators of requirements Geographic distribution Policies, regulations or standards affective the commodity Projected volume growth rate Projected revenue contribution Current revenue/cost ratio Competitiveness of commodity to the extent it warrants continued existence in its present form Intellectual Properties (Market Environment) SKILLS TOOLS
3.
EXECUTE PROCUREMENT STRATEGY 3.1 3.2 3.3 3.4 3.5 3.6 Solicit Bids Receive Bids Evaluate Bids Select Contractor Negotiate Contract Prepare Contract
3.7 Obtain Contract Approval 3.8 Award Contract
4.
MANAGE CONTRACT 4.1 Manage Technical, System and Quality Performance 4.2 Manage Cost/Schedule and Delivery
D-4
PPM PROCESSES62 Performance 4.3 Manage Government Furnished Resources (GFR) Performance 4.4 Administer Contract
COMPETENCY AREAS KNOWLEDGE Market size Present market share Limitation of market share Historical trends in market share Best competitive markets Markets needs Market growth (Client Profile) Major clients within a Department Client locations Clients' business volumes Client attitudes towards product/service Client commodity usage data/trends Forecasted requirements Special requirements (Business Activity) Total business by commodity Volume trends for the commodity Comparative performance by particular segments of the market (Competition) Major competitors Locations Competitors market share Strengths and weaknesses Historical competitor trends in market share Marketing methods used Future trends Future competitors Potential market share SKILLS TOOLS
5.
DISENGAGE CONTRACT 5.1 Physical Disengagement 5.2 Administrative Disengagement
D-5
PPM PROCESSES62
COMPETENCY AREAS KNOWLEDGE Current and past sales/revenue volume trends New products/services/systems Their technological efficiency or cost advantage Competitive marketing strategy (Industry) Major suppliers/contractors Production capabilities Location Sales and volume trends Products, services, systems New product, services or systems development Pricing information Cost information Seasonal manufacturing trends Packaging Warehouse/Distribution network Sales network Services Quality Assurance Security Labour situation unionized/non-unionized Local/National/ International markets Production cycle Type of supplier Economic Development Factors Economic factors impacting commodity (government restraint programs, inflationary pressures, labour disputes, increased petroleum SKILLS TOOLS
D-6
PPM PROCESSES62
COMPETENCY AREAS KNOWLEDGE costs, interest rates, value of Canadian dollar, etc.) Socio/Political Environment Government Regulations for: - products/services/systems - pricing - competitive practises - advertising and promotion - import/export Policies/set asides Government fiscal policies/Special Operating Agency (SOA)/Crown Corporations/Operating budget, etc. Increased client delegation Industrial and Regional Benefits Team roles and responsibilities Reporting procedures Client Relations Service Provider Behaviours Communications channels Marketing of Procurement Services Marketing Principles Promotional Techniques Organizational/Client and PWGSC Mission/Objectives Organizational Structures Policies, procedures and directives Government Structure and Operations SKILLS TOOLS
D-7
ANNEX E LIFE CYCLE WALL CHARTS
LIFE CYCLE WALL CHARTS

The purpose of this Annex is to provide a graphic overview of the procurement process that can be used to orient discussions, further analysis and training. The wall charts are designed as wall displays and also as overhead projector slides. The author plans to integrate some of these information elements into an office wall chart; hence the name. Figure E-1 presents a high-level view of the project planning and procurement management processes from the governments perspective. It integrates the complex procurement activities of PWGSC with the project/program focus of the client department. The time line goes from need recognition to product delivery. The information is organized into columns reflecting each of the Treasury Board recognized project phases of: identification, development, definition, implementation and close-out. The detail presented is limited by a desire to present the information on one page and to keep to a high enough level so that one can easily grasp the big picture. Certain boxes are marked to draw attention to key decision documents: the Statement of Operational Requirements, Procurement Management Plan (PWGSC), Project Implementation Plan (client department), Synopsis Sheet (iterative project authorization document), Statement of Objectives (used in Benefits Driven Procurement), the Request For Proposal and the Contract. The chart allows for a separate definition phase contract, but has a more detailed breakout for the implementation phase. The remaining figures address the interaction between the contractor and the government. These three Figures (E-2, E-3 and E-4) share a common product life cycle timeline: product definition, design, development, integration, test and evaluation, production, installation (or deployment) and operation. Disposal is not shown, but it does require early consideration for example, how one gets rid of nuclear waste. The terminology used here is widely accepted in industry. Definition and development refer to the product; whereas, in Figure E-1 these terms had a different meaning and referred to the government project.
E-1
LIFE CYCLE WALL CHART

