Professional Documents
Culture Documents
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:
TABLE OF CONTENTS
Section
Title
Page
1.
2.
3.
4.
5.
5.5
Figures
Figure
Title
Page
ii
Tables
Table
Table 1
Table 2
Table 3
Table 4
Table 5
Title
Page
Annexes
Annex
Title
A
B
C
D
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
E
F
iii
ACRONYMS
ABE
ACRO
AIT
AMESS
ASD
BDP
BPR
BRU
CBP
CCC
CFP
C/SPMS
CDRL
CEIL
CIS
CITT
CMF
CMIS
COTS
Commercial-Off-The-Shelf
CPAA
CPP
CSC
DID
DMS
DND
DoD
EPA
FAA
FTE
iv
GBO
GCRs
GETS
GFR
IM/IT
IP
Internet Protocol
IPPD
IPS
IPT
IT
Information Technology
LOI
Letter Of Interest
LSAR
MA&S
MCP
MOU
Memorandum Of Understanding
MPSL
MRP
NAFTA
NDI
Non-Developmental Item
NSN
OBS
P&A
P&PP
PFC
Pre-Facilitated Contract
PIP
PMBOK
PMI
PMO
PMP
PNs
Part Numbers
PO&M
PPA
PPM
PPMS
PPRA
PRC
PWGSC
RCI
RFP
ROM
SAR
SEI
SI
System Integration
SOA
SOI
Solicitation Of Interest
SOO
SOP
SOR
SOSB
SOW
Statement of Work
SPAC
SRB
SS(ID)
S&SS
TB
Treasury Board
TPP
TQM
UGD
WBS
WTO-AGP
vi
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
STANDARD PROCUREMENT
DELEGATED PROCUREMENT
AUTHORITY
Goods &
Services Requests
COMPLEX PROCUREMENT
DEGREE OF COMPLEXITY
LOW
Manufacturers
Part Numbers,
NATO Stock Numbers,
Commercial-Off-The-Shelf
Higher Risk,
Complex SOW,
Pre-Facilitated Contracts,
Capital Equipment,
Major System Procurement
Catalogued Item
Procurement
Process
Simplified
Procurement
Process
Integrated
Procurement
Team
Client Delegated
Procurement Process
Local
Purchase
Orders
PWGSC
Enablers Standing
Offers,
Catalogues
HIGH
Quick Competitions,
Electronic Business
Via Internet
SOSB
Facilitated
Review Policies
Reduce Open Bidding
Times
Pre-Qualify Vendors
Use of E-Business
SOSB
Contracted
Integrated
Procurement Team,
Contract Management
Framework based on Risk,
Contract Administration
and Resources on
Contractors Site
SOSB
Contracted
2.
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.
PPM competencies;
Training requirements;
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:
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:
Improve the working environment, increase efficiency, reduce costs, and enhance human
resource skills;
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:
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
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
Alternative Service
Delivery (ASD)
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.
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
People
DESKTOP
MAIN VIEW
TRAINING
Processes
Tools
LIBRARY
EDUCATION AND TRAINING
WHATS NEW
4.
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
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
Operations
Contracting
PWGSC
OTHER
DEPARTMENTS
Technical
r
r
CONTRACTOR
Taken from the Canadian Government Procurement Guide, B.F. Hough, CSC.
"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:
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.
EFFORT
PHASE 1
PHASE 2
PHASE 3
Objectives &
Constraints
Defined
Requirements
Defined
Solution
Defined
ACQUISITION
MILESTONES
PHASE 4
PHASE 5
Product
Accepted
Delivery &
Installation
Complete
Logistics
Product
Support
Qualified
Fielded
Support
Planned
INDUSTRY
GOVT
KEY
DOCUMENTS
Statement of
Requirements
Performance
Specification
Detailed
Specifications
Maintenance
Plan
Test &
Evaluation
Reports
Product Baseline
TIME
5.
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
were defined to relate the objective of each activity to the process and its
output/outcome.
PPM Activity
Templates
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
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.
