AN UNEXPECTED ANGLE ON COST CONTROL
The question was whether the contractor couldn’t manage its costs, or whether there was a problem in the MPC that the command had developed and used as a funding baseline.
CORs developing them faced minimal quality checks. Tey worked for and reported to either the commanding general, the chief of staff or the garrison commander, not the contracting officer.
Of particular note, the chief of staff was responsible for acqui- sitions and funding for the NTC and Fort Irwin. Tis served as a platform by which Acquisition Command leadership could partner with the chief of staff to achieve a desired end state that motivated all parties involved. Tis teaming resulted in a rec- ommendation for a revised version of the MPC process, which included quarterly reviews with all key stakeholders (chief of staff, garrison commander, directors, CORs, Acquisition Com- mand personnel and contracting officer). Now, instead of the CORs explaining cost overruns to the contracting officer at the Acquisition Command organization, they and their directors would have to explain them to the chief of staff (who in many cases was the directors’ senior rater), in the presence of the gar- rison commander (who in many cases was the directors’ rater), in a headquarters conference room. We determined that if we could minimize mission creep and implement this revised MPC process, the quality of our MPC would improve.
Once we put the plan into action, this transformation yielded significant benefits. Te chief of staff, the Acquisition Com- mand, the director of resource management and the contracting officer compared the original directorates’ MPCs with current actual costs, and the directors were asked to explain any over- runs in detail. We discovered that in some cases, the directorates were asking the contractor to exceed the scope of the contract, resulting in changes, mission creep and overruns.
After the first session, some one-time adjustments to contract funding were made, and the chief of staff and the garrison
122 Army AL&T Magazine April - June 2018
commander told the directors that they would be responsible for any future cost overruns for their respective organizations. Te end result was a tighter MPC process, a higher-quality MPC and significantly fewer cost overruns.
CONCLUSION Te experience at NTC Acquisition Command yielded a num- ber of valuable lessons in how to apply the MPC for maximum benefit:
• When using the MPC as a post-award tool and funding base- line, ensure that your MPC process is robust and flexible enough to incorporate changes that impact contract costs.
• Contractors must notify the contracting officer in a timely manner when they anticipate overrunning their cost on a cost- reimbursement contract.
• Leadership at all levels, not just in the Acquisition Command, needs to be involved in the MPC process. Everyone who con- tributes to the MPC and its process is a stakeholder.
• Government leaders and the contractor need to be held accountable for controlling their organizations’ respective costs.
• Keep lines of communication open within the government and between the government and the contractor. • Ensure that MPC quarterly reviews are rigorous, transparent.
fair and
• Finally, continually educate acquisition team members on the MPC and its process.
Taken together, these principles can determine whether and how the MPC can help an organization get a grip on its contract costs.
For more information, contact the author at
anthony.j.nicolella.
civ@mail.mil.
MR. ANTHONY J. NICOLELLA, a retired U.S. Army officer who held numerous pre- and post-award contracting positions, is a professor of contract management at Defense Acquisition University (DAU) – South in Huntsville, Alabama. He holds an M.S.A. in general administration from Central Michigan University and a B.S. in logistics management from Penn State. Nicolella is Level III certified in contracting and is a member of the Army Acquisition Corps. Before joining DAU, he was a senior buyer and planner for NV Energy Inc. and a supervisory contract administrator for the University of Nevada, Las Vegas.
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