1. IDENTIFICATION Project & Procurement Planning Operational/Business Need Integrated Procurement Team Options Analysis Market Research Sources of Supply Operations & Support Concept Performance Objectives Statement of Operational Requirements Indicative Cost Estimate 2. DEVELOPMENT Solicitation Planning Business/Technical Requirements Project Management Strategy Project Implementation Plan Refined Cost Estimate Risk Assessment & Mgt. Strategy Business Case Procurement Strategy Defn & Approval Synopsis Sheet (PPA) Project Defn Authorized Statement of Objectives (if BDP) Industry Days (if BDP) RFP (Definition Phase) 3. DEFINITION Solicitation & Source Selection Definition Phase Contracting Process System Definition & Project Planning Substantive Cost Estimate & Risk Analysis Synopsis Sheet (EPA) Implement Authorized Implementation SOW & Specification CDRL/DIDs & CEIL Terms & Conditions & Bid Evaluation Criteria RFP (Implementation Phase) Bid Evaluation & Contractor Selection Contract Negotiation Contract - Preparation, Approval & Award 4. IMPLEMENTATION Contract Management 5. CLOSEOUT Close-out
Manage Systems: Requirements Mgt. Risk Management Data Management Configuration Mgt. Etc.
Physical Disengagement
Mgt. Engineering & Production Performance Mgt. Logistics Acquisition Processes Mgt. Govt Furnished Resources Mgt. Cost/Schedule & Delivery Performance Mgt. Quality Performance Product Acceptance & Payment Manage Product Support Processes Contract Management and Administration
Admin. Disengagement
Procurement Concept Procurement Management Plan Synopsis Sheet (ID) Long Term Capital Plan
Figure E-1 Government Processes/Major Documents Figure E-2 presents an overview of the engineering and production process implemented by the contractor and overseen by the government team. These processes start with definition of system requirements and end with acceptance of the product design and the production units. In between, the technical reviews are conducted to make sure that the engineering and production effort in each phase is achieving the contract objectives. The engineering documentation is reviewed progressively by the government Technical Authority and feedback is provided to the contractor. Also shown are the major baselines, declared upon successful completion of the corresponding technical review, which are used to control the evolving product configuration. This overview is based on an equipment system project procurement, however the principles are applicable to Information Technology (IT) /System Integration (SI) projects, regardless of the project and product life cycle or orientation (e.g. waterfall, spiral, incremental release).
E-2

DEFINITION SYSTEM DEFINITION Define System Requirements Define Segments and Equipment Conduct Preliminary Design Conduct Detailed Design
Conduct Functional Tests, Qualification Tests, User Trials
DESIGN
DEVELOPMENT
INTEGRATION
TEST & EVALUATION
PRODUCTION & INSTALLATION
OPERATION
Release Engineering To Production
Perform Operational Trials
TECHNICAL REVIEWS System Requirements Review
Segment/ Equipment Technical Reviews
Preliminary Design Reviews
Critical Design Reviews
Test Readiness Reviews
Production Readiness Review
CONFIGURATION BASELINES Functional Baseline
Software Specification Review Product Baseline
Allocated Baseline
Design Acceptance
PRODUCT ACCEPTANCE
Formal Qualification Review
Functional Configuration Audit
Physical Configuration Audit
PRODUCTION ACCEPTANCE
Figure E-2 Engineering and Production Figure E-3 provides an overview of the logistics planning and acquisition activities on the same timeline as the previous figure. The engineering reviews and audits are presented to link this figure back to the engineering processes in Figure E-1. The logistics activities can be grouped into: logistics engineering (to influence the design to achieve supportability objectives); maintenance planning (to select a support system alternative (or strategy) and to then develop a detailed list of maintenance tasks and required resources); logistics acquisition (to purchase/develop the logistics support recommended in the maintenance plan) and early product support (funded under capital acquisition). Logistics acquisition includes many sub-processes, not broken out, such as the conduct of provisioning conferences and the approval of a training strategy. Intensive interaction between the contractor and the government team specialists occurs at this time. Interim contractor support is shown to reflect the reality that measures must be taken to ensure adequate support while the logistics support is being fielded.
E-3

DEFINITION REVIEWS & AUDITS Functional Baseline DESIGN Allocated Baseline DEVELOPMENT Preliminary Design Reviews INTEGRATION Critical Design Reviews
MAINTENANCE PLANNING
TEST & EVALUATION Functional Configuration Audit
PRODUCTION & INSTALLATION Physical Configuration Audit
OPERATION
LOGISTICS ENGINEERING
LOGISTICS ACQUISITION
PRODUCT SUPPORT
LOGISTICS DECISION POINTS
Provide Concept of Operations
Design System Select Equipment Perform R&M Modelling Provide Engineering Data
Select Support System Alternative
Approve Maintenance Plan
Interaction: Contractor/ Technical Authority

TECHNICAL DATA PACKAGE SUPPLY PROVISIONING INTERIM CONTRACTOR SUPPORT
PHST DEVELOPMENT R&O REQUIREMENTS
ADAPTATION/ DEVELOPMENT OF LOGISTICS SUPPORT
TECHNICAL PUBLICATIONS DEVELOPMENT SUPPORT & TEST EQUIPMENT DEVELOPMENT ATE AND TEST PROGRAM SETS TRAINING DEVELOPMENT SOFTWARE SUPPORT FACILITY LIFE CYCLE PRODUCT SUPPORT
PERSONNEL PLANNING FACILITIES CONSTRUCTION
PERSONNEL REQUIREMENTS FACILITIES REQUIREMENTS
PERSONNEL ALLOCATION FACILITIES CONSTRUCTION
Figure E-3 Establishing Logistics Support Figure E-4, shows the operation, maintenance and support part of the life cycle. This diagram typically spans many years, depending upon the technology. Information technology projects have special support considerations, such as loading existing (legacy) data into the new system and then solving all the detailed problems that emerge. Most products require a range of contractor support services repair and overhaul; engineering support services (technical investigations, modification development, etc.); change and revision services (for technical publications, drawings, etc.); software support services (for example operation of a software support facility); and in-service supportability analysis (to detect and correct support problems). Mid-life upgrades, common with major systems, are often major support project procurements, linking back to Figure E-1.
E-4
OPERATION, MAINTENANCE AND SUPPORT