10
COMPETENCY AREA
RESPONSIBILITY
IPT = Input D = Decision
Financial Management
Project/Technical
Management
IPT
D = Project Leader/Manager/Director
Capability Assessment
D = Project Leader/Manager
Risk Management
IPT
D = Project Manager
Procurement Management
IPT
D = Project Manager
Procurement Management
IPT
D = Project Manager
INPUTS
Program approval to proceed
with planning
System or commodity
designation
OUTPUTS
Planning for P&PP phase and
definition of project performance
objectives
File allocated within Branch, and IPT
defined
Statement of Operational
Requirements (SOR)
Expert judgement
National objectives in
procurement
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:
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:
The PPM Process in the Project and Procurement Planning Phase is shown in Figure 6. Each
process is then described below.
13
14
12
15
The PPM process is shown without numbering. Annex C contains a numbered of WBS view of PPM.
13
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.
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
SPECIALIST SUPPORT
Policy Advise
Cost Accounting
Legal Advice
Risk Assessment
Security Advice
CORE TEAM
Project
Management
Operations
Technical
Contracting
Finance
PROJECT
LEADERS
DIRECTION
REQUIREMENT
Quality Standards
Expertise
INTERACTION
WITH
INDUSTRY
Supply System
Expertise
Documentation Support
Configuration Management
Support
PROCUREMENT PROCESS
OPERATION
CAPABILITY
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
15
ALLIES
INTERNET
JOURNALS
COMPANIES
...
SOURCES OF SUPPLY
16
DND Acquisition Reform Guide, Team Leader G. Reinhardus; Author B.F. Hough.
16
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
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.
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.
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.
Description
Requirement
5.
2.
Need Date
Policy Issues
Authorization Reference
Risks (Time, Cost, Performance)
4.
Contract Administration
Sourcing
Procurement Method
Trade Agreements
Competitive vs Sole Source
Multi-Sourcing
RFP Issued
Bids Closed
Contract Award
Deliveries Commence
Contract Complete
6.
Additional Comments
7.
3.
Procurement Milestones
Approved By:
Evaluation Criteria
Socioeconomic Considerations
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
19
GOALS
RESPONSIBILITY
IPT = Input D = Decision
Multidisciplinary
IPT
D = Project Manager
Project/Procurement/Technical
Management
IPT
D = Project Manager
D Procurement Manager20
Multidisciplinary
IPT
D = Procurement Manager
Technical/Procurement/Cost &
Pricing Management
IPT
D = Project Manager
Procurement Management
IPT
D = Procurement Manager
INPUTS
Scope Documents: WBS,
SOW, SPEC, Plans, cash flow
OUTPUTS
Requirements documents
consistent with procurement
strategy and best practices
Contract documents: T&Cs,
SOW, SPEC, Plans,
DIDs/CDRL, Master Schedule,
WBS
Document templates
Independent estimates
20
In this context Procurement Manger is the PWGSC lead IPT position. Finance and logistics represents the DND procurement position.
20
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
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
Total System Cost Per Pound of
Payload on Station
5
Small Long-Endurance
Aircraft
Identify options
2
Large Long-Endurance
Aircraft
1
0
0
50
100
150
200
250
21
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
22
5.2.1.1
24
25
23
1.
DEFINE
OBJECTIVES
2. BASELINE CURRENT
PARAMETERS
5.
3.
IDENTIFY
ALTERNATIVES
4.
FORMULATE
ASSUMPTIONS
DETERMINE
COSTS OF EACH
ALTERNATIVE
6.
DETERMINE
BENEFITS OF EACH
ALTERNATIVE
7.
COMPARE
ALTERNATIVES
9.
PERFORM
RISK ANALYSIS
10.
MAKE
DECISION
11.
8.
IDENTIFY
RISKS
MAINTAIN
BUSINESS CASE
Baseline
Current
Parameters
Identify
Alternatives
Formulate
Assumptions
Determine
Costs
24
5.2.1.2
26
Determine
Benefits
Compare
Alternatives
Identify Risks
Perform Risk
Analysis
Make Decision
Maintain
Business Case
CSC.
