DODI 5000.74 Enclosure 3: Oversight of Contracted Services Portfolios

1. OVERVIEW

a. The DoD will manage services acquisitions in order to improve productivity and efficiency. Requirements will be addressed from an appropriate enterprise-level so that resulting contract awards are aligned with mission, performance, and cost objectives. Portfolio management enables a framework for strategic oversight by the USD(AT&L), coupled with decentralized execution by the DoD Components.

b. Portfolio management requires collection and sharing of data within and across organizations, employing cross-departmental teams, and identification and promulgation of best practices and lessons learned. Collaboration among requiring organizations and contracting activities enables the DoD to leverage its resources and buying power. Portfolio management requires experts who specialize in specific market sectors. Such expertise results in enhanced support to the warfighter by maximizing efficiency and increasing productivity by tailoring management to the unique aspects of the various categories of services. By fostering collaboration, portfolio management:

(1) Improves the transparency of requirements across the DoD.

(2) Reduces the proliferation of redundant business arrangements for acquiring similar services.

(3) Increases awareness of alternative business arrangements that may be better suited to particular needs.

2. PORTFOLIO MANAGEMENT TAXONOMY

a. The DoD portfolio management structure is based on the taxonomy for the acquisition of services, as provided in subpart 237.102-74 of Reference (g).

b. There are 9 portfolio groups assigned for the acquisition of services, as listed in Figure 2. The portfolio groups are overseen through the FDE structure, as described in section 3b of this enclosure, except for the Research and Development and Construction Services portfolio groups. FDEs are not assigned for these two groups because section 2330c of Reference (h) excludes these portfolio group services.

Figure 2. Services Acquisition Portfolio Groups

image

3. KEY PORTFOLIO MANAGEMENT PARTICIPANTS

a. DoD Components. DoD Components will ensure that services are acquired efficiently and with increased productivity by:

(1) Using market research to identify service providers within the marketplace for specific services based upon their demonstrated competencies, performance, and cost competitiveness.

(2) Maximizing small business participation to expand the competitive base of service providers.

(3) Using management controls and business intelligence systems to establish appropriate oversight and sustain situational awareness of services acquisitions.

(4) Ensuring services acquisitions use performance-based requirements to the maximum extent practicable and include identifiable and measurable cost, schedule, and performance outcomes with consideration for quality and delivery.

(5) Enhancing services acquisition planning and coordination by using multi-functional teams.

(6) Identifying potential contract consolidation candidates and coordinating with the appropriate Office of Small Business Programs to ensure compliance with applicable bundling and consolidation policy.

(7) Accomplishing market research to collect information to maximize reliance on the commercial marketplace and to benefit from its capabilities, technologies, and competitive forces to fulfill the DoD’s needs.

b. FDEs. There will be FDEs designated for each of the service sectors defined in Better Buying Power (BBP) 1.0.

(1) The OSD Component head concerned will designate an individual within his or her OSD Office or a Defense Agency or DoD Field Activity under his or her authority, direction, and control, as FDEs for Services Acquisition Management as set forth in Figure 3.

(2) When a service sector not listed is added as part of BBP initiatives, USD(AT&L), may designate an individual within the Office of the USD(AT&L) or a Defense Agency or DoD Field Activity under his or her authority, direction, and control, and may request the head of the OSD Component head concerned to designate an individual to serve as the FDE for that new service sector.

(3) Each FDE serves as the DoD-level lead reporting through his or her Component head to USD(AT&L) (see Figure 3) for his or her respective service portfolio group, as defined in subpart 237.102-74 of Reference (g). Consistent with relevant DoD policies, including policies issued by USD(AT&L), FDEs will collaborate to define common processes across the Department for services acquisition and metrics to be utilized for documenting trends in the acquisition of services. The FDE provides strategic portfolio management overseeing the lifecycle process of services acquisition in his or her portfolio by:

(a) Providing strategic leadership of the domain to improve planning, execution, and collaboration to achieve greater efficiency and reduce costs.

(b) Ensuring that processes are in place to monitor post-award performance.

(c) Identifying and sharing portfolio group best practices, leveraging small business capabilities, and employing lessons-learned to improve the acquisition and management of services across their respective service categories.

(d) Developing appropriate metrics to track cost and performance of contracted services within the portfolio group in order to leverage best practices, reduce redundant business arrangements, identify trends, and develop year-to-year comparisons to improve the efficiency and effectiveness of contracted services.

(e) Identifying opportunities for strategic sourcing across the services portfolio group or portfolio category.

(f) Making policy recommendations to USD(AT&L) to improve efficiency and productivity of services acquisitions.

Figure 3. Functional Domain Expert Structure

image

c. CLLs. CLLs are senior functional leaders within the DoD Component functional communities aligned within the FDE structure, whose role is to support the strategic management and leadership of portfolio groups across the DoD Component. CLLs’ leadership will be critical to improving the acquisition of services by:

(1) Improving planning, execution, and collaboration to achieve greater efficiency and reduce costs within their functional domains.

(2) Supporting a robust requirements development, validation, and approval process to ensure that the DoD contracts for the most appropriate and efficient level of services needed to meet mission requirements. CLLs also should consider total force mix capabilities during the development process.

(3) Sharing best practices and lessons learned within the CLL network across the various DoD Components to collectively improve the efficiency and effectiveness of contracted services within each functional domain.

(4) Using portfolio metrics and data to effectively monitor cost and post-award performance to improve the efficiency and effectiveness of the CLLs’ contracted services.

(5) Promoting the training and development of program managers (PMs), functional service managers (FSMs), and functional and requirements personnel tasked to support the acquisition of services.

(6) Ensuring that “should cost” management is implemented in the portfolio. Contracted services managers are responsible for identifying cost reduction opportunities, establishing targets below “will cost” estimates that are the basis for budgeting, and pursuing those opportunities. Cost savings resulting from “should cost” successes will remain in the component for application to higher component priorities.