PRODUCTION & INSTALLATION OPERATION
// //
HOT LINE, HELP DESK,UPGRADES . . .
DISPOSAL
IT PROJECTS
DATA MIGRATION CONTRACTOR SUPPORT OF TRIALS
USER ACCEPTANCE
MOST PROJECTS
CONTRACTOR REPAIR AND OVERHAUL
ENGINEERING SUPPORT SERVICES
INTERIM CONTRACTOR SUPPORT
CHANGE AND REVISION SERVICES
SOFTWARE SUPPORT SERVICES
IN-SERVICE SUPPORTABILITY ANALYSIS
MID-LIFE UPGRADES
OR
ALTERNATIVE SERVICE DELIVERY
CONTRACTOR PERFORMED MAINTENANCE AND SUPPORT SAFE, ECONOMICAL DISPOSAL
DISPOSAL PLANNING
Figure E-4 Operation, Maintenance and Support The strategy of Alternative Service Delivery affects both Figure E-3 and E-4. With ASD, the government may hand the responsibility for logistics support over to industry. This greatly simplifies the procurement processes. However, enforceable (measurable) quality of service measures are needed to define the performance expected of the contractor.
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ANNEX F SAMPLE ACTIVITY TEMPLATES
PPM ACTIVITY TEMPLATE Title: Implement COTS Procurement 2.7 Define Procurement Strategy
PPM Process Reference: Description
The federal governments preferred acquisition strategy is Commercial-Off-The-Shelf (COTS). The main benefits of this approach are that a satisfactory solution can be deployed quickly, relatively inexpensively and at low risk. Also, a large customer base ensures on-going product support and commercially funded product evolution. COTS procurement should be the norm. COTS procurement is possible if the: Required goods have already been brought to production status and have a proven performance, and the Required services have been established and are commercially available.
In this template, the term Non-Developmental Item (NDI) is synonymous with COTS. The product may be marketed commercially (COTS), or may have been produced for some other military (NDI) the point is that development is not required. Market research is used to identify COTS products that meet your need. You must be willing to accept an 80% or 90% solution - one that may lack a few desirable features. You also may need to be innovative in addressing issues such as system interfaces, environmental conditions and product support. The challenge in COTS procurement is to keep it simple: Resist the temptation to modify the product; Keep the RFP and subsequent contract straightforward Terms and conditions appropriate to COTS procurement; Statement of Work limited to essential tasks with no engineering program typical of development; Data requirements kept minimal, consistent with commercial practice; Technical requirements presented in either a brief performance specification or in a commercial product description no new requirements forcing development; Logistics support consistent with commercial best practice no costly development effort.
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Outputs Needs analysis, option analysis, trade-off studies > Statement of Operational Requirements Market research, gap analysis, requirements scrub > Performance Specification or Commercial Item Description Project planning, cost estimating, risk analysis > Synopsis Sheet Solicitation process > Proposal Evaluation Plan, Request for Proposals, Contract Contract implementation > essential, commercial style documentation Product support > commercial warranty; possibly commercial maintenance and support
Techniques Effective market research and gap analysis can lead to COTS procurement. Having chosen a COTS procurement strategy, you will typically face the practical issues discussed below. Product performance is important. However, you cannot push the state of the art via COTS procurement. So select a suitable solution from among existing products. Do not specify performance beyond that available in the marketplace. Do not specify a composite of what is commercially available. Any real system is a compromise among competing objectives for example, aircraft design involves a trade-off between range and payload. So find the balanced solution that most closely meets your needs. Seek technical solutions consistent with widely accepted international standards, as applicable. For example, there are standards for: Open architecture interfaces among databases; Digital data transmission in communications systems; Electronic busses linking equipment; Software language in imbedded systems; and Linking of information in electronic documents.
This will prevent future problems with interfaces, technology upgrades, product support, etc. Minor modifications are acceptable. But be careful not to impair the design integrity of the product. You may inadvertently stress the product beyond its design limits. A few examples are:
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Adding enough equipment to a ship to change its center of buoyancy; Changing the suspension system on an all terrain vehicle, transferring stress to its frame; Increasing the load on a diesel generator, causing overheating and early failure.
Do not specify a worst case scenario operating environment without considering measures to shelter the system from environmental stress. For example, most equipment onboard a ship is sheltered from the salt spray and freezing ice of the North Atlantic. Equipment installed at a northern radar site need not operate at cold arctic temperatures the radome can be heated. Relatively delicate equipment need not survive an unprotected fall from a transport truck proper packaging and handling offset the risk. Logistics support usually must be adapted to suite the particular operational scenario. However, do not impose costly changes merely to be consistent with past practice and general policy. For example, the product vendor may have excellent maintenance manuals which, however, are not in the Canadian military format. Before requiring them to be restructured, be sure that the value of this effort is commensurate with its cost. Similarly, carefully assess existing training before launching a unique and expensive training development effort. Investigate rapid commercial parts supply before investing in traditional provisioning and warehousing. With COTS procurement, the supplier retains proprietary data rights. Determine what data you really need and how you can obtain it. It may be best to arrange for data access on an asrequired basis, rather than delivery of a technical data package. Software Tools Templates Mandatory References LEGISLATION N/A POLICY Policy - Treasury Board Treasury Board Manual Capital Plans, Projects and Procurement, Chapter 3-1 Policy on Selecting Preferred Procurement Strategies. (As of July, 1998 this Chapter was still in draft form.) Policy - Department of National Defence The Defence Management System, A-AD-125-000/FP-00I - Preparation of Synopsis Sheets; Procurement Strategy
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Discretionary References POLICY N/A GUIDANCE N/A STANDARDS N/A MIL-STD-810E, Environmental Engineering Considerations and Laboratory Tests, defines military environments and associated environmental qualification tests. This standard is used to identify applicable conditions, select parameter values and define tests. Be realistic and innovative do not over specify requirements. Standards - NATO NATO STANAG 2895, Climatic Conditions Affecting the Design of Materiel for use by NATO Forces defines climate conditions throughout the world. It is used to specify military environments in which equipment must be able to operate. Be realistic and innovative do not over specify requirements. Best Practices When buying COTS, you should use commercial: Contract terms and conditions; Project management practices; Quality assurance processes; Inspection and testing methods; Distribution and support capabilities; and Warranties.