25
Output: The IPT defines and records in the PMP the project, risk and
contract management strategies that will be used in the contracting process.
TR
OL
ID
EN
N
CO
TI
FY
AN
AL
YZ
TRACK
COMMUNICATE
CON P L A N
TIN
GEN
CI
ES
DND Acquisition Reform Guide, Team Leader G. Reinhardus; Author B.F. Hough.
Continuous Risk Management Guide. Carnegie Melon University, Software Engineering Institute. Page 267.
26
Analyze Risk
Data
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
RISK ANALYSIS
Brainstorming
Structured Walk-Throughs
Problem Reporting
COMMUNICATION
RISK TRACKING AND CONTROL
Risk Matrix in Bid
Risk Management Plan
Risk Tracking Process
CONTINGENCY PLANNING
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
28
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)
Risk
Identification
and Evaluation
Delivery
Objective
To Manage
Risk
Financial Mgt
Value for
Money
Technical
Performance
Fit with
Performance
Specification
Tech
Perf
RISK
GFR
Critical
Indicators
(Examples)
QA Test and
Acceptance
QA
Inspection
and
Acceptance
Fin Mgt
Delivery
GFR
Time and
Location of
Delivery
Fitness
for Use
29
Process: The strategy should address all mechanisms that will be used to
monitor delivery and perform acceptance, for example:
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.
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:
31
32
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.
INTERNATIONAL ASSOCIATION
AND INSTITUTIONS STANDARDS
PROPRIETARY
GUIDANCE
SEI
SEI
EIA
SAE
Deming
Juran
Crosby
etc.
NON-PROPRIETARY
GUIDANCE
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.
Objective: To develop and document the GFR Strategy that will be used to
monitor contractor performance.
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
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 basis of selection (e.g. best price, best value, best technical)
The evaluation plan (detailed process and scoring formats that the
valuation team uses);
Output: Strategy prepared by the IPT and recorded in the PMP for bid
solicitation.
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:
33
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.
5.2.1.3
33
34
PRE-FACILITATED CONTRACTS
Objective: To develop and document the Reporting Strategy that will be used
to administer the contract.
Output: Strategy prepared by IPT and recorded in the PMP for contract and
project reporting.
35
5.2.1.5
5.2.1.6
5.2.2
Output: Strategy prepared by IPT and recorded in the PMP for procurement
strategy approval, and contract approval and signing authorities.
Output: Strategy prepared by IPT and recorded in the PMP for contract
change management, including necessary configuration and data management
processes.
Figure 18 shows Part II of the solicitation planing process and each process is described below.
36
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
RISK
High
Medium
isk
gR
n
i
s
rea
Inc
Low
Low
Medium
High
38
5.2.2.2
5.2.2.3
34
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.
Objective: To define and record the methodology that will be used to manage
the procurement.
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
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.
5.2.2.4
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.
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?
REQUIREMENTS
RESULTS
-- Customer Verification --
ACCEPTANCE
4
4
4
4
37
38
41
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
Negotiation
Agreement
39
42
Instructions to Bidders
Section B:
Section C:
Evaluation Criteria
Section D:
Requirements Clauses
Part B:
Financial Clauses
Part C:
General Conditions
GUIDANCE TO BIDDERS
Annexes to Part A:
Annex A
MODEL CONTRACT
REQUIREM ENTS
Statement of Work
Appendix 1
Appendix 2
Annex B
Annex C
...
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.
5.2.2.5
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.
41
44
5.3
43
45
GOALS
Multidisciplinary
RESPONSIBILITY
IPT = Input D = Decision
IPT
D- Procurement Manager
IPT
D- Procurement Manager
Procurement
IPT
D- Procurement Manager
Multidisciplinary
IPT
D- Procurement Manager
Project Management
IPT
D- Project Manager
Procurement Management
IPT
D- Procurement Manager
INPUTS
OUTPUTS
Expert Advice
Proposals
46
5.3.1
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
44
45
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.
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.
5.3.1.1
Solicit Bids
5.3.1.2
Receive Bids
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
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
Evaluate Bids
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:
49
.6
Technical
Merit
.2
Management
Capability
.1
Schedule
Compliance
Price
.1
Industrial, Regional
Benefits (IRB)
Weight
= Importance
Risk
(example)
Select Contractor
49
50
5.3.1.5
Negotiate Contract
Objectives;
Use of questions;
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
51
5.3.1.6
Prepare 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.
5.3.1.7
and
52
5.3.1.8
Award 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
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
GOALS
RESPONSIBILITY
IPT = Input D = Decision
IPT
D = Procurement Manager
Delivery
IPT
D = Project Manager
Performance
Validation and Verification
Delivery and Acceptance
IPT
D = Project Manager
Quality
IPT
D = Project Manager
Risks
IPT
D = Project Manager
IPT
D = Project Manager
Multidisciplinary
IPT
D = Procurement Manager
Multidisciplinary,
Procurement
IPT
D = Procurement Manager
INPUTS
OUTPUTS
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
55
5.4.1
Manage Contract
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);
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
56
CONTRACT MANAGEMENT
- WORKING TOGETHER TO ACHIEVE PROJECT SUCCESS
GOVT FURNISHED RESOURCES
DELIVERY SCHEDULE
Functional Test
Concept of Operations
Qualification Tests
-- Shock
-- Temperature
-- Humidity
-- Sand
Trials
Computer Models
Electronic Units
Actual
Plant Machinery
CONTRACTOR
COST
CONTRACT
AUTHORITY
TECHNICAL
AUTHORITY
DOCUMENTATION
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
5.4.1.2
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.
Inputs to administration of
Delivery is on schedule
Costs are as per contract
ACCEPTANCE
58
5.4.1.3
5.4.1.4
5.5
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.
Administer Contract
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:
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
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
GOALS
RESPONSIBILITY
IPT = Input D = Decision
Procurement/
Multidisciplinary
IPT
D = Procurement Manager
Procurement/
Multidisciplinary
IPT
D = Procurement Manager
Multidisciplinary/
Procurement
IPT
D = Procurement Manager
INPUTS
OUTPUTS
Contact Provisions
Procurement audit
Contract Deliverables
Business Case,
SOW/SPEC, Acceptance
criteria
Product Acceptance
Product in-service
Negotiation/litigation/ arbitration
Resolution/amendment
Negotiation
55
60
5.5.1
Contract Closeout
Confirmation of Completion
Loans of Equipment
Government Inventory Closeout
Claim Settlement
Warranty Action
Final Payment
Project Evaluation
Record Retention
61
5.5.1.1
5.5.1.2
Physical Disengagement
Administrative Disengagement
Prepare release that holds both parties harmless from future claims by
either party;
62
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
Output/Outcome
Service Agreement
Project Report(s)
Improved
Performance
A-2
Procurement Services
Solicitation Planning
Our PPM experience has led to the following experience and products
Project Services
Risk Assessment
Data Management
Change Management
Program Services
Strategic Planning
Business Improvement
Performance Evaluation
Professional Development
E- Business Initiatives
A-3
Selected Assignments
DISCIPLINE
SITUATION
SOLUTION
Strategic Planning
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.
Project Procurement
Management
Project Procurement
Management
Performance
Evaluation
A-4
ANNEX B
PROJECT PROCUREMENT MANAGEMENT (PPM)
TEMPLATE
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.
2.
PPM Process - The forty-nine steps of the PPM process. The terminology is based on
the BPR initiatives common to both PWGSC and DND.
3.
4.
Competencies - The knowledge, Skills, and Tools that have been identified for complex
procurement.
5.
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).
6.
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.
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)
PPM Process
Title
(WBS
Numbering)
1.
All
2.
Phase 1-Project
and Procurement
Planning /
Identification
Phase
1. Validate
Requirements
3.
1.1 Analyze
(Review Clients)
Requirements
4.