You should not normally require a company to: Apply military standards in a commercial environment; Furnish information not essential and not customarily provided; Relinquish intellectual property rights. Comply with terms and conditions inconsistent with the nature of the contract.
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Lessons Learned An example of COTS procurement is a satellite signal receiving and transmission unit required for ground radar sites in the far north of Canada. The units installed at the sites were ageing; therefore, replacement units were needed. The original units, developed specifically for the military, cost $20,000 each. They met the military prepared specification and could still be procured. Market research revealed that a similar unit was now commercially available for $500 per unit. However, it did not work properly in the low temperatures sometimes experienced at the unheated radar sites. This problem was resolved by installing small heaters inside the radome. The inexpensive COTS units were bought. They were delivered quickly, installed and worked well. The Coast Guard needed lap top computers for use by the Chief Engineers aboard their ships. A military ruggedized computer capable of withstanding exposure to oil, salt spray, freezing water and shock and resistant to fungus growth could be bought for $15,000 per unit. A commercial computer with equivalent functionality could be bought for $3,000 per unit. It was decided that the less expensive items would be bought. Even though the ship as a whole was exposed to a severe environment, the Chief Engineer would use the computer only in his cabin, which had a benign environment. Training COTS procurement is addressed in the Statements of Work and Specifications and Systems Engineering Management courses at the Materiel Management Training Center. Support OPI TBD
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PPM ACTIVITY TEMPLATE Title: Implement Solution-Oriented Procurement 2.7 Define Procurement Strategy
Under the solution-oriented procurement strategy, you ask industry to meet a need or solve a problem by adapting an existing solution, or by harnessing industry expertise previously demonstrated in similar circumstances. A major redesign effort, or establishment of a new service capability, is not required. The solution-oriented procurement strategy is in-between Commercial-Off-The-Shelf (COTS) and unique government development. It involves some design and development effort. Often one procures an existing, proven platform and installs unique mission systems (or kits). Examples are: Buying a helicopter with a certified airworthy airframe and engine, but selecting, integrating, installing and testing mission systems to meet specified Canadian requirements; Buying a proven army vehicle, but developing and installing kits designed to support Canadian military operations mobile communications facility, deployable maintenance shop, emergency medical center, etc.; and Buying an existing coastal patrol vessel, but fitting it with specific minesweeping, communication and weapon capabilities.
Outputs The outputs are the same as for Implement Unique Government Development but are focussed primarily on the part of the overall system being adapted to meet your needs. For example, the specification for a maritime helicopter would stipulate performance requirements (speed, range, payload, reliability, etc.) that could be met by more than one existing, certified aircraft. These requirements would be stated at the aircraft level, and not address requirement allocations to the engine, gearbox or other subsystem integral to the proven design. Unique requirements, such as a submarine hunting capability, would be expressed in performance terms that typically would allow the selection and integration of proven system elements. The tests and trials, technical reviews and audits and product acceptance would focus on those areas requiring design and development, not on the off-the-shelf elements.
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Techniques Read the techniques section for both Implement COTS Procurement and Implement Unique Government Development. Apply this guidance where it pertains to your specific project. Software Tools Same as for Implement Unique Government Development. However, the software tools will be used selectively as appropriate for the design and development effort. Templates Templates are provided in related procedures for each of the documents that must be prepared by the Technical Authority. Also, check lists are provided in related procedures for each respective technical review and audit. Mandatory References LEGISLATION N/A POLICY N/A Discretionary References POLICY N/A GUIDANCE N/A STANDARDS N/A Best Practices Conduct market research to identify existing solutions as close as possible to your capability requirements. Settle for less than 100%, if necessary. Be careful not to destroy the design integrity of an existing system. Engineering changes can have unexpected consequences so change as little as possible.
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Pay close attention to system interfaces. For example, a new mission suite installed in an existing platform may impact power usage, cooling requirements, electromagnetic compatibility, total weight, center of gravity (or center of buoyancy), system reliability and maintainability, etc. Often, adaptations are achieved by changing or adding software. Allow considerable extra time and money for this effort problems usually are encountered. With major software systems, be careful about changes in fundamental parameters. For example, an information management system that works well with a small number of users may not be robust enough to handle many users. Do not under-estimate the amount of effort required for system integration and test. Interfacing existing equipment to create a system often introduces problems that are only evident during testing and take time to solve. Lessons Learned Do not force design and development where it is avoidable. Take advantage of existing logistics support manuals, training, support equipment, etc. to the maximum extent possible. Consider the value added of contemplated re-work and avoid reformatting, etc. where there is little real benefit. Training This topic is addressed in the Systems Engineering Management course given at the Materiel Management Training Center (DND). Support OPI TBD
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PPM ACTIVITY TEMPLATE Title: Implement Unique Government Development 2.7 Define Procurement Strategy
Unique government development is necessary when no suitable product exists to meet you needs, and a new capability must be developed. A significant design, development and test effort is required. This approach thus involves more risk than other strategies. As in all procurement projects, the Technical Authority must prepare: Project approval documentation Cost and schedule estimates.
When development is required, the Technical Authority must prepare: Statement of Work (SOW) identifying the activities to be performed by the contractor; Contract Data Requirements List (CDRL) identifying the deliverable data and indicating its due dates; Set of Data Item Descriptions (DIDs) defining the data content and media; Specification defining the system performance requirements; and Contract End Items List (CEIL) identifying the hardware and software deliverables.