1.1.1 Define
Performance
Objectives
1.1.2 Determine
Allocation and
Teaming
5.
6.
7.
8.
1.2.1 Identify
Sources of Supply
Output/Outcome
Competency Knowledge
Skills Tools
All
K- 1-14, 19
S- 1-11
T- 1-9
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
R. Trites
(819) 956-0846
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
PPM TEMPLATE
PPM /Project
Phase
(49 Steps)
PPM Process
Title
(WBS
Numbering)
9.
10.
1.2.3 Refine
Performance
Objectives
11.
1.2.4 Prepare
Procurement
Management Plan
(PMP)
2. Define
Procurement
Requirements
12.
Phase 2Solicitation
Planning/Develo
pment Phase
13.
2.1 Define
Business and
Technical
Requirements
14.
15.
16.
17.
2.2.2.1 Define
Delivery and
Acceptance
Strategy
Output/Outcome
Competency Knowledge
Skills Tools
PPM Activities
(Guidance/Tools
and Techniques)
Point of
Contact60
K- 1-19
S- 1-11
T- 1-9
R. Trites
(819) 956-0846
Mike Cody
(819) 956-0312
Keith Adams
(819) 956-0334
B-3
PPM TEMPLATE
PPM /Project
Phase
(49 Steps)
18.
19.
20.
21.
22.
PPM Process
Title
(WBS
Numbering)
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
23.
24.
2.4 Define
Reporting Strategy
25.
2.5 Define
Approval Strategy
26.
27.
2.7 Define
Procurement
Strategy
28.
2.7.1 Validate
Sources of Supply
29.
2.7.2 Define
Procurement
Methodology
(Tools and
Techniques)
Output/Outcome
Competency Knowledge
Skills Tools
PPM Activities
(Guidance/Tools
and Techniques)
Point of
Contact60
Anna Best
(819) 956-0320
Implement COTS
Procurement
Implement SOP
Implement UGD
Implement BDP
B-4
PPM TEMPLATE
PPM /Project
Phase
(49 Steps)
PPM Process
Title
(WBS
Numbering)
30.
31.
32.
2.7.5 Obtain
Management
Approval of the
Procurement
Strategy
3. Execute
Procurement
Strategy
33.
Phase 3Solicitation and
Source Selection
/ Project
Definition (or
Implementation)
Phase
34.
35.
36.
37.
3.4 Select
Contractor
3.5 Negotiate
Contract
38.
39.
3.6 Prepare
Contract
40.
3.7 Obtain
Contract Approval
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.
Competency Knowledge
Skills Tools
K- 1-19
S- 1-11
T- 1-9
PPM Activities
(Guidance/Tools
and Techniques)
Point of
Contact60
R. Trites
(819) 956-0846
B-5
PPM TEMPLATE
PPM /Project
Phase
(49 Steps)
PPM Process
Title
(WBS
Numbering)
41.
3.8 Award
Contract
42.
Phase 4Contract
Management /
Project
Definition and
Implementation
43.
4. Manage
Contract
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
47.
Phase 5Contract
Closeout /
Project
Implementation
and Closure
48.
5. Disengage
Contract
49.
5.2 Administrative
Disengagement
5.1 Physical
Disengagement
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.
Competency Knowledge
Skills Tools
PPM Activities
(Guidance/Tools
and Techniques)
K- 1-19
S- 1-11
Far more
emphasis and
specialization
in/on T- 1-9
Point of
Contact60
R. Trites
(819) 956-0846
Mike Cody
(819) 956-0312
K- 1-19
S- 1-11
Far more
emphasis and
specialization
in/on T- 1-9
R. Trites
(819) 956-0846
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
B-7
CATEGORIES
COMPETENCIES
11. Strong in negotiation
Tools- PMBOK
B-8
ANNEX C
PPM WORK BREAKDOWN STRUCTURE
VALIDATE REQUIREMENTS
1.1
1.2
2.
1.1.2
1.1.3
1.2.2
1.2.3
1.2.4
2.2
2.2.2
2.2.3
2.2.4
2.3
2.4
2.5
2.6
2.7.
2.7.2
2.7.3
2.7.4
2.7.5
C-1
3.
4.
5.
Solicit Bids
3.2
Receive Bids
3.3
Evaluate Bids
3.4
Select Contractor
3.5
Negotiate Contract
3.6
Prepare Contract
3.7
3.8
Award Contract
MANAGE CONTRACT
4.1
4.2
4.3
4.4
Administer Contract
DISENGAGE CONTRACT
5.1
Physical Disengagement
5.2
Administrative Disengagement
C-2
ANNEX D
THE RELATIONSHIP BETWEEN
THE COMPLEX PROCUREMENT FUNCTIONS AND CORE
COMPETENCY AREAS
PPM PROCESSES62
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
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
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)
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
COMPETENCY AREAS
PPM PROCESSES62
Objectives
1.2.4
Prepare
Procurement Management
Plan (PMP)
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
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
D-2
COMPETENCY AREAS
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
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
COMPETENCY AREAS
PPM PROCESSES62
2.7.5
Obtain
Management Approval of the
Procurement Strategy
3.
EXECUTE
PROCUREMENT
STRATEGY
3.1
Solicit Bids
3.2
Receive Bids
3.3
Evaluate Bids
3.4
Select Contractor
3.5
Negotiate Contract
3.6
Prepare Contract
3.7
Obtain Contract
Approval
3.8
4.
Award Contract
MANAGE CONTRACT
4.1
Manage Technical,
System and Quality
Performance
4.2
Manage
Cost/Schedule and Delivery
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
D-4
PPM PROCESSES62
Performance
4.3
Manage
Government Furnished
Resources (GFR)
Performance
4.4
Administer
Contract
5.
DISENGAGE CONTRACT
5.1
Physical
Disengagement
5.2
Administrative
Disengagement
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
D-5
COMPETENCY AREAS
PPM PROCESSES62
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
COMPETENCY AREAS
PPM PROCESSES62
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
E-1
2. DEVELOPMENT
3. DEFINITION
4. IMPLEMENTATION
Solicitation Planning
Operational/Business
Need
Business/Technical
Requirements
Definition Phase
Contracting Process
Integrated
Procurement Team
Project Management
Strategy
Options Analysis
Project
Implementation Plan
Substantive Cost
Estimate & Risk Analysis
Mgt. Logistics
Acquisition Processes
Performance Objectives
Business Case
CDRL/DIDs
& CEIL
Statement of Operational
Requirements
RFP
(Implementation Phase)
Mgt. Quality
Performance
Procurement Concept
Statement of Objectives
(if BDP)
Procurement
Management Plan
Industry Days
(if BDP)
Contract Negotiation
Manage Product
Support Processes
Contract - Preparation,
Approval & Award
Contract Management
and Administration
Contract Management
Manage Systems:
Requirements Mgt.
Risk Management
Data Management
Configuration Mgt.
Etc.
5. CLOSEOUT
Close-out
Physical
Disengagement
Admin.