Preparation of each of the above items, which are key elements of the Request for Proposals (RFP) and subsequent contract, is described in separate procedures. The project may proceed in phases. For example, the phases may be: Project Definition preparation of plans, investigation of risk areas, implementation cost and schedule estimate; Project Implementation design, development, integration and test, production, delivery/installation.
This phased approach ensures proper planning and allows for risk mitigation. Successful completion of one phase may be required before authorization to proceed with the next phase is granted. Once work is underway under contract, the Technical Authority: Approves project plans
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Approves system level specifications and test plans; Participates in system level technical reviews and audits; Authorizes changes to the contract specification; and Accepts the system based on test and evaluation results.
The contractors engineering activities should follow a logical process shown below at a high level for services, hardware and software type projects. The early work of needs analysis and concept exploration may be largely complete prior to contract award. For example, often the development effort involves selection and integration of existing elements to create a new system with a specified capability.
SERVICES Needs Analysis Demonstration Project Full Scale Implementation Support HARDWARE Needs Analysis Concept Exploration Demonstration and Validation Full Scale Development Production and Installation Support SOFTWARE Needs Analysis Preliminary Design Detailed Design System Integration and Test Installation and Conversion Support
Outputs The following list of outputs is indicative of the documentation generated in a development project. The list could be greatly expanded and, of course, varies by project.
Project Approval (Government) Bid Solicitation (Government) Implementation (Contractor) Project Management Synopsis Sheet Project Profile and Risk Assessment Procurement Plan Request for Proposals Proposal Evaluation Plan Contract Project Plans Progress Review Documentation Contract Change Requests Equipment Breakdown Structure Specifications system, subsystem, equipment Interface Control Documents Design Documents Engineering Change Requests Technical Review and Audit Documentation Drawings and Parts Lists Software Code and Documentation Test Plans Test Procedures and Test Cases Test and Evaluation Reports
System Engineering
Detailed Design Test and Evaluation
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Production
Maintenance
Operation
Bill of Material Product Specifications Production Flow Diagrams Process and Material Specifications Quality Control Instructions Maintenance Plan Provisioning Data Technical Publications Training Program User Manuals
Techniques An overview of the system development process is shown below. OVERVIEW OF SYSTEM DEVELOPMENT PROCESS
DEFINITION SYSTEM DEFINITION Define System Requirements Define Segments and Equipment Conduct Preliminary Design Conduct Detailed Design
Conduct Functional Tests, Qualification Tests, User Trials
DESIGN
DEVELOPMENT
INTEGRATION
TEST & EVALUATION
PRODUCTION & INSTALLATION
OPERATION
Release Engineering To Production
Perform Operational Trials
TECHNICAL REVIEWS System Requirements Review
Segment/ Equipment Technical Reviews
Preliminary Design Reviews
Critical Design Reviews
Test Readiness Reviews
Production Readiness Review
CONFIGURATION BASELINES Functional Baseline
Software Specification Review Product Baseline
Allocated Baseline
Design Acceptance
PRODUCT ACCEPTANCE
Formal Qualification Review
Functional Configuration Audit
Physical Configuration Audit
PRODUCTION ACCEPTANCE
The system development process involves top-down requirements allocation and design and bottom-up build, integration and test. The starting point is analysis and clarification of system level requirements. Performance requirements are documented in a system level specification, which is the subject of the System Requirements Review. Once the functions to be performed by the system are properly described and agreed to, then the system Functional Baseline is established.
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The system level requirements are then allocated to the system segments (subsystems) and in turn to the individual equipment (hardware and software) comprising the system. These requirements are described in the respective top-down layers of specifications. Satisfactory completion of the technical reviews establishes the Allocated Baseline at each level. If the system includes extensive software, then a separate Software Specification Review is conducted to address design issues specific to software. The next phase of the systems engineering process is preliminary and detailed design. The Preliminary Design Review ensures that the development requirements are being achieved and that the evolving configuration is properly and accurately documented. It confirms that the design engineers are on the right track and identifies technical risks that must be closely managed. The Critical Design Review is held to confirm that the design is sufficiently mature to enable the team to proceed with qualification testing and production. At this time representative and (hopefully) stable technical data are provided for maintenance planning. The Test Readiness Review confirms that preparations for the test program are complete that the test plans, test procedures and test cases have been prepared, that the test facilities are available and ready, and that the needed test prototypes have been built. The test and evaluation program includes analyses, functional tests, environmental qualification tests and possibly, user trials. It verifies that each specified requirement has been met. The Formal Qualification Review confirms that the qualification test program has been satisfactorily completed. The Functional Configuration Audit confirms that the specification requirements have been met. These two activities may be combined. Engineering data are issued to production through a formal, controlled Engineering Release process. The Production Readiness Review confirms that the design is sufficiently proven and stable to start production, that preparations for production are complete and that the required material is being purchased and will be available as needed. The Physical Configuration Audit is performed by comparing an early production item to the technical data, to confirm that the item conforms to its approved technical documentation. The Product Baseline is declared upon successful completion of this audit. (Items delivered prior to this point may have to be retrofitted to a common standard.) The technical data required for operation and maintenance of the system are then turned over to the customer. Software Tools Industry uses many software tools in development and production programs. Examples are:
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Requirements Management Computer System Configuration Management Information System (CMIS) Document Management System (DMS) Computer Aided Design/Computer Aided Manufacturing (CAD/CAM) Computer Aided Software Engineering (CASE) Manufacturing Resource Planning (MRP) Logistics Support Analysis Record (LSAR)
Templates Templates will be provided in related procedures for each of the documents that must be prepared by the Technical Authority. Also, check lists will be provided in related procedures for each respective technical review and audit. Mandatory References LEGISLATION N/A POLICY N/A Discretionary References POLICY N/A GUIDANCE N/A STANDARDS N/A Best Practices The specification included in the Request for Proposals and subsequent contract must be a performance specification. An example of a performance requirement is: The vehicle loaded to a maximum Gross Vehicle Weight Rating travelling over paved roads at speeds between 50 and 90 km/h, with an average of 70 km/h, shall have a range of 400 km between refuelling stops.
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The US DoD in some recent projects has prepared a Statement of Objectives and required bidding companies to write the Statement of Work and specification. This takes advantage of expertise in industry and ensures that best business practices are followed. Seek ways of working together with the company rather than being adversarial. In successful projects everyone works together in a team effort. Lessons Learned Some lessons learned on past projects are: Do not under estimate the system integration effort when the project involves integrating off-the-shelf elements. Do not over specify your requirements this will drive up costs without commensurate benefits Do not specify design solutions if you do, it is the Technical Authoritys problem if they dont work. Give industry an opportunity to comment on the Statement of Work and specification before formally issuing the RFP. Interested companies tend to have a great deal of expertise in the applicable area. If the project is broken into phases, contracted for separately, then make sure that there is funded work bridging the successive contracts to keep the companys development team together. Ensure early and extensive testing. operations. Otherwise problems will be uncovered during
Work closely with the company on clarifying technical requirements and authorizing changes. Respond quickly to requests otherwise the project will be delayed. Be willing to make trade-offs.
Training This process is taught in the Systems Engineering management course given that the Materiel Management Training Center (DND). Support OPI TBD
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PPM ACTIVITY TEMPLATE Title: Implement Benefits Driven Procurement 2.7 Define Procurement Strategy
Benefits Driven Procurement (BDP) originated in Information Technology projects, but has been extended to any project requiring a development effort. BDP is identified by Treasury Board Secretariat as a preferred approach for implementing Information Technology projects. Under BDP a company is selected to implement a project, through a competitive solicitation process, based on its competence in managing complex projects and its understanding of the relevant technologies. This company is selected, and starts work under contract, without the constraint of a government prepared technical specification. At this stage, the projects objectives, i.e. benefits, have been defined by the client and these desired benefits drive the implementation process. The company performs requirements analysis and definition, does trade-off studies, develops and implements a solution, and provides the required product support. An integrated product and process team is established to ensure a close working relationship between the client and the company. BDP transfers to industry much of the work needed to plan and implement projects, while retaining clear lines of accountability. Government staff are relieved of the difficult task of performing in-depth requirements analysis and the company is free to use current rapidly evolving technology. BDP moves away from the rigid firm fixed price type of contract previously used for complex, multi-year, high technology projects. Given the level of technical uncertainty, the contract should be cost type, with a ceiling price consistent with the scope of work and project budget. The contract may include incentives for early delivery, technical innovation or cost efficiencies. The project may be implemented in phases, with off-ramps at the end of each phase to allow the government to gracefully terminate the project if it is not proving to be successful. In some instances, the contractor may share in the cost of implementing the project, if the technical solution leads to an alternative assured source of revenue for the company. For example, the company may be able to exploit the market for the resulting product. However, this funding approach involves risk for the company that may result in it losing interest in continuing with the project if the predicted market potential does not materialize.
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Outputs A Statement of Operational Requirements (SOR) and Statement Of Objectives (SOO) are needed to define the intended benefits, interfaces and project constraints. Industry workshops are used to explore technical alternatives, clarify objectives and identify risks. The Request for Proposals (RFP), bid evaluation and contracting processes are normal, with the caveat that the SOO replaces a technical specification and the statement of work (SOW) is high level. The contract should be cost reimbursable with ceiling price, and may include performance incentives. An integrated product and process team approach is followed, with the client and contractor working closely together. Techniques Statement of Operational Requirements (SOR) The operational staffs prepare an SOR explaining the projects objectives, describing critical interfaces and identifying significant constraints. The requirements are expressed in operational or functional terms not in terms of a preconceived technical solution. The SOR will go through a number of iterations, partly as a result of feedback from industry. Cost Estimates The cost of implementing the project is estimated by analogy with similar projects, cross-checked, to the extent possible, using market research data. A substantial contingency is allowed for risk, given the lack of detailed costing data. The cost estimates are updated repeatedly as more information becomes available. Preliminary Project Approval The Project Authority seeks approval to work with industry to clarify project objectives. Early Dialog with Industry Inputs are obtained from interested companies: Home Page A project home page is created on the internet, contact information is presented and the SOR is posted. Also the project milestones are listed, indicating the steps in the acquisition process and their planned timing. A notice referring to the home page is promulgated to industry via the Government Electronic Tendering System (GETS) - now called MERX. Solicitation of Interest (SOI) Companies that hope to participate in the project are asked to indicate their interest by completing a one page form identifying the company, providing contact information and summarizing their relevant capability.
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Project Briefing The Project Authority presents a briefing to companies who have indicated an interest in the project. Companies are encouraged to form alliances, if appropriate, to ensure a full capability and to reduce to a practical number the bids that eventually will be submitted. Industry Days Working sessions are held with the interested companies to validate the objectives, schedule and budget, to explore concepts and to identify risks. The client refines the SOR using knowledge gained from industry.