Disengagement
E-2
DESIGN
DEVELOPMENT
INTEGRATION
Define System
Requirements
Define
Segments and
Equipment
Conduct
Preliminary
Design
Conduct
Detailed
Design
System
Requirements
Review
Segment/
Equipment
Technical
Reviews
Preliminary
Design
Reviews
Critical
Design
Reviews
TEST &
EVALUATION
PRODUCTION &
INSTALLATION
OPERATION
SYSTEM
DEFINITION
TECHNICAL
REVIEWS
CONFIGURATION
BASELINES
Functional
Baseline
PRODUCT
ACCEPTANCE
Conduct
Functional Tests,
Qualification Tests,
User Trials
Test
Readiness
Reviews
Release
Engineering To
Production
Perform
Operational
Trials
Production
Readiness
Review
Software
Specification
Review
Product
Baseline
Allocated
Baseline
Formal
Qualification
Review
Functional
Configuration
Audit
Design
Acceptance
Physical
Configuration
Audit
PRODUCTION ACCEPTANCE
E-3
REVIEWS
& AUDITS
DEFINITION
DESIGN
DEVELOPMENT
INTEGRATION
TEST &
EVALUATION
PRODUCTION &
INSTALLATION
Functional
Baseline
Allocated
Baseline
Preliminary
Design
Reviews
Critical
Design
Reviews
Functional
Configuration
Audit
Physical
Configuration
Audit
LOGISTICS ENGINEERING
LOGISTICS
DECISION
POINTS
Provide
Concept
of
Operations
Design System
Select Equipment
Perform R&M Modelling
Provide Engineering Data
MAINTENANCE PLANNING
Select
Support
System
Alternative
LOGISTICS ACQUISITION
PRODUCT SUPPORT
Interaction:
Contractor/
Technical Authority
Approve
Maintenance
Plan
TECHNICAL
DATA PACKAGE
SUPPLY PROVISIONING
PHST DEVELOPMENT
ADAPTATION/
DEVELOPMENT
OF LOGISTICS
SUPPORT
OPERATION
INTERIM
CONTRACTOR
SUPPORT
R&O REQUIREMENTS
TECHNICAL PUBLICATIONS DEVELOPMENT
SUPPORT & TEST EQUIPMENT DEVELOPMENT
LIFE
CYCLE
PRODUCT
SUPPORT
PERSONNEL PLANNING
FACILITIES CONSTRUCTION
PERSONNEL REQUIREMENTS
FACILITIES REQUIREMENTS
PERSONNEL ALLOCATION
FACILITIES CONSTRUCTION
E-4
DATA
MIGRATION
IT PROJECTS
MOST PROJECTS
//
//
OPERATION
USER
ACCEPTANCE
DISPOSAL
CONTRACTOR
SUPPORT
OF TRIALS
INTERIM
CONTRACTOR
SUPPORT
MID-LIFE UPGRADES
OR
ALTERNATIVE
SERVICE
DELIVERY
DISPOSAL PLANNING
SAFE,
ECONOMICAL
DISPOSAL
E-5
ANNEX F
SAMPLE ACTIVITY TEMPLATES
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
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:
F-1
Outputs
Solicitation process > Proposal Evaluation Plan, Request for Proposals, Contract
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:
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:
F-2
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
Public Works and Government Services Canada
F-3
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:
Warranties.
Comply with terms and conditions inconsistent with the nature of the contract.
Public Works and Government Services Canada
F-4
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
F-5
Description
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.
F-6
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.
F-7
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
F-8
Description
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:
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;
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:
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:
F-9
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
System Engineering
Detailed Design
Test and Evaluation
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
F-10
Production
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
Maintenance
Operation
Techniques
An overview of the system development process is shown below.
OVERVIEW OF SYSTEM DEVELOPMENT PROCESS
DEFINITION
DESIGN
DEVELOPMENT
INTEGRATION
Define System
Requirements
Define
Segments and
Equipment
Conduct
Preliminary
Design
Conduct
Detailed
Design
System
Requirements
Review
Segment/
Equipment
Technical
Reviews
Preliminary
Design
Reviews
Critical
Design
Reviews
TEST &
EVALUATION
PRODUCTION &
INSTALLATION
OPERATION
SYSTEM
DEFINITION
TECHNICAL
REVIEWS
CONFIGURATION
BASELINES
Functional
Baseline
PRODUCT
ACCEPTANCE
Conduct
Functional Tests,
Qualification Tests,
User Trials
Test
Readiness
Reviews
Release
Engineering To
Production
Perform
Operational
Trials
Production
Readiness
Review
Software
Specification
Review
Product
Baseline
Allocated
Baseline
Formal
Qualification
Review
Functional
Configuration
Audit
Design
Acceptance
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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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.
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.
Work closely with the company on clarifying technical requirements and authorizing
changes. Respond quickly to requests otherwise the project will be delayed.
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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Description
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.
Public Works and Government Services Canada
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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:
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.
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:
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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