Requirement Scrub The requirements are challenged, by experienced people, partly based on knowledge gained through the industry days process. This step eliminates requirements that are not feasible or affordable or that introduce unnecessary risk. Statement of Objectives (SOO) The Project Authority prepares a SOO stating the projects refined objectives in short, precise paragraphs. Project Effective Approval The Project Authority seeks approval to proceed with project implementation, usually in predefined phases. Request for Proposals (RFP) The Project Authority prepares an RFP. It includes instructions to bidders, evaluation criteria, a Statement of Objectives and a draft contract. The RFP is kept as short and clear as possible. It is promulgated via the OBS (MERX). Submission of Proposals Companies submit proposals that are limited in number of pages. Performance Specification - Depending upon the nature of the project, the bidders may be required to prepare a performance specification. (This would be premature if concept exploration and definition is necessary, but would be suitable if the project can go directly to development, to integration and test or to delivery and installation.) Oral Presentations Companies with responsive bids are asked to give an oral presentation demonstrating their understanding of the problem, reviewing their proposed solution and confirming their ability to manage the project. Proposal Evaluation The Crown evaluates the proposals and determines which proposal provides greatest overall value. The evaluation process includes reference checks, scoring of proposals and, if necessary, on-site capability surveys. Contract Negotiation PWGSC debriefs the loosing bidders and negotiates a contract with the selected company. The contract is based on the selected proposal. It defines the project objectives and provides a basis of acceptance and a basis of payment. It provides a risk management process and a dispute settlement method. It may include off ramps, if appropriate, to enable the government to gracefully escape from failing projects. Project Implementation The project is implemented in phases, if appropriate. The emphasis is on the use of commercial standards, best business practices, integrated processes, minimum documentation and integration of acquisition and life cycle support. Where appropriate, the solution is implemented progressively. Contractor performance is monitored making as much use as possible of the contractors internal management controls.
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Acceptance Acceptance is based on confirmation that the objectives have been met. This may not be as simple as in traditional contracting methods, because the government did not detail its requirements as definitively as in the past. Basis of Payment The contractor is paid its reasonable direct and overhead costs and a level of profit based on performance. A ceiling price is dictated by the project budget. The contract may involve performance incentives. For example, if contractor introduced innovations result in significant cost savings, then these savings should be shared between the contractor and the government. Project Close-Out The Crown confirms that all goods and services have been delivered and accepted, that costs have been invoiced and paid and that there are no outstanding problems and actions. Any residual payments (for example resulting from holdbacks) are paid. To the extent that payments were based on costs, an audit may be necessary. Independent Review - An independent review of the project should be conducted to capture lessons learned so that these may be used in subsequent projects. Software Tools Given the evolutionary nature of system development via Benefits Driven Procurement, a requirements management computer tool, (e.g. RequisiteProTM, from Rational Software Corporation) should be used. Computer-Aided Software Engineering (CASE) tools should be used in large and complex software development projects to facilitate modelling, code management, integration and test, version control and documentation preparation. Templates Statement of Objectives: This is a short and to the point document stating: What capability is needed functions that the system shall perform; What quality is expected concise high level performance statements; When the capability is required the schedule constraints; How much the Department is willing to pay the budget constraints; What technical constraints pertain such as interfaces with other systems; Who is responsible - for requirements analysis, development, installation and life cycle product support; and
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What company management and technical skills are needed as demonstrated through past performance.
Company Proposals: The proposals are in two volumes: Management, Technical and Past Performance Which includes an executive overview, streamlined Statement of Work, master project schedule, implementation team organization chart, project methodology, proposed solution architecture, innovative concepts, past performance (client references), confirmation of ability to obtain needed resources and a risk mitigation summary. Financial and Industrial Benefits Which includes evidence of financial stability, price proposal, explanation of business arrangements, proposed socio-economic benefits, acceptance of (or revisions to) terms and conditions and any necessary certifications.
Mandatory References LEGISLATION N/A POLICY N/A Discretionary References POLICY Policy Guidelines - Treasury Board An Enhanced Framework for the Management of Information Technology Projects, Part II Solutions: Putting the Principles to Work, Treasury Board Secretariat, March 1998 Policy Guidelines - Department of National Defence GUIDANCE Guidance - Other Government Departments Benefits Driven Procurement Process, PWGSC, 27 March, 1997 Guidance - Other STANDARDS N/A
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Best Practices The US DoD introduced the concept of a Statement of Objectives (SOO). The SOO is a brief document (preferably one or two pages) identifying the project objectives to be achieved by industry. Use of the SOO shifts the responsibility to prepare the statement of work (and specification) from the government to industry. Companies present, in their bids, a proposed SOW for the project. This allows industry complete freedom to define and organize the work as necessary to accomplish the project objectives. It encourages innovation and cost consciousness. Lessons Learned BDP evolved out of experiments with a Canadian government acquisition process called Common Purpose Procurement (CPP). CPP introduced a streamlined, competitive procurement process. It brought industry into projects much earlier than before, when objectives were known but detailed requirements were still being defined. As a consequence, the Crown didnt have to write a detailed Specification the requirements were defined as necessary by an integrated product and process team that included both government and contractor personnel. This process avoided the difficulties that would otherwise have been faced by the Crown of: Defining requirements without an in-depth understanding of current technology; and Expressing requirements in terms of current technology merely to have these requirements become obsolete before they could be implemented.
The difficulty experienced with CPP is that it established a partnering relationship between the Crown and the contractor, whereby design decisions were made jointly. When the projects got into difficulty, the contractor could not be held accountable. By establishing a normal contractual relationship between the Crown and the contractor, whereby the contractor is responsible for delivering a solution that meets the project objectives, these difficulties can be avoided. Training Support OPI TBD
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PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

DELEGATED PROCUREMENT AUTHORITY

Goods & Services Requests

Manufacturers Part Numbers, NATO Stock Numbers, Commercial-Off-The-Shelf

Low Risk and Complexity Simple Spec/SOW

Integrated Procurement Team

Local Purchase Orders

Quick Competitions, Electronic Business Via Internet

FORCES FOR CHANGE

Taken from SOSB BPR Report, dated 14 September 1998

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

SOCIAL, INDUSTRIAL AND ECONOMIC OBJECTIVES

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Prepare for Electronic Business Create a Learning Organization

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Alternative Service Delivery (ASD)

Strong preference for teaming

THE PPM TEMPLATE AND DESKTOP TOOL

MPSL web page: http://www.ames-mpsl.com

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

INTEGRATED PROCUREMENT TEAMS

Project Management Institute (PMI) Benchmarking Research Report, Page 22.

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Finance Technical Operations Contracting

Use of information technology Shared access to computer tools and databases

Figure 4 Integrated Procurement Team

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

Objectives & Constraints Defined Requirements Defined Solution Defined

Statement of Requirements Performance Specification Detailed Specifications

Maintenance Plan Test & Evaluation Reports Product Baseline

Figure 5 Complex Procurement Effort Profile

Public Works and Government Services Canada

PROJECT PROCUREMENT MANAGEMENT TEMPLATE

PROJECT PROCUREMENT MANAGEMENT FRAMEWORK

PMBOK, Procurement Page 132.

Public Works and Government Services Canada